City: Pure madness

TRY as you might to consign the Guinness affair to the dustbin of history, it keeps rearing its head. Confidential DTI documents concerning the affairs of a licensed dealer called TWH Management have recently come into the Independent on Sunday's possession and extraordinary reading they make, too. As if enough concerns have not been raised already about the way the regulatory and prosecuting authorities dealt with the financial scandal of the decade, these make the process look more perverse still.

TWH was a small Mayfair-based fund management operation introduced to the Guinness share-support operation by Lord Spens, then managing director of the merchant bank, Henry Ansbacher. When the DTI investigated, it found the firm had been involved in at least six other share-support operations during the mid-1980s. In each case, TWH bought shares on the basis of an indemnity against loss from Ansbacher.

When the time came for payment of the loss, TWH would issue what the DTI describes as a 'false and misleading' invoice, and Ansbacher would charge it on to the client. In each case, what happened was almost identical to what occurred in the Guinness affair.

On discovering this, the DTI moved to revoke TWH's licence, but its findings were overturned at a secret appeal tribunal and, as far as I know, TWH still trades to this day. The tribunal, chaired by Lord Grantchester QC, found 'there was no evidence that such transactions were improper'. Moreover, though TWH was criticised for issuing false invoices, the tribunal found that this was 'not so discreditable as would justify the revocation of the company's licence'.

No wonder the DTI has sat on these findings for so long. Whether you agree with them or not, they show the authorities to have dealt with share- support operations in a thoroughly inequitable and inconsistent way.

Transactions that Lord Grantchester apparently found to be perfectly proper, or not discreditable enough to justify revocation of a trading licence, were thought by others to be so improper and so discreditable that they justified prosecution and, in the case of Ernest Saunders, Gerald Ronson and Tony Parnes, a spell behind bars.

I don't particularly want to defend any of these people, but there is plainly something seriously wrong with a system that allows such rampant schizophrenia. No doubt, all three will be making full use of this new material in their pending appeals to the Home Secretary.