Former construction managing director reaches settlement - but not before exposing state of firm's accounts.

Details of a £200m hole in Amec's accounts emerged during evidence given at an employment tribunal brought by Stephen Bowcott, the firm's sacked construction managing director.

The case, which centred on Amec's allegations that Bowcott awarded a £250,000 PR contracts to his wife's PR firm, was halted midway through the hearing on Wednesday and promptly settled out of court.

Before then Amec conceded that the company was owed £200m by clients during Bowcott's tenure, which ended when he was dismissed in June 2005.

Nigel Higgins, Amec's former finance director, revealed that Bowcott had made a request to write off £10m of the £200m, but that this had been refused by the Amec board.

After the case was abruptly settled the two sides released a joint statement. This said Bowcott accepted he had been dismissed for not disclosing a conflict of interest, but that had not realised that this was a breach of his obligations.

An Amec spokesperson said no money had been granted to Bowcott as a result of the settlement. The joint statement said: "Amec accepts that at the time Mr Bowcott genuinely and honestly believed that he was not in breach [of conflict of interest requirements]."

Giving evidence, Higgins said he had taken part in an investigation into Bowcott's conduct, which began after the firm received an anonymous letter accusing him of awarding a £250,000 PR contract to Image Communications, a company owned by Denise Johnstone, who was then Bowcott's girlfriend.

On the witness stand, Higgins conceded that Bowcott's division was owed more money on contracts carried out than any other Amec managing director. He admitted that there was concern about this level of money owed although he said he believed it to be recoverable.

Higgins said he had refused to write off any of this money because "my role is not to let Stephen off the hook by writing stuff down - I wanted Stephen and his team to pursue the client".

John Early, an Amec main board director, told the tribunal that neither Bowcott's business nor personal performance had been a factor in the decision to dismiss him.

He said Amec would not have given Bowcott permission to award the contract to Image Communications and his decision to do so was a clear conflict of interest.

The effect on Bowcott's career was also discussed at the hearing.

Simon Pratt, director of headhunter Glenn Irvine International, said regional contractor Geoffrey Osborne had been interested in appointing Bowcott as chief executive but was concerned at the adverse publicity around his dismissal.

Pratt added that Bowcott's line manager at Amec had described him as a "breath of fresh air".