Diana fund seeks Lottery aid after 'suicidal' bid to save face

Lottery money could be used to plug the funding gap left after the Diana, Princess of Wales Memorial Fund froze all its charitable grants.

The fund, set up after the death of the Princess in 1997, was forced to cancel payments to its beneficiaries amid a bitter and costly legal wrangle with an American souvenir firm.

About 120 good causes and 500 jobs worldwide are now under threat. The memorial fund has approached scores of potential alternative donors, including the Lottery, for help.

Dr Andrew Purkis, the Memorial fund's chief executive, said the fund needed about £10m to pay existing grants, including £1.3m that projects were expecting by the end of this month and £4.5m expected by the year's end.

The Community Fund, which distributes National Lottery cash to good causes, said it was investigating whether it could fast-track funding applications from the stricken charities. "We will not be in a position to say whether we will be able to help some of the charities out for another week but we are looking into the legal case for doing so," a spokeswoman said. In the period 2001-02, £361m of Lottery cash was awarded as grants to good causes.

The Franklin Mint, which is based in Pennsylvania, is continuing with its £15m legal action against the Diana fund. The suit stems from a failed attempt by the fund in 2000 to stop Franklin Mint making Diana dolls and other goods with her image.

Steven Locke, a Franklin spokesman, said the memorial fund had fought a "suicidal" legal action and should be held accountable for its "bad behaviour.

"They have been fighting us for six years and they have lost at every stage throughout. They have also waged a very nasty PR campaign against us, and we think they should be held to account," he told Today on BBC Radio 4, adding that any awarded damages would go to charitable causes.

A later statement from Franklin said: "There is no possibility on God's earth that the princes, William and Harry, will be involved, in any way shape or form, in our litigation against the Diana Memorial Fund."

Meanwhile, Sid Shaw, who in 1997 won a landmark court battle against Elvis Presley Enterprises of America over the rights to the Elvis Presley name, said he had warned the Diana fund against suing the Franklin Mint. "I wrote to John Major, then legal guardian to princes William and Harry, and the Diana fund trustees' lawyers and said, 'Please don't make the same mistake as Elvis Presley Enterprises, work with instead of against people, don't sue'."