High Court judge attacks City `dishonesty'

Regan accused of `iniquitous conduct' as net widens to 17 more companies
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The scandal surrounding Andrew Regan's failed pounds 1.2bn break-up bid for the Co-op widened yesterday to include 17 leading City financial institutions and blue-chip companies.

They were supplied with confidential information stolen from the Co-op after what a High Court judge described as "iniquitous conduct" on the part of Mr Regan and his advisers.

Details of the scale on which confidential information was circulated in the City emerged as the CWS won an extension to the High Court injunction banning the use of the illicitly obtained information. This had been provided to Mr Regan by Allan Green, the CWS controller of retailing who was suspended earlier this month.

Ruling in favour of the CWS, Mr Justice Lightman said: "I regard this as a quite exceptional case [and a] gross, wilful and disgraceful breach of confidence." He added: "It was inevitable that this bid would be stopped as soon as it was apparent that it was based on iniquitous conduct on the part of those making it." He described the methods of obtaining the information as "clearly dishonest".

The CWS was also awarded the most punitive form of costs against the Regan camp. These are expected to run to millions of pounds and there will be a further claim for damages.

The CWS's QC, Christopher Clarke, read out in court a list of the 17 City firms which had received confidential information, mostly distributed by Hambros Bank, Mr Regan's financial adviser.

The list included Nomura International, which withdrew its backing for Mr Regan on Thursday, Price Waterhouse, Goldman Sachs, UBS and JP Morgan. Also cited was Sainsbury, the supermarket group which recently called off talks with Mr Regan to buy some of the Co-op supermarkets.

The information provided was so detailed that it fell into 32 categories including trading forecasts, the board's budget for 1997 and the entire CWS membership on diskette apart from those in Northern Ireland.

In his sworn affidavit, Mr Green also admitted discussing with Mr Regan the possibility re-focusing the CWS as an operator of smaller convenience store outlets and about possible buyers of the larger stores including Tesco and Allders.

Appealing to the judge Mr Clarke said: "It is just that they pay now the cost ... for behaviour we consider outrageous."

At a press conference staged later at the headquarters of SBC Warburg, the CWS's advisers, Graham Melmoth, the society's chief executive spoke of a "cascade" of stolen information saying it was an issue that "strikes to the heart of the City".

He said: "The City prides itself on its system of self-regulation and demands high standards of probity and integrity. Those standards must have been called into question by the activities of certain parties."

Brian Keelan, the CWS' key adviser at SBC Warburg said: "The last week has not been a good one for the City. It is an ugly situation."

He added that on Monday Warburg's had delivered to Hambros a file of information thought to contain details of the controversial pounds 2.4m payment to an offshore company by Regan two years ago.

Though Mr Keelan declined to reveal the contents of the file he said he had expected Hambros to withdraw its backing for Mr Regan's bid at that point. But the bank decided to press ahead.

The CWS has added Hambros and Travers Smith Braithwaite, Mr Regan's legal advisers, to the injunction banning the use of the confidential information. It is also pursuing private civil proceedings against both. However, Travers Smith issued a short statement yesterday saying: "We will resist most strongly any claim which may be made against us." The firm believes that the theft of information is not included under the theft act.

The CWS is now pursuing the 17 institutions which received confidential Co-op information for assurances that it will not be used. It said replies had been received from some while others were taking advice from their lawyers. It said further action was possible. "We're not going to just sit back if another bid were to emerge that is based on that information."

Mr Melmoth said he did not feel triumphant as a result of the victory. He said the Regan "bid" would have a "cathartic" effect on the movement and encourage it to improve its performance and move its disparate societies closer together.

Mr Regan could not be contacted yesterday. It has emerged that the CWS has written to the Stock Exchange asking it to investigate whether any shareholders in Galileo traded shares in Lanica Trust with the benefit of inside information. In the letter it points out that confidential Co- op documents were distributed to Galileo's shareholders, including Jupiter Tyndall. A number of these were also shareholders in Lanica, whose shares were rising strongly on speculation of a big deal. Lanica's shares have been suspended since February. An announcement from the Exchange is expected in a few days.

Additional reporting by Chris Hughes