The chief executive of Doncaster and Bassetlaw Hospitals Foundation Trust has defended the ‘integrity and character’ of the trust’s finance director following the discovery of a previously unknown £12.6m deficit.

Mike Pinkerton told HSJ it was likely the trust’s year-end position would be worse than the £12.6m deficit identified at month six, and revealed the trust was finalising details of an external investigation with regulator Monitor to understand how the deficit position remained unknown to the trust board for so long.

Monitor announced today that it would investigate the trust following the deterioration in its finances and added it was concerned “the scale of deterioration” may force the trust to apply for “additional funding support in the future.”

The trust’s finance director Matthew Lowry resigned earlier this month following an internal review which revealed the scale of the deficit.

Chief executive Mike Pinkerton told HSJ: “We have absolutely no information or expectation that Matthew is involved in any way. He has to the best of our knowledge been working on exactly the same information as the board and along with the board has been making reasonable decisions on the wrong information.

“The reason Matthew resigned is that irrespective of what happened, at whatever level of commission or omission by whichever parties, Matthew as director of finance, as with all board directors, is responsible for maintaining an adequate system of control. Those systems of control have been demonstrated to have failed, and Matthew has had the integrity and character to accept personal responsibility.”

Mr Pinkerton said the final year end position “was likely to be worse” than the current £12.6m.

He said the trust was working with Monitor to agree the terms of a “rigorous and transparent investigation” adding: “We need to have an investigation that not only satisfies ourselves but also our regulator. We are in the process of agreeing with Monitor the scope and nature of the investigation and any other support that the trust might move in order to move forward strongly.”

The investigation could be completed before the end of the year.

The trust has also notified NHS Protect and is following their advice and requirements.

HSJ understands the trust has initiated new “lock-down” controls on spending to ensure expenditure matches entries to the trust ledger.

It had been forecasting a £2.2 surplus but alerts were triggered in July when variations began to emerge between the trust’s bank holdings and spending reported by budget holder.

HSJ understands the focus for investigation is on the finance department but at this stage it is still not known what caused the deficit to be hidden.