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Lucas under fire in US over Gulf war equipment

LUCAS Industries faces criminal charges in the United States over the sale of allegedly defective missile electronics that failed during the Gulf War. A separate investigation into the aerospace and automotive components group centres on the supply of possibly sub-standard radios to the US army.

The company said it had been co- operating with the US authorities for 18 months in an investigation into components supplied by Lucas AUL, a New York division bought in two parts in 1986 and 1989. Lucas said appropriate provisions had been made, thought to be about pounds 12m to pounds 14m. But neither inquiry is finished and the company admitted that the final cost could be more - or less - than it had set aside.

A report in the Wall Street Journal claimed that US prosecutors were seeking at least dollars 20m ( pounds 13m). Far more importantly, it could hinder the company's chances of future Pentagon business at a time when Lucas is emerging from recession and about to embark on a new era under its chief executive-elect, George Simpson.

An out-of-court settlement seems likely, and a Lucas spokesman hoped the incident would not hit future business because the company had responded quickly to the allegations. Problems at AUL occurred before it was bought, and testing procedures improved, he said. Lucas embarked on a damage-limitation exercise yesterday to calm analysts and found that its share ended the day 3p up at 211p.

The more serious inquiry concerns Lucas AUL's quality control in the making of launch equipment for Maverick aircraft missles. US authorities began investigating the Maverick after a missile mistakenly killed US marines in Gulf War 'friendly fire'. Lucas said the Pentagon had confirmed that its equipment was in no way responsible.