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LGV director lied over McBride deal

A DIRECTOR of Legal & General Ventures, the investment arm of the insurance giant, has admitted in the High Court that he lied in a memorandum about the management buy-in of McBride, the household prod- ucts group that was formerly the Consumer Products Division (CPD) of BP Nutrition.

Adrian Johnson testified last week that he wrote a note to himself saying the investment syndicate backing the proposed MBI in 1993 had agreed to sever its ties with George Hosking, a member of the team. But questioned on the stand he admitted: "It is not strictly true." This prompted Mr Justice Harman to observe that "writing a note which you know is not strictly true is telling a lie on paper".

Mr Hosking is claiming pounds 3.8m from LGV after being forced out of the MBI team because, he says, he refused to go along with figures predicting McBride would have profits of pounds 48.8m to pounds 51m by 1995. His estimates called for the company to show pounds 42.7m by this year, which was closer to the actual profit of pounds 38.6m announced in October.

Mr Johnson denied that he instructed the MBI team to abandon Mr Hosking's approach and massage the projected profit upwards to attract investors.

However, he said in his witness statement that he was concerned that Mr Hosking's figures showed a fall in profits during the first year after the buy-in followed by a rise later, rather than the immediate increase forecast by the company's existing management. "The whole point of installing an MBI team is to enhance the performance of the company beyond that achieved or forecast by the existing management," he said.

Earlier in the case, Michael Handley, now chief executive of McBride, testified that Mr Johnson had "made it very clear" that the investors, particularly the banks, were nervous about Mr Hosking's analytical methods. "They were worried. It was a concept they could not get their mind round. It was intangible. It was lower profits."

Mr Handley also testified that the figures he presented to the syndicate instead of Mr Hosking's were prepared with the help of LGV and its accountants, KPMG.

The defence denies the charges, saying Mr Hosking was undermining the buy-in team by challenging its projections and that he was in breach of contract due to a botched presentation to investors and his absence from several site visits to CPD.