British Gas smear was fed to Labour

An internal British Gas memorandum containing inaccurate information about a competitor was handed to the Labour Party, which quoted from the document under the cloak of parliamentary privilege.

This new revelation follows the disclosure in the Independent yesterday of the tactics being employed by Angus Maitland, a public relations adviser to British Gas, in handing out anonymous documents critical of Clare Spottiswoode, director-general of the watchdog Ofgas.

United Gas, the new competitor to British Gas, called last night for "Ofgas or alternatively the Department of Trade and Industry, to launch an official investigation to establish both the source of, and the authority behind, this anonymous material. We also reserve all our rights to legal redress and we will be considering our position further."

The company said it had been concerned for some time about attempts to discredit it. Roger Turner, managing director of United, said: "We deplore this kind of cowardly behaviour. If other companies, or other persons retained by those companies, wish to raise allegations about United Gas, they should do so openly rather than in this covert fashion."

United was particularly concerned about references in the Commons in March by Jack Cunningham, then Labour's trade and industry spokesman, that TransCo, the distribution arm of British Gas, was "having problems with United, which is not paying its bills".

Mr Cunningham was quoting directly from a memorandum prepared for a meeting of British Gas's public relations team, headed by Peter Sanguinetti, the company's public affairs director. The memo set out a timetable of "events/announcements" affecting the PR machine. Against the entry for early January 1995 was written: "TransCo will have a problem with United, who are not paying their bills."

United was stung by the remarks, which it said were completely unjustified. It told Dr Cunningham that the problem was of TransCo's own making, because the British Gas subsidiary had been performing badly, and its customers, including United, had decided to withhold cash until the problems had been resolved.

British Gas's rival compared the charge to the "dirty tricks" campaign waged by British Airways which made unfounded allegations of non-payment of bills against its upstart challenger, Virgin Atlantic.

In his reply to United's complaint, Dr Cunningham suggested United take it up directly with British Gas.

Margaret McKinlay, head of compliance at British Gas, wrote to United explaining that the company could not be responsible for Dr Cunningham's words. She added the company was holding a leak inquiry . Dr Cunningham said last night that he did not get the information on which he based his Commons statement "directly from British Gas". Labour joined the controversy yesterday and called for an inquiry by the Office of Fair Trading into the attacks on Ms Spottiswoode and United's threat of legal action. Nigel Griffiths, the party's trade and industry spokesman, said he would be writing to the OFT and "ministers should also investigate". For the Liberal Democrats, Nick Harvey said: "Mr Maitland has done himself no favours. "If there are criticisms to be made of utility regulators, let us have them done properly and openly." A British Gas spokeswoman last night said the company was not to blame for Dr Cunnigham's comments. "It was leaked. United took it up with us and we have given them a full account and apologised." Responding to the article in yesterday's Independent about Mr Maitland's activities, the spokeswoman said: "There is no smear campaign emanating from the offices of British Gas, and to suggest such a thing is nonsense."