Scandal prompts pressure
NZPA London A month-old investigation by the Department of Trade and Industry into the giant British brewing company, Guinness, is providing few answers to the share dealing controversy surrounding the company. And although the scandal is unresolved, it has renewed pressure for the Government to ’’clean up” insider trading in the City once and for all. Still unanswered by the DTI is the central question of ownership of a parcel of 2.1 million Guinness shares — alleged to have been financed by Guinness to boost the value of its bid for the Distiller’s company last year. The acquisition of Dis-
tillers, the biggest ever in Britain, made Guinness the largest producer of whisky in the country. “A close examination of documents and the sequence of events point to actions by Guinness and Morgan Grenfell, its merchant bank advisers, that are at best extremely strange, if not actually questionable within the ... Companies Act,” the “Financial Times” said. The law prohibits companies from buying their own shares, except in regulated circumstances. Guinness itself is worried. In the company’s first official statement since the inquiry was launched, it was announced that a full board meeting had been called to consider the growing controversy. The directors had also been holding a series of ur-
gent talks in a secret location over the past few days. "They (the directors) have taken and are continuing to take urgent steps to satisfy themselves as to the full implications of of what they have learnt,” the Guinness statement said. The Guinness affair began more than nine months ago when £7.6 million was transferred to the Henry Ansbacher merchant bank, during the company’s £2.5 billion battle for control of Distillers. Ansbacher’s version is that the money was used, on instructions from Morgan Grenfell, to buy Guinness shares. Guinness maintains the money was only a deposit. On Tuesday it asked Ansbacher for the money to be returned — Ansbacher refused, and Guinness have threatened to take legal action. “What Guinness will not say is why the money equalled — down to the last
10p — the amount claimed by Ansbacher after it bought the Guinness shares,” the Financial Times said.
‘‘Nor will Guinness say why the deposit was placed in-terest-free, a most unusual practice.” The inquiry has seen the resignation of Morgan Grenfell’s corporate finance director, Mr Roger Seelig, for undisclosed reasons, and the company’s withdraw! as Guinness’ financial adviser.
Meanwhile, Guinness and the issue of insider dealing is reaching Westminster. The Prime Minister, Mrs Thatcher, has been called on by Liberal leader David Steel to make a full, statement on the Guinness affair to the House of Commons next week.
The reputation of the Tory Government and the City’ were now Intertwined, Mr Steel said in a statement.
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Press, 10 January 1987, Page 28
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458Scandal prompts pressure Press, 10 January 1987, Page 28
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