Taxpayers may have to foot bill for Farepak collapse

Taxpayers may have to foot millions of pounds in legal bills following the abandonment of a Government bid to penalise directors of a Christmas hamper business which collapsed six years ago leaving tens of thousands of savers out of pocket, a businessman involved said today.

A Government companies watchdog has discontinued High Court action against former bosses at Farepak and its parent firm.

The Insolvency Service, which is part of the department headed by Liberal Democrat Business Secretary Vince Cable, wanted former bosses at Farepak, and its parent firm, disqualified from being company directors. Former bosses contested disqualification applications.

Lawyers representing the Insolvency Service called a halt after "consideration of evidence" given at a High Court trial which started in London nearly a month ago.

A High Court judge overseeing the case today said lawyers representing the Insolvency Service had been right to conclude that there was "no prospect of success".

Mr Justice Peter Smith said what had been missing from evidence was "any justified complaint" against former Farepak bosses. He added: "They did everything, so far as I can see, possible to save the group."

After the hearing Sir Clive Thompson, a former president of the Confederation of British Industry and ex-chief executive of Rentokil - and one of the former Farepak bosses targeted, said he was "extremely surprised" that Mr Cable had launched the action.

He estimated that the litigation would cost £20 million in total and said he and other former Farepak bosses would be asking the court to order Mr Cable's department to foot the entire bill.

PA