The co-founder of iSoft, the troubled IT company at the heart of the £6.2bn project to upgrade NHS computer systems, has been 'removed'.

The company, based in Banbury, said Steve Graham, former commercial director, had been "removed as a director" and had "ceased to be an employee of iSoft."

The move follows his suspension, on full pay of £385,000, in August, "following an initial investigation into possible accounting irregularities in the financial years ended 30 April 2004 and 2005".

The company said: "It is not our intention to pay any compensation."

Mr Graham still owns 3.1m shares, or 1.34 per cent of the company. In June 2005 he sold shares worth £8.5m at 425p, the previous summer he sold shares worth £12.7m at the same price, and in March 2003 he got £4.3m.

Since then, the company's share price has collapsed and the Financial Services Authority is investigating whether the company misled the stock market about its finances. Mr Graham was part of the team that bought the business from KPMG in 1998 and floated it two years later.

At the end of 2003, iSoft took over the health software arm of Witney-based Torex, and last year it moved its HQ to Banbury.