DUNCAN Bannatyne said he was “devastated” and felt “betrayed” when he discovered that a former member of staff had been misappropriating funds from his business empire for a number of years.

Speaking to The Northern Echo for the first time since it emerged that million of pounds had been plundered from his company accounts the Dragons’ Den star spoke of his dismay that someone he trusted had “been found with their fingers in the till.”

The company’s accounts for 2014, which have been published today, note that “misappropriation of the Bannatyne’s funds had been occurring for a number of years...”

The impact was that the cost of fixed assets was overstated by £1.963m and accumulated depreciation overstated to £575,824. In addition, a further misappropriation of assets worth £1.125m in 2014, and £1.965m in 2013 was identified in the accounts.

Mr Bannatyne said changes to his senior management team gave him confidence that his fitness clubs, spas and hotels group was now “in great shape” and set to expand further following the acquisition of new sites that would create 12 jobs at his Darlington headquarters.

Asked how he felt that a trusted colleague had been defrauding his business, Mr Bannatyne said: “It was quite devastating when it is a person whom you have given your 100 per cent confidence. It was a betrayal of trust. But we are over all of that now.”

Christopher Watson, a former finance director for Mr Bannatyne's business, will confess to charges of fraud and money laundering when he appears for a plea hearing scheduled next week. Prosecutors say crimes totalling almost £8m were committed by Watson as he made electronic transfers from company accounts to his personal ones and those of his business.

It is understood that the former director - who made "full and frank admissions" when he was arrested last year - will dispute the amount that is said to be involved.

Graham Nigel Armstrong, former managing director and chief executive of the Bannatyne Group and one-time close friend of the tycoon, has been cleared of any wrongdoing over a fraud investigation at the Darlington-based business.

Durham Police confirmed this month that no further action would be taken against Mr Armstrong, who was arrested on suspicion of fraud in December last year and released on bail, with no criminal charges ever brought.

Earlier this month, The Northern Echo revealed that Mr Armstrong, who is known by his middle name, is seeking a payout from the entrepreneur. A case against Mr Bannatyne at the High Court in Manchester, which is understood to include a claim for £10m after Mr Armstrong was dismissed from his job, has been adjourned. It will reconvene before Christmas, unless an out-of-court settlement is reached in the meantime.

The latest set of accounts show Bannatyne Fitness Limited profits after tax dropped from £8.71m in 2013 to £1.72m last year. The directors do not recommend the payment of a final dividend.

During the year there was a 0.8 per cent increase of adult members at the firm’s health clubs and spas to 1,329 and the average yield per member increased to £35.29 from £35.27.