Tom Lynch has been ousted as executive chairman of Elan, which has two spin-off entities in Bermuda. Mr. Lynch's removal comes in the wake of the company's share collapse, according to a report in the Financial Times.

The Times says, however, that Mr. Lynch, who has been blamed by some investors as the architect of a complex web of joint ventures and off balance sheet vehicles that undermined shareholder confidence, will not be leaving the company.

Instead, he will take charge of Elan's efforts to resolve a US Securities and Exchange Commission investigation into the company's accounting practices. Elan shares have lost about 90 percent of their value this year since the company admitted profits would have been lower last year if it had included two-off balance sheet vehicles used to fund R&D. The SEC investigation - which was launched following a highly critical report in The Wall Street Journal - was announced on February 7.

The report accused Elan of Enron-style accounting practices and said some of the company's loss-making enterprises were registered in the accounts of myriad Bermuda-based partnerships rather than Elan's own accounts. Elan chiefs sternly rejected the report, insisting their accounts conformed to internationally accepted standards.

Elan had two spin-off entities in Bermuda called EPI01 and EPI02, which it legally owned but did not control.

Elan's then vice chairman Mr. Lynch said the “qualified special purpose entities”, which were incorporated in Bermuda, were a handy way of raising cash when market conditions were choppy.

He said: “I don't know what other people have done, but we saw it as a good way of raising money.”

In 1999 and 2000, Elan transferred parcels of quoted and unquoted securities into the vehicles, then invited banks and financial institutions to invest in them over a five-year period. Investors in the EPI01 and EPI02 are not allowed to sell any of the securities, of which only 40 percent are traded publicly, with the exception that they can accept take-over offers.

The two vehicles are controlled by boards of directors appointed by their investors. Mr. Lynch said he did not know the identity of these directors.

The entities were previously included in Elan's Irish and British accounts but not in the company's accounts in the US - where the majority of its investors are.

On Monday, Elan announced plans to wind up much of its R&D and spin out of its drug delivery operations into a stand alone unit. It has cut back its ambitions to become a major player in cancer, acute care and dermatology while concentrating on neurology, pain and autoimmune diseases. The Financial Times reported that up to 500 jobs, or 11 percent of the workforce, would be eliminated as non core activities are sold or licensed to other companies.