Green prepares to strike again as turmoil engulfs Marks & Spencer

Rose grilled by FSA; Fresh allegations of corporate espionage; Goldman banker identified

Expectations were mounting last night that Philip Green will make an improved offer for Marks & Spencer as early as the next seven days, taking advantage of the turmoil surrounding the retailer and its embattled chief executive Stuart Rose.

Expectations were mounting last night that Philip Green will make an improved offer for Marks & Spencer as early as the next seven days, taking advantage of the turmoil surrounding the retailer and its embattled chief executive Stuart Rose.

Mr Rose spent two hours yesterday morning at the offices of the Financial Services Authority, which last week launched a formal inquiry into trading in the company's shares.

Mr Rose has also become embroiled in an increasingly bitter dispute with Goldman Sachs, the investment bank that is advising Mr Green on his bid for M&S.

The dispute, which is understood to centre on claims made by Phil Raper, one of Goldman's most senior corporate brokers, was last night in the hands of Mr Rose's lawyers who are understood to be considering further action against the bank.

In a dramatic twist, Mr Rose has also discovered that his mobile phone account has been breached. He has discovered that somebody, impersonating himself, called his O2 mobile phone account on 23 June and set up a security code without his knowledge.

Mr Rose discovered this on Monday and M&S is looking into the affair as part of a tightening up of its security procedures. It has told staff to only use mobiles when absolutely necessary and not for making calls of a sensitive nature.

Analysts believe that while M&S and Mr Rose are embroiled in the FSA investigation it would be a perfect time to pounce with an improved offer for the embattled retailer.

Such a move would pre-empt Mr Rose's own attempt to communicate his planned strategy to improve the fortunes of the FTSE 100 retailer, which he is due to deliver on 12 July.

Mr Green submitted a revised proposed bid for M&S on 16 June worth "not less" than 370p a share, valuing M&S at £8.4bn. The M&S board rejected the offer.

One analyst said: "Despite all the furore over the FSA investigation and what have you, this will come back to a question of value. I think Mr Green will come back and this would be the week to do it."

Mr Rose was met by reporters outside the FSA headquarters yesterday as he attended an interview with FSA enforcement staff who are investigating M&S share trades. Mr Rose arrived shortly before 10am and left about two hours later, refusing to comment. The FSA investigation has prompted pre-emptive action from James Crosby, the chief executive of HBOS, who is also a board member of the FSA.

HBOS is one of Mr Green's main financial backers for his M&S bid. It emerged yesterday that Mr Crosby approached the FSA himself at the end of May when it the regulator was first said to be looking at M&S share trades. A spokesman for HBOS said: "James contacted the FSA himself to point out that it would not be appropriate for him to have any information or knowledge of any investigation that the FSA would be undertaking into M&S. James has no knowledge of the FSA investigation, nor will he have nor would he expect to have."

A spokeswoman for the FSA said it had procedures in place for handling potential conflicts of interests which have been adhered to.

Throughout the affair, Mr Rose has maintained that he did nothing wrong in buying 100,000 shares in M&S on the afternoon of 7 May, shortly after receiving a phone call from Mr Green summoning him to a meeting. Mr Rose subsequently met Mr Green on 12 May when he signed a confidentiality agreement. Mr Green then disclosed his plans to bid for M&S. Later in the month, the M&S board approached Mr Rose to become its new chief executive, an offer he duly accepted.

However, Mr Rose's separate row with Goldman Sachs threatens to escalate into a deep rift. Mr Rose is furious at reports in the Sunday Telegraph about alleged conversations he had at the Chelsea Flower Show with Rosemary Thorne, the finance director of Bradford & Bingley which is another Goldman Sachs client.

A Goldman Sachs banker, thought to be Mr Raper, alleges Ms Thorne told him on four occasions that Mr Rose had told her that he was going to be chairman of Mr Green's bidding vehicle for M&S.

Both Mr Rose and Ms Thorne deny this version of events. Mr Rose demanded a retraction from Goldman Sachs, which yesterday wrote back to M&S saying any reaction it made would be to the FSA. The matter is now being considered by Mr Rose's lawyers.

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