De Lorean battle may return to UK

The marathon $500m (pounds 313m) legal battle between the Government and accountants Arthur Andersen over the collapse of the De Lorean car plant in west Belfast could end up back in a British court. It is almost 10 years after the case began in the US and 15 years after the ill-fated car company went to the wall.

Arthur Andersen, which is being sued by the UK authorities over its role as auditor of De Lorean's accounts, yesterday applied to have the case returned to the High Court in London. It follows last week's decision by a judge in the New York federal court to throw out the action, which alleged Arthur Andersen was guilty of conspiracy, fraud and negligence.

The project collapsed in 1982, after the UK had pumped pounds 70m of taxpayers' money into John De Lorean's venture to build a futuristic, stainless- steel bodied, gull-winged sports car. Late last year Judge MB Mukasey ordered that confidential Cabinet documents discussing the affair could be made public.

They detailed how the first Thatcher government had continued to pour money into the car plant, fearing that if it scrapped the project it would stir up support for the IRA. Mr De Lorean's factory was originally approved in 1978 by the Callaghan administration, also on largely political grounds. It was established in a mainly Catholic area with 30-40 per cent unemployment.

The political machinations were cited by the judge last week when he threw out the case. He noted a memorandum by one Northern Ireland Secretary who said it would be "disastrous both politically and commercially to pull the plug on the company at this stage".

The judge ruled the UK could take the case to a lower state court, but if it did so it could not claim its legal costs, estimated at up to pounds 15m. There were originally actions on both sides of the Atlantic, but by 1988 the Government had succeeded in putting the British proceedings on hold pending the outcome in the US.

A spokesman for Arthur Andersen said the accountants wanted the case returned to the UK to avoid excessive delays which would be created by starting up a "totally new set of proceedings in a different US court". He said: "Nearly 10 years later we are back where we started because the New York judge has upheld our view and thrown out the Government's case."