Britain’s financial regulator comes under fire over the weekend over the ‘chaotic’ listing on the London Stock Exchange of a healthcare company facing allegations that some of its shares were fraudulently traded.

The Financial Conduct Authority (FCA) approved the admission of Umuthi Healthcare Solutions to the London Stock Exchange (LSE) in March. The company has developed a smartphone app to help drugs reach doctors in remote rural areas.

Trading is now suspended in the company. South African police are investigating allegations that millions of non-existent shares were sold to investors for around £ 2.45million before the IPO.

Anthony Morris, from Umuthi’s main shareholder group, said: “This listing was a complete shambles and should never have been authorized. There has been a dismal failure on the part of the Financial Conduct Authority.

The company denies any wrongdoing. He said the claims concerned sales of shares prior to its public listing between individuals who “do not involve the company or its directors.”

The main market for LSE is approximately 1,300 companies from more than 70 countries. The inscription is described as a “badge of quality”.

The FCA, which reviews companies’ prospectuses before they are admitted to the LSE, has come under fire for its performance and efficiency over the past year after a series of financial scandals. Activists described the disclosure earlier this month by the Observer that the regulator has paid staff over £ 125million in bonuses since 2016 as an ‘absolute insult’.

Umuthi has operations in South Africa, but is keen to expand to other African countries and Europe.

The South African Police Department said last week that the company’s chief executive, Gert Viljoen, and a consultant, Connie van Nieuwkerk, were arrested on allegations of fraud earlier this month.

A police spokesperson said: “It is alleged that the CEO along with another executive persuaded shareholders to buy shares that did not exist. Thirty shareholders lost 50 million rand [£2.45m] due to misrepresentation. The investigation is continuing. “

Investors say the FCA missed a series of red flags that should have blocked the listing. Van Nieuwkerk was fined last year by financial watchdogs in South Africa for publishing false or misleading financial statements.

One of Umuthi’s non-executive directors, Colin Bloom, a prominent Conservative supporter and government adviser on faith, said he resigned from the company last month. He said he was not aware of any suspicious activity and asked the Serious Fraud Office to investigate.

Umuthi has developed a smartphone app that allows doctors and pharmacies in remote areas to order drugs directly from healthcare providers. It was listed on the LSE on March 4, but its listing is now suspended.

Umuthi said in a business update on Thursday: “Mr. Viljoen has been released on bail. The allegations appear to relate to the over-the-counter sale of Umuthi shares, transactions over which the company and Mr Viljoen had no control or involvement.

“In addition, a consultant for the company, Connie van Nieuwkerk, was arrested in connection with the same allegation.

“Ms. van Nieuwkerk had no operational role in the company.

“Following the arrest, the company immediately terminated the consultancy contract with Ms van Nieuwkerk.”

Viljoen denied any wrongdoing and said the list had gone through “rigorous verification processes”. Van Nieuwkerk did not respond to a request for comment.

An FCA spokesperson said: “We are aware of the issues raised here and are liaising with the relevant authorities in South Africa. When problems with the company arose, we immediately suspended the listing to protect investors, and at present it remains suspended. “

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