GOLDEN Vale managing director Mr Jim O'Mahony, has been removed from his job by the group's board of directors. The move follows the recent controversy over the payment by Golden Vale of £3.1 million in milk super levy arrears to the Department of Agriculture.

In a four line statement last night the company said the board had appointed finance director, Mr Liam Irvine, as acting managing director. "The board will now begin the search for a new managing director," the statement added.

The board is understood to have asked Mr O'Mahony to offer his resignation at yesterday's meeting but he refused. He was subsequently removed, with immediate effect. News of Mr O'Mahony's departure came too late to affect its' share price, which closed unchanged at 67p. Mr O'Mahony was not available for comment last night.

The announcement comes just two weeks after Mr O'Mahony fought off a challenge to his position at a meeting of the Golden Vale co-op, following the disclosure that the group had to pay the £3.1 million in arrears. A "no confidence" motion was proposed by the former Golden Vale chairman, Mr Denis Walli. However a supporter of Mr O'Mahony subsequently proposed a confidence which was passed.

However the plc board decidedly yesterday to remove Mr O'Mahony. It was not clear last night whether the decision was taken unanimously or by a majority of its members and a company spokesman would not enlarge on the statement.

The decision is seen as a move by the company to win back the confidence of its big Irish institutional investors, some of which have heavily sold shares.

However, this week financier Mr Dermot Desmond bought a 5.82 per cent stake in Golden Vale for over £6 million, appearing to indicate "his belief the share is undervalued at current levels.

Market analysts have been revising downwards their profit forecasts for the group. The latest super levy development, together with concerns in relation to the performance of the group's core business, is expected to substantially lower profit predictions, with most brokers likely to revise down their 1996 profit forecast from around "£1 million to £12 million or less.

Analysts have expressed concern about the performance of the group's operations in Holland and Northern Ireland and have also questioned the severity of the squeeze on its domestic margins.

The board is known to have become increasingly concerned about the group's ability to recoup the £3.1 million super levy bill from its 1,000 milk suppliers. With filling milk prices and the beef crisis, it is understood they believed the prospect of collecting the money was fairly slim.

The way the news of the super levy fine was transmitted to the market has also been sharply criticised. Dublin analysts expressed anger at the way in which news of the payment became public, through the Minister for Agriculture, rather than from the company. A statement was not issued to the Stock Exchange until the following day and many analysts felt Golden Vale's credibility had been "seriously damaged".

This was the second time the company annoyed the market in two years. Golden Vale shocked the market with a profits warning that knocked 40p off the company's share price in 1994. Subsequently it hired IBI Corporate Finance as its advisers and IBI has been working closely with the company to restore market confidence.