DTI may seek action in Lloyds TSB case
(The Times, 26 June 1999)

             BY JASON NISSÉ

 THE Department of Trade & Industry is  considering taking legal action against Lloyds TSB and Grant Thornton, the accountants,  over the collapse, four years ago, of Heritage,  a North London-based housewares business.

 Kim Howells, the Trade Minister, is expected to decide shortly whether an action under  Section 47 of the Financial Services Act should be launched against the bank and the  accountant for procuring a £250,000 investment in Heritage by the group's chief  executive, Jeff Lampert, a matter of days before the company was put into receivership.

 Section 47 deals with giving misleading statements about investments and has rarely  been used since it arrived on the statute books 13 years ago.

 The legal services director of the DTI originally rejected taking any action over the  case, but Dr Howells sent the case back to him last month after extra evidence was presented  in a Private Member's Bill presented by Rudi Vis, the MP for Finchley and Golders Green.

 Grant Thornton was appointed receivers of Heritage in August 1995 after Lloyds, the  company's main bankers, pulled the plug on the company. Lloyds's actions were prompted  by an adversely critical report into Heritage written by Grant Thornton, which, in addition  to being the reporting accountants in the case, had also been tax advisers to Heritage.

In between the report being sent to Lloyds and Heritage going into receivership, Mr Lampert  invested £250,000 in the business. Losing this money has put Mr Lampert into financial  difficulties and he now is threatened with the loss of his North London home. Mr Lampert  claims that he was never shown the Grant Thornton report.

The Section 47 case rests on whether Lloyds and Grant Thornton kept this report from him  on purpose so that he would invest the £250,000 and reduce Lloyds' exposure.

 Both Lloyds and Grant Thornton deny that there was any attempt to withhold the report  from Mr Lampert.