CITY DIARY

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The Independent Online
The embittered engineer who shopped Lucas Industries to the Pentagon over the falsification of test records has been well-rewarded for his treachery. The lowly ex-employee will collect $19.1m from his agreement with US defence chiefs.

Keen to encourage a steady stream of corporate supergrasses, the Pentagon has been generous to a fault. The payoff amounts to 22 per cent of the $88m that Lucas agreed to hand over last week to settle the dispute. Even allowing for inflation this is a considerable advance on 30 pieces of silver.

The Pentagon was unamused to learn that gearboxes for its Hornet fighters had slipped through rigorous testing procedures and pursued the matter with a vengeance. The malcontent, at the Western Geared Systems subsidary, was promptly signed up and Lucas was banned from bidding for future defence contracts. It has already paid $18.5m to end a criminal action. The settlement will stick in the craw of George Simpson, the ex-Rover man who inherited the sorry mess But he felt it unwise to leave the matter to an American jury.

A safe play given the trial of his namesake.

Will Arthur Andersen bid for Touche Ross? The possibility is now being openly debated on the abacus cocktail circuit with senior partners of the rival "Big Six'' accountancy firms licking their lips over the inevitable and lucrative fallout.

Andersen lost out in the last bout of mega mergers. It has since swallowed the second-tier practice of Binder Hamlyn, but this morsel was not sufficient to satisfy its hunger for new audit clients.

Touche, on the other hand, has seen its fee income growth suffer and is now well adrift of its peers. It is also isolated on the issue of limited liability for auditors, preferring the moral high ground of unlimited liability.

"We never see Touche's name on the list when we are tendering for new audits,' said one senior accountant. "Unless they happen to be the incumbent firm.'' This sounds reminiscent of the dying days of Arthur Young.

Anxious moments for David Gemmill, deputy chief executive of West Merchant Bank, whose forthcoming holiday in his native Zimbabwe had been looking anything but inviting. The swimming pool at his home, 29 Orange Grove Drive, Harare (a prestigious address) has been accidentally demolished thanks to an administrative cock up.

The trail of destruction began with an order for a swimming pool refurbishment from 49 Orange Grove. One wrong number later and the pool squad arrived at Mr Gemmill's home, an old colonial property built in 1906 by the pioneers. Out went the water (during the worst drought in living memory) and in went the hammers and chisels.

"I got a fax from a friend to say that my pool looked like an IRA bomb had hit it,'' said the banker."To be fair, it did look like it needed some attention.'' The contractor has agreed on a modest refurbishment in compensation - doubtless grateful that the property wasn't owned by Tiny Rowland. There really would have been hell to pay.

The pounds 15bn merger between Lloyds Bank and the TSB is being greeted with dismay by friends of Graham Wallace, the TSB mouthpiece who always likes to say yes. A Canadian who apparently pitched up in London with less than two pennies to rub together, his idea of corporate hospitality has been to invite guests to Eric Clapton concerts. Mr Wallace's style is said to owe much to his younger days, when he belonged to a San Fransisco rock band not dissimilar to the Grateful Dead. However there is concern that his refreshing approach may not be fully appreciated by that lugubrious bunch at Lloyds, where the chess culture left behind by former chairman Sir Jeremy Morse hangs heavy.

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