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Last Updated: Thursday, 12 February, 2004, 14:50 GMT
20m spent on De Lorean lawyers
20.72m was spent on legal fees and expenses
20.72m was spent on legal fees and expenses
More than 20m in legal fees was spent by the government in legal action against the auditors of the failed De Lorean car company, according to the public spending watchdog.

A report by the NI Audit Office shows that in total the De Lorean receivers paid the government 17m - while the firm's auditors Arthur Andersen paid 20.7m in settlement of a legal action where the government alleged negligence.

However, the legal bill for the action taken in the American courts had spiralled to the same level, 20.3m, as the action lasted more than a decade.

The Department of Enterprise argued that the firm had failed to disclose fraud in the car company's accounts.

It is more than 25 years since the government decided to back the De Lorean factory with 77m in taxpayer's money.

The department said it was important the case was pursued in order to hold the company to account for their alleged negligence.

The department had registered a claim for 61m with the receivers and in 1985, lodged a claim for damages of 73m in Belfast and London.

Given the longevity of the process - some 20 years - and the significant time involved, it is likely that these costs amounted to a substantial sum," said the report
Audit Office report

The claims were largely based on Andersen's failure to disclose the 8.8m fraud in De Lorean's accounts.

By the time the financial recovery process had come to an end in January 2003, the department had recovered 40.45m.

However, 20.72m was spent on the direct costs of legal fees and expenses, giving a net recovery of 19.73m.

Incurred costs

The audit report said the figure for direct costs did not include the department's administrative costs.

"Given the longevity of the process - some 20 years - and the significant time involved, it is likely that these costs amounted to a substantial sum," said the report.

I would hope that DETI have learned from this process and that this experience will serve to prevent such debacles from re-occurring in the future
Billy Bell
UUP

In relation to Andersen, the department agreed a settlement of 20.72m in 1997.

However, against this it incurred costs of 20.32m between 1985 and 1997.

BBC Northern Ireland business editor James Kerr said: "The department said that its motives were not just to recover money - but that it was seeking to uphold a principle - that Anderson's negligence had contributed to the loss of public money - then it was important they were held to account.

"However, it admitted that lessons had been learned in the need to constantly review the costs and objectives of such litigation."

Former chairman of the Northern Ireland Assembly's Public Accounts Committee Billy Bell said the report was a detailed analysis of the department's efforts to recover public money.

He said he recognised the recovery process was not without success, since the receivers paid over 16m to the department from its recoveries and a further 1.6m was also paid out by the trustee of the De Lorean parent company.
John De Lorean was the man behind the failed venture
John De Lorean was the man behind the failed venture

"I would hope that DETI have learned from this process and that this experience will serve to prevent such debacles from re-occurring in the future," said Mr Bell.

The SDLP's John Dallat said the De Lorean project was a scandal to out shame all scandals.

"Everyone did well out of this project except the taxpayers, the creditors and the poor workers who were exploited in a most shameful way," he said.

Seamus Close of the Alliance Party said: "Those responsible for this economic disaster have a lot to answer for, but not for the first time it's the poor taxpayer who carries the can while lawyers ride off into the sunset with millions of dollars or pounds."




WATCH AND LISTEN
BBC NI's Julian O'Neill:
"The government could have a accepted settlement years earlier when its legal bill would have been just 4m"


BBC NI's business editor James Kerr:
"The NI Audit Office says the government's legal bill swallowed the entire amount of damages paid by Arthur Anderson"



SEE ALSO:
Labour's Arthur Andersen links
30 Jan 02  |  Politics



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