Lonrho split grows with dirty tricks claim: Bock says he is amazed at efforts to question his financial standing, and denies having break-up plan

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The Independent Online
THE SPLIT between Tiny Rowland and Dieter Bock, joint chief executives at Lonrho, deepened yesterday amid allegations of dirty tricks and plans to break up the international trading group.

Mr Rowland believes Mr Bock wants to transform Lonrho through wholesale disposals and to invest the cash mountain in property. Mr Bock dismissed the claims as nonsense, saying he wanted the conglomerate's core interests to remain in mining, agriculture and hotels.

Mr Rowland has also been investigating his partner's financial background, and it emerged yesterday that Mr Bock has mortgaged his 18.8 per cent stake in Lonrho as security against a pounds 100m loan. Mr Bock paid pounds 135m for the shares.

The Bock camp feels an attempt is being made to embarrass the German financier and damage his efforts to 'normalise' Lonrho. Since joining the company last year, Mr Bock has been in a running battle with Mr Rowland over the appointment of non-executive directors, the introduction of new accounting practices and changes to the articles of association. The last of these reforms could oblige older board directors associated with Mr Rowland to retire, reducing his power base.

Talking on The Money Programme on BBC2 last night, Mr Rowland said: 'He (Mr Bock) sees in Lonrho a great opportunity to sell off assets and build up Lonrho into a cash mountain, and then, I think, he would probably want to start investing in properties.'

Mr Bock said he had no intention to break up Lonrho. 'On the contrary, I want to strengthen the company more. We will have some more disposals in order to streamline the business, and we will use this to invest in our core businesses.'

This confusion over strategy is compounded by new suggestions of a personal distrust between the two men. Lonrho has invoked disclosure provisions of the Companies Act to force information from Mr Bock's private business interests on how he raised the money to buy his stake in the company.

Letters between Lonrho and Laerstate, a Dutch company through which Mr Bock owns his stake, reveal the entire shareholding is held as collateral by the London branch of BfG Bank, a German firm owned by Credit Lyonnais.

The German businessman is known to be amazed at attempts to call his financial standing into question, and he will raise the issue at the next Lonrho board meeting. Mr Bock's associates claim Mr Rowland had been well aware of the situation concerning the shares.

Mr Bock said: 'I still owe the bank less than pounds 100m. Initially the bank did not want Lonrho shares as security. Maybe they did not trust enough Lonrho's shares at the time. Later on, about six months later, they felt more comfortable with Lonrho's shares. So I could replace the security I gave at the beginning and gave them the normal shares I bought as security.'

He rejected suggestions that the loan made him beholden to the bank. 'If I fulfil my obligations, which consist of paying interest at a later stage and paying back the loan, that is all I have to do. There are not any more links and no obligations at all.'

However, Mr Rowland, who owns 6.4 per cent of Lonrho, said: 'I am still perhaps the largest shareholder in terms of shares unpledged. That makes a huge difference. I mean, I am totally independent. Other people may have pledged their shares to the banks and need to satisfy the banks that their investment is sound and that the bank has adequate security.'

He said he had no objections at all to some of the changes introduced by Mr Bock. But he added: 'If there are audit committees, or if there are cash committees and so forth, they have nothing to do with me.'

Laerstate used to be a subsidiary of Mr Bock's principal investment company in Holland, Gouden Akker, which is run from the home of Johannes Trapman. Both men own 50 per cent of Gouden Akker.

Later this month Lonrho is expected to report pre-tax profits of about pounds 80m for the year, a lower figure than expected.

(Photograph omitted)

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