The Renaissance man

From shambling wreck to rude good health, Ernest Saunders is back in business

In 1991, Dr Patrick Gallwey, a consultant psychiatrist, told the Court of Appeal that Ernest Saunders, formerly the chief executive of Guinness, "was unable to recall three numbers backwards. He forgot the subject of a sentence almost before he had started. He could not even remember who was the President of the United States".

It seemed like a terrible end to a once-glorious business career. Mr Saunders had, of course, been jailed for five years in 1990 for his part in the drinks company's share-support operation during its pounds 2.7bn takeover of Distillers. But he always denied any wrongdoing. Now he was in Her Majesty's open prison at Ford on the Sussex coast, and his mind was deteriorating fast. Or so it appeared.

The Court of Appeal sat to decide whether Mr Saunders's five-year sentence was fair, and his lawyers deployed a whole battery of evidence to show a lengthy term of incarceration would only exacerbate his condition. Mr Saunders, it was claimed, was exhibiting the symptoms of pre-senile dementia. Like thousands of other sad victims, he seemed to be experiencing the terrible, early onset of Alzheimer's, although the doctors were unable to make an unequivocal diagnosis.

Mr Saunders cut a sorry, shambling figure, all the trappings of his past long gone. Lord Justice Neill pronounced the sentence to have been too harsh. It was cut in half, and within a short time of his return to Ford prison, Mr Saunders became eligible for parole and was freed.

That ought to have been the last we heard of him. He should surely have withdrawn from the world, with only the occasional medical bulletin to remind people of his existence. Death, when it came, would have been a mercy.

NOT A bit of it. Within 12 months of leaving jail, Mr Saunders had made a dramatic recovery. Documents disclosed to the Independent on Sunday show that within four years of his release, the man who could not recite three numbers backwards, was charging pounds 16,000 a month for his services. Five years after he left Ford, his fee had risen to pounds 25,000 a month.

That was for his work for a company called Richbell, the publishing and information group belonging to David Elias, a multimillionaire businessman. Richbell was one of the two companies for which Mr Saunders worked. The other was Carphone Warehouse, the fast-growing mobile communications group. To these earnings can be added his pounds 75,000-a-year pension from Guinness.

Every month, without fail, the man who once could not remember the name of the US President, would never forget to send in his invoice to Richbell or to add his expenses. They would arrive promptly on the notepaper of Stambridge Management, his private company. Last year, Mr Saunders, who received legal aid to the tune of pounds 1.3m during his court cases, was enjoying the good life once more. He holidayed on the Moor Maiden, a yacht belonging to Richard "Rocky" Shaw, an insurance broker. As the vessel lay at anchor in Cavalier Bay, near St Tropez, in the south of France, Mr Saunders could see the villa he used glistening in the sun.

He has three homes: a London house in Putney, a country residence near Chichester in West Sussex, and a chalet in Switzerland. A blue Rolls-Royce Silver Spur - supplied by Richbell - ferried him to London's smartest restaurants, the Savoy, Connaught, River Cafe and Coast. The chauffeur- driven H-registration Roller would pick him up in the morning at Putney and drive him to meet his wife, Carole, to Glyndebourne, to have lunch with his children, Joanna, James and John, to collect a blazer from Gieves & Hawkes in Savile Row. On one occasion, he arrived at a Guinness shareholders' meeting in the Rolls.

In July last year Saunders's rehabilitation became complete when he was appointed chairman of the executive committee of a US-based multinational company. Located in Minneapolis, the $160m (pounds 98m) company, Harpur-Gelco, runs the Overdrive and Dialcard petrol credit cards. Overdrive and Dialcard account for 12 per cent of all petrol-card business in Britain.

For devoting 75 per cent of his time to Harpur, Mr Saunders negotiated a salary of $550,000 (pounds 337,500) a year, plus $750,000 (pounds 460,100)stock options, health cover, plus the chauffeur-driven limousine.

Further proof of the strength of his comeback came in the quality of Harpur's shareholders. The firm is 36 per cent-owned by Jupiter Partners LP, a Park Avenue, New York, $350m (pounds 21.5m) investment fund. A large slice of Jupiter's wealth comes from the private savings of partners in the blue-chip investment bank Lazard Freres. Another shareholder in Harpur is Rothschild Investment Trust.

If he ever needs to convince himself of the distance he has travelled since leaving jail, Mr Saunders need only glance at Jupiter's 1994 annual report and the explanation for its name: "Jupiter, the supreme God in the Roman pantheon, is the guardian of property and guarantor of oaths; he symbolizes justice, faith and honour."

But controversy still dogs Mr Saunders's business life. He had barely taken charge at Harpur when he became embroiled in a bitter row. After Jupiter, the next biggest shareholder in Harpur is Mr Elias, the man who once employed him as a consultant and loaned him the company Rolls.

Mr Elias is fuming because Harpur appears to be in poor shape. For the year ended 31 December 1996, the company lost $24.5m (pounds 15m), after making a profit the previous year of $8m (pounds 4.9m). Mr Elias voiced his concerns, but his remarks led to a swift response from Mr Saunders and his City of London lawyers, D J Freeman.

The Saunders camp maintains that it is precisely because the company was in trouble that he was appointed. The poor performance, he says, was nothing to do with him. Since Harpur has a sales lead-time of six months, he argues that there is little he could do in the second half of last year, immediately following his appointment, to turn things round.

Mr Saunders further alleges that Mr Elias's worries are not prompted by a genuine concern, but by a desire to avoid paying pounds 10.5m that his Richbell group owes to Harpur. "He has our full support," said John Sprague, head of Jupiter, "I believe that Mr Elias's attempts to draw Ernest into a dispute are nothing more than an attempt to divert attention from what we believe to be the financial difficulties which his own companies face."

That claim, made in the form of a press release from D J Freeman, led to a writ for defamation from Mr Elias against Mr Saunders, Mr Sprague and Jupiter. The press release was accompanied by a winding-up petition against Richbell by Harpur.

In the meantime, Mr Saunders has fallen foul of the US immigration authorities. In April, he was refused entry to the US for failing to declare he was a "convicted felon". On arrival in the US, he was "invited" by immigration officers to fly back whence he came. He now finds himself chairman of the executive committee of a company that is located in, and does the bulk of its business in, a country which he cannot visit. His lawyers are negotiating with US officials to have the entry bar lifted.

THE temperature in this battle is hotting up. Last week, the Independent on Sunday asked to speak to Mr Saunders. Our call was referred to Marcus Rutherford, a partner at D J Freeman. Mr Rutherford sent a tersely worded letter, which was accompanied by five pages of helpful "background notes" on Mr Saunders's medical condition and his gratifying recovery. The notes, which were prepared by another firm of lawyers for Mr Saunders two years ago, seek to explain the court evidence about pre-senile dementia in the light of his recovery.

At the Appeal Court in 1991, it was emphasised how ill he was; the notes, however, say that while he was suffering the symptoms of pre-senile dementia he may not have been suffering from a degenerative illness at all. He did not, the notes stress, make a "miraculous recovery" from Alzheimer's.

They point out that no doctor ever gave an unqualified opinion that he was suffering from Alzheimer's. Indeed, his advisers suggest, it was not Alzheimer's or any other form of senile dementia but stress-induced memory loss: "The features of pre-senile dementia which Mr Saunders exhibited, are difficult to distinguish from those of depressive illness/neurotic depression and stress-related conditions."

So far, any stress he is suffering as a result of the feud with Mr Elias has clearly not provoked a relapse.

In the end, say these medical notes, there is only one sure way of discovering if he is the first person in the world known to have recovered from Alzheimer's, and that is by examining his brain tissue when he dies. Until then, the absorbing case of Ernest Saunders will remain a mystery.