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The co-founder of Carphone Warehouse resigned abruptly from the board yesterday after it emerged that he had broken City rules by secretly mortgaging his £157 million stake in the mobile phones retailer.

David Ross failed to tell the company — run by his lifelong friend Charles Dunstone — that he had pledged the core of his fortune as collateral to support struggling commercial property investments.

The 43-year-old tycoon, who holds a 20 per cent stake in Carphone Warehouse, could face a criminal investigation by the Financial Services Authority (FSA) because he broke City rules on disclosure.

Mr Ross was also forced to disclose that he had covertly mortgaged shareholdings in three other companies.

As the scandal mounted yesterday, Boris Johnson, the Mayor of London, came under pressure to dismiss Mr Ross from a separate job as his Olympics financial adviser.

Mr Dunstone said, in an interview with Sky News: “It is certainly an embarrassment to the company and to him. My relationship with David is private to us. He had never given me any indication that his shares were pledged until I heard on Friday.”

By the end of yesterday it had emerged that Mr Ross had pledged £200 million across four companies. Mr Ross owns a property company, Kandahar, which is understood to be in breach of the conditions attached to its overdraft from the part-nationalised HBOS.

JP Morgan, his principal private banker, is also understood to be exerting pressure over the state of his portfolio, which has been hit hard by the economic downturn.

It is a startling reversal of Mr Ross’s fortunes. Worth almost £1 billion a year ago, Mr Ross used his Carphone millions as a springboard into high society, buying country estates in Leicestershire and fundraising for the Conservatives, while he stepped out with a string of glamorous girlfriends.

Mr Ross kept a low profile yesterday, leaving explanations to Mr Dunstone, the Carphone Warehouse chief executive, who said that the two men would continue to be friends. “It’s a great shame,” Mr Dunstone said. “When you live your life in public companies it is quite a harsh environment. When this sort of thing happens that’s the result. I’m very, very sad and I regret it enormously.”

Carphone Warehouse said that it first learnt of the unauthorised share dealings at the end of last week.

Mr Ross had, correctly, informed the company that he had mortgaged 41 million shares as collateral for investments in 2002 and 2003. But he failed to tell the company that he had pledged the rest of the stock in deals dating back to 2006.

He also failed to make similar disclosures to National Express, the self-storage company Big Yellow, and Cosalt, a safety business once run by his father and grandfather. National Express, the bus and coach company he chairs, refused yesterday to confirm whether he would continue to head its board as a result.

The FSA requires that company directors notify the company of dealings in its shares. Dealing is defined broadly and includes using shares as collateral for loans. Penalties range from a private warning to a fine.

Mr Ross is the biggest single shareholder in Big Yellow Group, with 11 million shares. Cosalt said that Mr Ross had pledged 3,989,296 of its shares against personal borrowings on various dates on or after March 23, 2006. On that date, its share price was £2.74, but it has since almost halved.

Philip Beresford, compiler of The Sunday Times Rich List, said: “This is symptomatic of the carnage affecting Britain’s entrepreneurial class at the moment. David Ross won’t be the last. As fast as people are losing their jobs, Britain’s millionaires are losing their millions. This could be the worst time to be a millionaire since the collapse of the South Sea Bubble.”

Mr Johnson’s political opponents seized on the crisis engulfing Mr Ross. “Given the serious questions Mr Ross’s resignation raises about trust and probity, it is hard to see how he can remain in post,” John Biggs, Labour’s deputy leader on the London Assembly, said.

“Londoners need to have total confidence that public money — their money — is properly spent and accounted for and the longer Boris stands by his man the more this confidence diminishes,” he added.

The Mayor spoke briefly on the telephone to Mr Ross, who is also his representative on the London Organising Committee of the Olympic Games, but hopes to get further information from the businessman today. Sources close to Mr Johnson maintained that the Mayor was keeping a close watch on events but did not want to prejudge the issue before any decision by the Financial Services Authority.

The London Mayor faces huge embarrassment whatever his decision. He has already lost three advisers this year, including James McGrath, his chief political adviser, Ray Lewis and Tim Parker both deputy mayors.

The row over Mr Ross raised doubts last night about his ability to pick the right people. But Mr Johnson’s failure to issue any comments expressing his confidence in Mr Ross, who has donated more than £150,000 to the Tory party, was interpreted widely as a signal that he would go soon.

Dee Doocey, Liberal Democrat London Assembly and Olympics spokesperson, said: “A person who has problems with his own financial dealings — and who has had to resign from the company he co-owned as a result — is surely not the right person to be overseeing the costs of the Olympics on behalf of Londoners. Boris Johnson should seek a replacement; someone in who we can all have confidence.”

David Cameron, the Tory leader, also faces embarrassment over his links with Mr Ross, who is also a close friend of Lord Marland, the Tory party treasurer. Mr Ross, who was photographed with Mr Cameron and his wife, Samantha, at the party’s summer ball this year, has donated about £150,000 to the Conservatives since 2001. Nearly £120,000 has been given in cash, the largest single donation being £41,000 last December, with a further £30,500 in May this year.

The Electoral Commission accounts also show that Mr Ross contributed £32,600 in kind, including help with travel agents and a £10,000 prize at a fundraising auction.

Mr Ross is the latest high-profile business figure to feel the effects of the economic downturn. The property magnate Robert Tchenguiz — who had stakes in the pub group Mitchells & Butlers and J Sainsbury — lost

£1 billion in a day when his biggest lender, the Icelandic bank Kaupthing, collapsed in October. Mr Tchenguiz incurred huge losses after he was forced to liquidate his stakes in M&B, Sainsbury and other companies.

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