A NEWLY-appointed Burnley hospitals boss has resigned after it was discovered he had been convicted of fraud.

And today regional health chiefs launched an inquiry into how Brierfield businessman Arshid Khatana became a non-executive director of the £90 million-a-year Burnley Health Care Trust just months after serving a prison sentence for attempted deception.

His appointment was made by the Secretary of State for Health, Frank Dobson, in a major shake-up of the Trust board.

But news of his £5,000-a-year appointment immediately sparked public complaints to Trust Board chairman, Brian Foster.

They told him the 36-year-old father-of-three was jailed for four months last year after admitting two charges of attempting to obtain property by deception.

The chairman called Mr Khatana, of Hawks House, Massey Lane, to a meeting at Trust headquarters yesterday afternoon and pointed out his previous offence debarred him from serving as a director.

Mr Khatana immediately resigned from his position and the Trust issued a public statement saying the director had decided "it was not a suitable post" for him.

Mr Foster admitted: "I pointed out certain requirements to becoming a director of a Trust and that a previous offence debarred him from serving as a director. "He said he did not know of these requirements and resigned his position. It was a relatively short meeting."

Today a spokesman for the Regional Health Authority - which recommends applicants to the Health Secretary for approval - said Mr Khatana had signed a declaration which said he did not meet the criteria for disqualification. "It seems this was not the case. Any conviction would disqualify a would-be director and this should have been quite clear to him."

The spokesman said they could not check the criminal convictions of each applicant and had to depend on their statements and those of their referees.

But he added: "We have never had anything like this before and we will be looking into this sort of thing and thinking out the best way forward for the future."

Mr Khatana - described as a management consultant and businessman at the time of his appointment - was known to have owned several properties in the Burnley and Pendle area and once headed Orient Express Imports - an importer of Pakistan furniture. Company records list him as a dermatologist.

At his conviction, Burnley Crown Court heard Khatana had used false information and twice attempted to get a £52,000 mortgage from two different building societies.

He refused to comment when approached about his resignation today.

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