BOURNEMOUTH Borough Council’s outsourcing partner has been hit by fresh controversy after its CEO was forced to quit in the wake of a £4million accounting error.

Richard Cuthbert resigned after the mistake forced a profit warning that triggered a share sell-off, wiping a third off Mouchel’s value.

The firm said that a one-off gain it had previously announced would be £4.3million lower than expected because of the error, impacting on profits the group is set to announce in just a few weeks.

An opposition councillor and union representative have warned the council over any further deals with the firm, while the authority’s deputy leader has insisted it is ‘business as usual’ in Bournemouth.

Cllr John Beesley told the Daily Echo: “The contract with Mouchel is one that prepares for every eventuality and if something happens with Mouchel, for example they’re taken over, we’re very clear about the continuity of service provision. We’re very clear about our contractual arrangements with Mouchel and others and the council has a range of options it can go through.

“Whatever position Mouchel PLC is in and its relationship with its bankers, shareholders and institutions is not of direct concern for Bournemouth council.

“As far as we’re concerned our relationship with Mouchel is business as usual. Certainly there will be concerns and speculation but in business and in local government there always is.”

The council signed a £150million deal with Mouchel last November to take over the running of four of its departments. In May this year, council leader Cllr Peter Charon said it would look to outsource more work to the firm as it tried to save more cash.

One opposition councillor, Lib Dem Cllr Roger West, said Bournemouth residents were ‘boosting the coffers of a failing company’.

“Although Mouchel were assessed by our risk management team when the contract was first agreed – even though at that time there were concerns about its long term future – it seems to me now that this risk has dramatically changed and we would be foolish to continue to get more involved with them without another risk assessment,” he said.

Dave Higgins, Bournemouth Unison branch secretary, said the council would be ill advised to look at moving over its finance and HR departments when Mouchel was in a ‘weak position’.

“The concern is they’re looking to do it at a time when their share price has plummeted, their chief executive has resigned and they’re ripe for takeover.

“They’re in a very weak position,” he said.

Mr Higgins said the council should ‘at least wait until the dust has settled’ before considering further deals.

Mouchel was subject to various takeover bids earlier this year, with one bidder, Interserve, tabling a bid of 130p per share. In the wake of the resignation on Thursday, prices dropped as low as 15.5p.