A DISPUTE between a group of shareholders of Darlington Farmers Auction Mart and its directors has led to both groups sending out letters to all shareholders to clarify their positions ahead of the company’s annual general meeting next week.

The shareholders had made allegations to the police about “financial irregularities” at the company, which is building a new out-of-town cattle mart close to Burtree, but Durham Constabulary has said its inquiries were in their "very early stages" and it had not been established whether the allegations were criminal in nature or not.

The Northern Echo understands that financial director Richard Heseltine and managing director Andrew Armstrong have not been interviewed by police.

A group of disgruntled shareholders sent a letter out to all 340 of the company’s shareholders last week outlining their allegations, which included claims that unauthorised payments totalling £380,000 were made to Mr Armstrong and Mr Heseltine via a company they had set up named Parking Only Limited.

However, the board of directors have now sent a letter to shareholders saying those payments were fully authorised by the board and were for their professional services in achieving funding for the new mart.

The letter said: “Contrary to the accusations recently circulated, remuneration for the professional services delivered by Andrew and Richard to the company for successfully achieving funding was validly approved by the board of directors in accordance with the company’s articles and company law. It was based, and paid, only on the company achieving project success and at a level lower than the payments made previously to unsuccessful external advisers.”

The letter said lawyers had reviewed the transactions and confirmed they were in accordance with company law. “We feel as a board of directors very strongly that we need to defend ourselves against such public and erroneous accusations,” it said.

It said the work done by Mr Armstrong and Mr Heseltine had produced a £7.88m sale of land at Neasham Road and income improvements to the company of £5.35m.

Directors said they would explain further at the company’s AGM next Tuesday but felt the involvement of those directors was essential to drive forward future plans for the mart.

The letter from the shareholders had said: “We have only the best interests of the company at heart, and contrary to the suggestion by Mr Heseltine in The Northern Echo we are not grinding an axe or concerned in creating conflict for the sake of it. We want to ensure that the financial affairs of the company are run properly and there is transparency and accountability.”

They also called for the directors’ resignation and for the money to be returned.

The matter is expected to come to a head at the AGM next Tuesday, where directors will answer shareholders’ questions.