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Jean Rhys's tangled trust: John Birt's one-time auditor and the family of a famous novelist are at odds over missing money

MICHAEL HENSHAW, the accountant who advised the BBC's director-general, John Birt, on his tax-avoidance deal, is entangled in a legal battle with the family of the novelist Jean Rhys over thousands of pounds which have disappeared from the late author's trust fund. The writer's family is pursuing Mr Henshaw over a series of 'unexplained debits' in the trust fund, and has already obtained a court judgment against Mr Henshaw, demanding the return of pounds 20,000.

The family of the author of Wide Sargasso Sea is concerned that as much as pounds 50,000 may have been removed without proper explanation. The fund's advisers are also querying the fees regularly charged by Mr Henshaw for administering the small trust. According to the accounts for 1987, the charge for administering pounds 13,000 of assets was more than pounds 8,000, while tax returns for 1981-82 were filed as late as 1988.

Removing Michael Henshaw as co-trustee of the Jean Rhys Trust in 1992 also cost the family nearly pounds 12,000 in legal fees. 'The entire thing has been unnecessarily time-consuming, expensive and extremely distressing to all parties involved,' says Ellen Moerman, Jean Rhys's grand-daughter. 'My mother, who is now 73, is confused, near to giving up and trying to make the best of an extremely bad situation . . . which is going to cost money again.'

Mr Henshaw, a former tax inspector who has no formal accountancy qualifications, was one of London's most popular media accountants in the Sixties and Seventies. His clients included film-maker Ken Loach, cartoonist Ralph Steadman, and comedy stars Terry Jones and Michael Palin. He achieved notoriety last year when he was named as Mr Birt's auditor in the furore over the Independent on Sunday's revelation that the BBC director-general was not on the staff and was instead paid through his own production company.

Mr Birt was later put on the BBC payroll and handed his company's accounts to accountants Ernst and Young.

The row between Mr Henshaw and the Rhys family began more than 10 years ago when Jean Rhys's daughter, Maryvonne Moerman-Langlet, and her husband, Job Moerman, who live in France and the Netherlands, faced a heavy tax demand from the Dutch inland revenue relating to the estimated income of the British-based Jean Rhys Trust. The couple asked Mr Henshaw to provide information about the trust.

But Mr Henshaw, who was made a trustee in 1979 under Jean Rhys's will, allegedly failed to disclose proper financial information about the trust. This prompted lengthy legal action, ending with Mr Henshaw being removed from his position by a court order in March 1992 and a demand that he hand over relevant documents.

His failure to do so sparked a contempt-of-court action, which collapsed on a technicality. Mr Henshaw later blamed an employee for not being able to release files.

The documents eventually received by Mrs Moerman- Langlet showed unexplained debits. In January 1988, pounds 12,000 had been directly debited from the trust's National Westminster Bank account to HM Customs and Excise, although the trust was not subject to VAT. This led to new legal action, and a judgment in default for a sum in excess of pounds 20,000 against Mr Henshaw was granted in April last year.

The family then learnt that this judgment was invalid because Mr Henshaw was an undischarged bankrupt when proceedings began. The family was told that Mr Henshaw had, in fact, been made bankrupt on 8 March 1990, when still a trustee, and incidentally also Mr Birt's auditor. Mr Henshaw later explained that the pounds 12,000 payment to Customs and Excise was due to a misunderstanding by a bank of his instructions. He also produced documents alleging that this amount was owed to him by the trust.

The trust's solicitors say they find it 'astonishing . . . that (Mr Henshaw) continued to act as trustee, and to resist his removal as trustee even after he had been declared bankrupt'.

This meant that the judgment for more than pounds 20,000 had to be set aside in 1993. The family is now taking advice on further legal action regarding the missing funds.

After some critical acclaim in the Thirties, Jean Rhys's literary career went into oblivion until the mid-Fifties. 'After the publication of Good Morning, Midnight in 1939 she vanished from the literary scene so completely that people supposed her to be dead,' writes her former publisher, Diana Athill. Jean Rhys came back to public life in 1956 after the BBC put an advertisement in the New Statesman because of a radio dramatisation of Good Morning, Midnight. She was contacted by Francis Wyndham, the writer, and her literary executor, who on behalf of the publisher Andre Deutsch offered an option on a new novel, Wide Sargasso Sea.

This was eventually published in 1966 and won the W H Smith Literary Award. It led to the reissuing of her earlier novels, After Leaving Mr Mackenzie, Voyage in the Dark and Quartet (originally published as Postures), which became a James Ivory film in 1981 with Maggie Smith, Isabelle Adjani and Alan Bates. Jean Rhys received a CBE in 1978 and died in 1979, aged 89.

Francis Wyndham says he was 'horrified' by Mr Henshaw's incompetence and inefficiency.

Mr Henshaw, now 64, declined to comment. He lives in Oxfordshire and has a house in south-west France. Known as a colourful character, he allegedly once attempted a citizen's arrest on Margaret Thatcher and also spent two nights in jail after refusing to apologise to a judge for arriving late as a witness in a court case.