Dowty expects US suit over charges

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The Independent Online

Dowty Aerospace, the components company under investigation for allegedly overcharging the US Air Force, said it now expected the US Justice Department to file a lawsuit.

The company, owned by TI Group, could face a $60m (£37m) claim for damages following an investigation sparked by a former employee who tipped off federal authorities.

He alleged that the Dowty division Woodville Polymer inflated labour and production costs by almost 200 per cent over a 10-year period. Woodville supplied wing components for bomber and strike aircraft.

The possibility of action was well known, and TI said the 6p fall in the shares to 360p was an over-reaction.

However, the US authorities are coming down hard on firms thought to have breached rules, and analysts are worried about the damage to TI's reputation.

A lawsuit is expected to be filed this week alleging that the US Air Force was overcharged by $20m (£12.3m), but any award for damages is likely to be treble that under US law.

The TI spokesman said the company had taken legal advice in the US, but still had no firm indication of when any suit would be served against Dowty.

Under US law the former employee who told the authorities, Jeffrey Thistlethwaite, can share any damages won. TI said he had been made redundant from the company prior to TI's acquisition of Dowty in 1992.