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In a statement, IMI said that it has retained external counsel and forensic accountants from Ernst & Young to conduct a thorough independent investigation which will result in appropriate action being taken. It suspended a number of employees in its sales team as well as senior managers in its Severe Service business.

IMI said it has notified the US Department of Justice and UK Serious Organised Crime Agency and will co-operate fully with any enquiry from those authorities.

The early indications are that these irregular payments involve a number of commission agents, who help introduce new clients to the Group in Asia and the Middle East. In total, commission agents represent about 20% of Severe Service business or circa £60-70m of sales. Typically total commission payments across IMI's Severe Service business in recent years have been around £3m to £4m each year.

Severe Service products are control valves and associated equipment for power generation plants, oil & gas producers and other process industries.

At this early stage the group said it has yet to determine the number or value of any improper payment, although estimates put the illegal kickbacks at around £20 million.

IMI plc, formerly Imperial Metal Industries, is a UK-based engineering company with its headquarters in Birmingham. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. The Group's principal activities are designing, manufacturing and supplying fluid controls and retail dispense product.

IMI traces its origins to 1862, when Scottish entrepreneur George Kynoch opened a percussion cap factory in Witton, Birmingham. The business soon diversified, manufacturing goods ranging from patent lamps, to soap, to bicycle components, but by the early 20th century it has developed particular expertise in metallurgy. After World War I it merged with a Scottish company and was renamed Nobel Industries. The new company in turn was one of the four businesses which merged in 1927 to create Imperial Chemical Industries. The Witton site became the head office of ICI Metals. In the 1950s the company's researchers perfected the process for producing titanium on a commercial basis.

IMI is present in Western Europe, the USA, in Latin America and Pacific Asia, with the majority of its sales being made in Europe. In 2005 the Group reported a £1.5 billion turnover with pre-tax profits of £158 million. Group Finance Director is Douglas Hurt, who joined IMI last year from GlaxoSmithKline plc.

Shares in the company fell by more than 46p (8 per cent) to 521.00 pence at lunchtime on Thursday in the wake of the announcement. IMI said it is doing everything possible to minimise disruption to the business and intends to issue its interim accounts on 3 September 2007 as planned.