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Last Updated: Sunday, 13 July, 2003, 12:14 GMT 13:14 UK
Lottery 'could support Diana charities'
Princess Diana
The Fund helps causes which were close to Diana's heart
Lottery money could be used to ensure the work of about 120 charities supported by the Diana, Princess of Wales Memorial Fund continues.

The body responsible for distributing National Lottery cash to good causes said it was investigating whether to step in, following the Fund's decision to freeze grants.

A spokeswoman said: "There is lots of good work in progress and obviously people do not want to see those efforts wasted."

On Friday the Fund warned its beneficiaries it could not make payments because it faces a $25m (15m) lawsuit by souvenir firm the Franklin Mint.

The US company said the charities will not suffer as a result of its malicious prosecution action, which was launched following the Fund's failed attempt to sue it for using Diana's image.

The Mint has accused the Fund of unnecessarily freezing grants in an attempt to find a "Cinderella" to rescue it, or to try to scare it into dropping the legal action.

Serious risk

The National Lottery Community Fund said on Sunday that it was investigating whether it could fast track applications from affected charities.

There is absolutely no danger that any of the bequests made by the late Diana, Princess of Wales, will be endangered
Franklin Mint statement

The Diana Fund said it helps "unpopular" causes, many of which have warned their work is at serious risk if the money they were expecting does not arrive.

A Community Fund spokeswoman said: "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."

The Diana Fund has pledged 10m to charities and, although it has 46m in reserves, says it cannot pay because it does not know when the Mint's legal action will start, or how much it will cost.

'Nasty' campaign

The US firm said it will not drop its legal action because it was the victim of the "most nasty PR campaign" by the Fund.

On Saturday it dismissed suggestions that Diana's sons, Princes William and Harry could be dragged into the legal battle.

In a statement it added: "There is absolutely no danger that any of the bequests made by the late Diana, Princess of Wales, will be endangered owing to the situation that the Memorial Fund, through its six years of failed legal action, now finds itself."

It continued: "Franklin Mint reiterates that it knows of no legal, financial, practical or moral reason for this year's financial allocations made by the memorial fund to be frozen."

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