By Brett Foley. Farooq Khan says he wants to rebuild shareholder value at Biota. A former executive of a company targeted by the corporate raider begs to differ. Brett Foley reports. As the board of Melbourne-based drug developer Biota battles to avoid becoming the next target of corporate raider Farooq Khan, the former financial officer of one of Khan's previous targets has called for closer scrutiny of the tactics he says Khan uses to impose his will on struggling companies. Mark Hubbard was the financial officer and company secretary of former telecommunications high-flyer Davnet, which became DVT Holdings and eventually merged with former Elders Resources boss Geoff Lord's UXC Ltd. Hubbard says there are parallels between Khan's approach to DVT and Biota, and believes the corporate regulator needs to investigate his activities. Khan first made advances towards the DVT board after using the failed online retailer Bigshop.com.au as a vehicle to buy a substantial shareholding in the troubled company in early 2002. Khan had previously taken control of similarly struggling companies Central Exchange, Queste Communications and Fast Scout in a bid to accumulate enough wealth to make a substantial acquisition. However, shareholders in those companies have suffered as the share prices fell to a couple of cents and cash reserves gradually declined. As major shareholder, Khan called an extraordinary general meeting to put several resolutions to grab control of the DVT board. Biota shareholders have been asked to vote on a similar series of resolutions at an EGM this Friday. DVT was rescued by white knight Geoff Lord's Belgravia Group. Khan used the cash from that purchase to acquire his 9.5 per cent stake in Biota and is now conducting a similar campaign against it. For his part, Khan says his aggregation campaign is complete and his Biota shareholding is the first step towards rebuilding shareholder value. He says Bigshop is in discussions with the Australian Stock Exchange to determine what shape his new entity will take. Khan's initial business plan was to accumulate $50million in cash to make a big-hit acquisition. He now concedes it is more likely to be around $15million, but he is no closer to identifying what the acquisition is. Khan says Bigshop needs to complete its discussions with the ASX before it can decide where it will invest its funds to seek capital growth and income potential. Hubbard says Khan tried to intimidate the DVT board by threatening personal legal action against directors, and he has since levelled similar claims against the Biota board. "He claims to be someone who is a shareholders' champion and someone that can restore value into companies and someone who had great commercial experience, but history shows he is anything but that," he says. "He actually destroys shareholder value and the annoying thing is that he doesn't offer an alternative plan. You won't see anywhere what he plans to do with the companies. "The companies he controls do not have any operations, revenues or any customers." Hubbard has called for the Australian Securities and Investments Commission to investigate Khan's statements to Biota shareholders because he believes many statements made to DVT shareholders were inaccurate. Biota's cash reserves are about $24.5million after having been eroded in recent years by costly research and development efforts into new drug treatments. Last year Khan made a takeover bid for Biota, which he has scaled down to seeking one board seat. In abandoning his bid to control Biota, Khan said it was futile to proceed until he knew what the cash position of the business was. Hubbard believes this betrayed Khan's real interest in Biota. "He is only interested in the cash as a means to further his own interests, not the shareholder interests. Once he gets control of companies, he ceases their operations and sells their assets," he says. With both Davnet and Biota, Khan proposed to sell 20 per cent of the companies through a private placement at a discount to its current market rate. However both companies refused as they had substantial cash reserves and stood to gain no benefit from further issuing of capital and diluting shareholder value. "They gave us no presentation about their plans for the company," Hubbard says. "Their proposal was to aggregate all the cash until we are at a point when we can go out and buy something bigger and that's not a viable plan, especially when they have no idea what that acquisition is." Khan says DVT was a completely different situation as, unlike DVT, he believes Biota has a viable future but has been mismanaged. "Everything we have done is lawful and to suggest that it needs investigating is a nonsense. Some people at DVT were hostile, they didn't like it [the takeover bid] and they are still crying about it," he says.