Bosses of Farepak hit back over 'damage to reputations'

Protests of executives spark new anger from victims of the savings scandal
  • @mrjamesashton

Farepak bosses hit back yesterday at the damage done to their reputations by the scandal of the Christmas hamper firm's collapse that was this week laid at the door of HBOS by a High Court judge.

Sir Clive Thompson who chaired Farepak's parent company, said his fellow directors had suffered from a loss of earnings because they had been excluded from landing top jobs for the last six years while the investigation rumbled on.

Bosses are expected to sue for up to £20m after a trial to disqualify them as directors set in train by Vince Cable, the business secretary, collapsed following a review of evidence. The costs they incurred from defending themselves come to £10m and loss of earnings could reach the same amount.

Some 116,000 families lost savings of £37m when Farepak fell into administration in 2006. Sir Clive, better known as "Mr Twenty Per Cent" for years of stellar returns at the helm of ratcatching firm Rentokil, bore the brunt of attacks from savers and was dubbed a "modern-day Scrooge" in Parliament. Mr Justice Peter Smith blamed HBOS for failing to give Farepak financial assistance as its management attempted to rescue it.

"I am in the twilight of my career," Sir Clive, 69, said yesterday, adding that directors such as William Rollason and Neil Gillis, who ran outdoor retailer Blacks Leisure, had the "golden years" of their careers hugely tarnished by the incident.

"I know when a guy is a top-rated executive and both of those are. If they had been given a totally clean bill of health they would have gone onto substantially more important jobs than they did undertake. The difference between the two is clearly what they may well be seeking in terms of compensation.

"We all feel extremely sad about the whole event, but at the end of the day, when you find yourself a director of a company involved in this business the moral obligation upon you is to do your utmost to resolve it, which we all did.

"The fact that the decision as to whether the company should continue is not within your control and moreover those who control it – the bank – then turn around and blame you for their decision to my mind is incredible, disgraceful and outrageous, and that is what happened."

However, Louise McDaid, the co-founder of the Farepak Victims Committee, reacted with incredulity at Sir Clive's assertions.

"I am not prepared to accept that he has some sort of right to be in the same boat as us because he hasn't. How can the directors expect sympathy or vindication? This court case was a sham."

Former members can expect to receive back 15p in the pound, or £70 from an average saving of £400.

HBOS, now part of Lloyds Banking Group, defended its actions, saying it made "entirely reasonable decisions based on the information available to it at the time".

In response to Mr Justice Peter Smith's suggestion that is should "seriously consider" adding to the £2m it put into the Farepak distress fund, a spokesman added: "The bank will of course consider the judge's comments but does not agree it acted inappropriately, as the judge has suggested."

Sir Clive pointed out that all directors had already contributed to the distress fund and he and others would again if they received more than their costs from suing the Department of Business.

He is also looking at suing several MPs, including former cabinet minister Jack Straw for defamation of character.