Coalfields sold to man 'unfit for business'

Click to follow
The Independent Online
The leading accountants Coopers & Lybrand reported to the Department of Trade and Industry that some actions by Richard Budge, the new owner of most of British Coal's pits, made him "unfit to be concerned in the management of a company".

The report was passed to the DTI by Coopers in their duty as administrative receivers to Mr Budge's family company, AF Budge, which collapsed in 1992 owing more than £90m.

A BBC Panorama programme tonight discloses that on 11 November last year, in the middle of Mr Budge's campaign to raise around £1bn in the City to finance his coal bid, he was interviewed by the Department of Trade and Industry's insolvency service. A report from the unit in December formed the basis of disqualification proceedings issued against three former directors of AF Budge.

In the event the DTI decided to take no action against Mr Budge but did proceed against his elder brother, Tony, and two other former directors.Charges were laid in February and a second hearing is scheduled for next month in a case described by one DTI source as one of the "most important we have ever undertaken". According to the Panorama programme, "King Coal", Mr Budge has in the past had two separate loan accounts which breached the Companies Act.

The first, totalling more than £400,000, was from his former company, AF Budge. According to Coopers & Lybrand this account contained payments that were in contravention of the Companies Act, which outlaws unauthorised payments to company directors. The Independent on Sunday first highlighted the controversy surrounding this loan account last October. Mr Budge paid £325,000 to the receiver in April 1993 in respect of these monies, without admitting any liability. The second loan, for more than £70,000, was taken from RJB Mining, the company which Mr Budge used to bid for parts of British Coal. This, according to the company'sshare issue prospectus, "did not comply with the provisions of the Companies Act".

When AF Budge collapsed in December 1992 the administrative receivers were obliged to investigate the conduct of all directors prior to receivership. Richard Budge had left the company a year before, having agreed to buy its mining business for £57.4m to form RJB Mining, which now operates the pits.

The Government declared Richard Budge its preferred bidder for all three English coalfields last 12 October, a month before he was interviewed by the insolvency service. Mr Budge had offered to buy the coalfields for £914m, £300m more than any other bidders.

Mark Wellesley Wood, a director of merchant bankers Kleinwort Benson and an adviser to a rival consortium, told the programme that disqualifying Richard Budge as a company director could have threatened the privatisation.

A spokesman for Richard Budge last night said he "did not think there was going to be anything particularly new" in the Panorama programme. "Mr Budge is happy to talk about RJB going forward but he thinks this programme is just having a go at the Government," he said. Coopers & Lybrand said: "This was a confidential document for the DTI and we are not able to discuss it further."

Coal deal, page 4

Comments