Izodia itself was an e-commerce company which raised cash for a failed dot-com venture, and retains about UK£33m of that cash. It is one of a number of cash-rich ex-dotcoms which have proved to be interesting vehicles for ongoing activities of other types. In the case of Izodia, a Jersey-based investment company called Orb, which owns 29.9% of Izodia, made an indicative offer for the company in October. It was Orb whose offices were raided.

The SFO said: 'The SFO is conducting an investigation into an allegation of unlawful appropriation of funds belonging to Izodia plc and possible related offences. Searches were undertaken at addresses in London and Jersey'.

The Financial Times, which has been studying the complex structure of Orb's holdings, including Izodia, recently interviewed some of Orb's senior staff in Jersey. One of them was Gerald Smith, who was appointed to Orb's main board last Friday, but who had been acting as a consultant to the company. Mr Smith received a prison sentence of 2 years in 1993 for the theft of £2m from the pension fund of a company of which he was chief executive. He told the FT that he used the money in an unsuccessful attempt to stop the company going into liquidation, and that he had not been accused of seeking personal gain from the theft.

Shareholders of Izodia told the FT that they were amazed and disturbed by the SFO's action. Orb said that the timing of the raids was particularly unfortunate, since the company was about to send a circular to Izodia's shareholders advising them of the appointment of a liquidator who would return Izodia's cash to shareholders, perhaps at a rate of 52 pence per share.

The relationship of the liquidation proposal to Orb's still outstanding bid for Izodia (at 59 pence per share) is unclear.