Oils on Vestey's troubled waters: Family tries to recover Constable and Turner used to secure loans

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The Independent Online
THE Vestey family is trying to regain possession of two very valuable paintings, a Constable and a Turner, which it was forced to give up three years ago when its biggest subsidiary came close to bankruptcy.

As part of an extraordinary deal the paintings, worth several million pounds and deemed to be 'of national importance', have been hanging in an office on the eighth floor of the Cheapside headquarters of the merchant bank Schroders for the past three years.

In 1991, Lloyds and the other banks supporting Union International, the meat distribution company that owns Dewhurst the butchers, became worried that their loans might not be fully repaid.

They came to a standstill agreement under which the Vestey family, the owner of Union, promised to pay more than pounds 30m by the beginning of 1995 if Union's loans had not been repaid by then. The paintings were handed over as security.

Schroders advised the banks during the tense negotiations. A Vestey spokesman said that one of the reasons for moving the paintings from Lord 'Sam' Vestey's house to the City was to place them in 'a highly secure zone'. It is also believed to have been a measure of the banks' annoyance with the Vesteys at the time.

Schroders said that one of the paintings has since been moved back to the Vesteys and the other is in the process of moving. Neither the Vestey spokesman nor the Schroders spokesman would give any details of the paintings.

The Vestey group's spokesman said: 'A sum of money was put up by the Vesteys as collateral in the event that a sale of Union's assets left a shortfall. Part of that sum was in the form of paintings which could be substituted at any time by the family for cash. Currently the family is in the process of that substitution.'

The two paintings qualify for tax exemption status under a Government scheme which means that no inheritance tax is paid on them as long as they are made accessible to the public.

However, members of the public wanting to view the paintings must first know their names. Then they have to approach the Victoria & Albert museum, which keeps a register of the agent or owner. A Schroders spokesman said he did not know how many people had viewed the paintings in the past three years.

Vestey appointed the former Lonrho executive, Terry Robinson, as chief executive of Union in 1991, with the task of reducing its debts. These have been cut from pounds 400m to around pounds 200m, though there are growing concerns that all the Vestey assets may have to be refinanced unless the debts in Union are further reduced by the end of the year.

Schroders has been in effect replaced by Warburg, which is currently trying to resurrect a plan to restructure the group's finances.

(Photograph omitted)