Polly Peck administrators may sue Midland

Click to follow
The Independent Online
The administrators appointed to Polly Peck International are set to sue Midland Bank for recovery of pounds 45m which they claim was transferred from the trading group to a bank owned by Asil Nadir, the former chairman of Polly Peck, shortly before it collapsed in 1990.

The writ is expected to be issued shortly after the Court of Appeal rules whether the administrators can sue the Central Bank of Northern Cyprus for recovery of the same pounds 45m.

The Central Bank has claimed the administrators have no right to sue it in an English court. The Appeal judges, who will give their ruling on Wednesday, have to decide whether there is either a 'good arguable case' or a 'case worthy of merit' to answer. Experts say it is too close to tell which way the judges will rule and that the case could go to the Lords.

One of the Central Bank's arguments is that its role was similar to Midland's, so why should it be the only one to be sued. The money was held in an account at Midland Bank International in the City, transferred to the Central Bank and then passed to Kibris Endustri Bankasi, a bank controlled by Mr Nadir. It is understood a writ is now being prepared against Midland.

The Central Bank case has already cost the administrators an estimated pounds 3.5m, and there seems to be disagreement between them about whether they should continue with the action.

Christopher Morris, the Touche Ross partner who is in charge of the legal actions, is convinced that going through the courts is the best strategy. However, Michael Jordan of Coopers & Lybrand, who is also joint administrator, is believed to doubt whether the cost may be higher than any possible return from the Central Bank.

Some creditors are concerned about the expense of the administration, which has cost more than pounds 30m so far.

Last month the administrators sued Citibank for pounds 75m, which they claim was transferred from Polly Peck to Citibank (Zurich), where it was allegedly misappropriated by Mr Nadir. In October 1991, they sued Mr Nadir for recovery of pounds 378m and Mr Nadir's mother for pounds 73m.

Mr Morris is understood to believe that by suing banks that did business with Mr Nadir, they will be able to persuade them to open their books and give more clues to the whereabouts of nearly pounds 400m, which the administrators claim was taken from Polly Peck.

Mr Morris has gained a judgment against Kibris Endustri Bankasi in Northern Cyprus, but has not been able to enforce it because of the nature of the region's court system.

He has asked the Northern Cypriot government to intervene, but it has said it cannot help. He now faces problems in renewing leases on two sites in Northern Cyprus owned by Polly Peck - a leisure complex and a packaging plant.

(Photograph omitted)