Inclusion Criteria:

• Patients with type 2 diabetes as defined by the World Health Organization (WHO) criteria
• Male or female patient who is 30 to 75 years of age at screening
• Patients with coexisting vascular disease (previous myocardial infarction, cerebrovascular accident or peripheral vascular disease) or hypertension (BP > 150/90)
• Patients who have initiated statin and fibrate therapy at least 6 months prior to screening, and have been receiving a stable dose for at least 3 months prior to screening. [Note: patients not receiving statin or fibrate therapy will be allowed to enter the study providing that this method of treatment is not required as active treatment for their medical condition at the time of screening; if any of these patients develop the need for statin or fibrate therapy during the course of the study, therapy will be started without the need to withdraw the patient from the study.]
• Female patients must be post-menopausal, surgically sterile, or using effective contraceptive measures. Women of childbearing age must use effective contraceptive measures for at least 1 month prior to visit 1 (screening), and should continue to use the same contraceptive method during the study and for 30 days after discontinuing study treatment.
• Patients who give their signed informed consent to participate.
• Patients with an HbA1c value < 10% at screening visit.
• Patients with evidence of at least one atheromatous plaque causing narrowing of internal carotid artery between 10 and 95%. Diagnosis to be performed prior to randomisation by colour duplex examination.

Exclusion Criteria:

• Patients who have taken >2 concomitant oral anti-hypertensive agents (i.e. oral combination) within the 3 months prior to the screening visit (visit 1)
• Previous exposure to a thiazolidinedione (TZD) or other PPAR-gamma agonist (e.g. rosiglitazone, troglitazone, pioglitazone, GI262570) or participation in a double-blind clinical study involving a TZD or PPAR-gamma agonist where the randomisation code has not been broken prior to visit 1 (screening) of this study.
• Patients who have required the chronic use of insulin for glycaemic control at any time in the past (with the exception of those who have needed short-term insulin use to maintain glycaemic control during a hospitalisation, during pregnancy or during a medical procedure or intervention) or patients with a history of ketoacidosis.
• Use of any investigational drug within 30 days of 5 half-lives preceding the first dose of medication at the start of the study.
• Systolic blood pressure >170 mmHg or diastolic blood pressure > 100mHg.
• Patients with unstable or severe angina or congestive heart failure (New York Heart Association [NYHA] class I-IV)
• History of gangrene or transient ischaemic attack (TIA)
• History of stroke within the previous year.
• Presence of clinically significant hepatic disease (i.e. patients with ALT, total bilirubin, or alkaline phosphatase > 2.5 times the upper limit of the normal laboratory range)
• Any pre-existing condition or clinically significant abnormality identified in the screening (visit 1) physical examination, electrocardiogram, ultrasound examination or laboratory tests which, in the judgement of the investigator, would preclude safe completion of the study.
• Clinically significant anaemia defined by haemoglobin concentration <11g/dL for males, or <10 g/dL for females
• Patients with creatinine > 150 umol/L.
• Women who are lactating, pregnant, or planning to become pregnant during the course of the study.
• Alcohol or drug abuse within the last 6 months.
• Previous surgery to carotid arteries.
• Pacemakers, cerebral aneurysm clips, claustrophobia or any implantable devices incompatible with magnetic resonance imaging.
• Patients exhibiting total occlusion of the internal carotid artery (when assessed by colour duplex examination performed).
• Patients unable to lie supine for 60 minutes.