Littlewoods faces £1m Far East lawsuit

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Littlewoods, the privately-owned mail order, stores and football pools giant, is being sued for £1m by a former business partner in the Far East with links to the defence industry.

Virage Holdings, a Bermuda-based holding company, has issued a writ claiming £1m damages from Littlewoods after a joint venture turned sour. Virage alleges Littlewoods, through its Hong Kong subsidiary Striker, owes the money as part of a payment agreed last June.

As late as last November, according to the writ, Barry Dale, Littlewoods chief executive, faxed Virage to confirm that £900,000 would be paid on time. Littlewoods agreed to wire the money but none has been forthcoming.

The dispute stems from a partnership between Littlewoods and Lorad, a sister company of Virage, in 1991. In an attempt to cut out the middle man, Littlewoods tried to source its goods from Hong Kong, Taiwan and the other main Far East manufacturing centres, direct. Lorad, a local trading company was identified as a suitable partner. Under the plan, Lorad was to share its network of offices and contacts, in return for commission on all the supply contracts.

The marriage turned sour when members of the Moores family, Littlewoods' owners, became concerned about Lorad's connections with the international defence business. One deal - a proposal that Narinco, the Chinese government- controlled defence and electronics manufacturer, would sell washing machines to Littlewoods while at the same time, providing weapons to Lorad - set off alarm bells among the image-conscious Moores.

They immediately severed the partnership and agreed to buy out Lorad. Now, though, it seems, even that decision has been grounded.

Part of the problem is thought to be the continuing boardroom turmoil that has engulfed the normally staid Littlewoods in the past few months.

Last October, Prodip Guha, head of the group's international division and the man widely credited with turning round its store chain in recent years, was summarily dismissed. Mr Guha has claimed he was the victim of racial discrimination - a suggestion rejected by Littlewoods.

No sooner had he gone than three senior managers in the stores' buying department, in an unconnected move, were given their cards. They were dismissed after the company took the unprecedented step - for Littlewoods - of calling in a firm of corporate detectives, Network Security Management.

As part of their inquiries, Network uncovered suspected corruption and the three were fired. Network's investigation, which is still continuing, has resulted in almost rampant paranoia among staff in Liverpool amid allegations of phone-tapping and executives being secretly followed.

A spokesman for Littlewoods said he could not comment on the latest twist, the Virage writ. "This matter is sub-judice."