Regan man paid pounds 2.4m for 'just three days'

Japanese bank to fund pounds 1.5bn Co-op bid
Click to follow
The Independent Online
Andrew Regan, the 31-year-old financier trying to break up the Co-op, paid a Cayman Islands middleman pounds 2.4m for just three days' work on a simple commercial contract, the Co-operative Wholesale Society (CWS) claimed last night.

As the row about the payment - linked to an earlier deal between Mr Regan and the CWS - rumbled on, it emerged that Nomura International, the Japanese bank, had agreed to fully underwrite pounds 1.2bn of debt funding to back Mr Regan's audacious pounds 1.5bn break-up bid for the Co-op.

News of the funding came as the CWS carried out its threat of contacting the Serious Fraud Office regarding the pounds 2.4m payment to Ronald Zimet of Trellis International who helped Mr Regan's former company Hobson negotiate an extension to a a supply agreement with the CWS.

In a letter to the CWS's chief executive, Graham Melmoth, last night, Mr Regan maintained that Mr Zimet had acted for him for "some weeks" before the deal was finally agreed.

However, Mr Melmoth wrote back claiming that Mr Zimet had "miraculously" negotiated the deal in three days. The letter goes on: "I find that extraordinary. What did Mr Zimet do to earn the pounds 2.4m in three days? This is the question which you refuse to answer. Why?"

Mr Regan's bid plan, which is being conducted through an offshoot of his quoted vehicle Lanica Trust, would be worth around pounds 1.5bn in total. This would include a pounds 1,000 payment to the 500,000 members of the CWS. It would also include a one-off pounds 10m payment to the Co-operative Union, the CWS administrative centre, to use for funding "good causes".

Nomura was putting the finishing touches to its financing deal last Friday when it heard of the High Court injunction banning the use of confidential documents. The bank said yesterday it did not have any such information in its possession. It is thought Nomura is keen to go ahead if the injunction is lifted at a court hearing on Friday.

CWS representatives visited the SFO yesterday regarding the pounds 2.4m payment made by Hobson, a food company that was formerly controlled by Mr Regan, to Mr Zimet in return for negotiating an extension to a supply agreement between Hobson and the CWS. The CWS contacted the SFO after assurances from Mr Regan failed to satisfy the Co-op's legal advisers.

In his letter explaining the payment to Mr Zimet, Mr Regan also responded to questions posed by the CWS about the involvement of Allan Green, the CWS retailing controller who was suspended last week.

Mr Regan said: "Mr Green attended at least one meeting with Mr Zimet at which I was present. The meeting took place on 11 January 1995." Mr Green has said the negotiations were held direct with Mr Regan and denies any knowledge of Trellis or Mr Zimet.

Mr Regan closes by saying he was given legal advice that it was not necessary to disclose the payment to the CWS.

In a caustic response, Mr Melmoth said: "The facts are these: On 19 January [1995] you were still negotiating directly with Mr Green. The deal was done on 24 January, the documents were signed on 25 January and the payments were made on 26 January. Mr Zimet got his instructions from you late on 19 January. Then miraculously, only three days later, Mr Zimet announces that he has overcome the intractable negotiating problem you say you faced. The deal was done within hours and you pay him pounds 2.4m."

In a separate development yesterday, the Regan camp won an extension to the deadline requiring it to file affidavits in the High Court detailing what confidential information it had obtained on the CWS and the use to which it would be put. The initial deadline was set for 4pm yesterday. However after a brief hearing in court Justice Timothy Lloyd granted an extension to 10am today. The CWS opposed the extension.

Mr Regan's counsel said the extension was required to complete and check work undertaken to comply with the order.

The CWS yesterday denied it still had a surveillance operation on the Regan camp. It repeated that it had called off security experts, Control Risks, last Friday.

Mr Regan still has to satisfy the Bank of England's strict criteria on bank ownership in order to buy the whole of the CWS, including the Co- operative Bank. Under the Banking Act it is required that all parties who have even a 10 per cent controlling interest in a bank must be passed "fit and proper".

Comment, page 23