Lawyers winners on De Lorean case costs says report

Legal fees in the long-running legal action taken by government in a bid to recover some of the £77 million of public money poured into the failed De Lorean Motor Company have amounted to almost £21 million.

Although De Lorean receivers paid out £17.6 million, the cost of legal fees in the ten-year court battle in America reached £20.3 million. A sum that includes the legal costs but not any other associated administrative costs that are believed to be considerable.

The Department of Enterprise had lodged a claim for £61 million with De Lorean's receivers, and a further £73 million claim for damages.

The Northern Ireland Audit Office report revealed that when the creditors recovery action ended in January last year, £40.45 million had been recovered. However, as £20.72 million had been accrued in legal fees the net amount recovered was £19.73 million.

Previously the sum of £20.7 million had been paid out by De Lorean's auditors Arthur Andersen for alleged negligence in respect of their failure to disclose that £8.8 million in funds had been misappropriated from De Lorean accounts. However, the legal costs incurred in that action had amounted to £20.3 million when the case was finally settled in 1997.

Former Chairman of the Northern Ireland Assembly’s Public Accounts Committee, Lagan Valley MLA Billy Bell said: “This report is a detailed analysis of the Department’s efforts to recover public money following the failure of the DeLorean Motor Company in 1982.

"Between 1978 and 1982, almost £80 million had been pumped into the company by the taxpayer. And yet, by January 2003, following 20 years of protracted recovery, the government has managed to get back only £20 million (net) of its initial outlay."

Mr Bell said that in this sum equated to "every man, woman and child in NI contributing approximately £45 to perhaps the most notorious failure ever seen in the Province.”

Mr Bell concluded: "At some stage in the process I believe that the department lost its focus in pursuing recovery. While recognising that it had pursued Arthur Anderson on a matter of principle, I am concerned with the inadequate management of this process, since there was insufficient reconciliation of the costs of this pursuit with both the objectives and the likely recovery from the process.

"I do, however, recognise that the recovery process was not without success since the receivers paid over £16 million to the department from its recoveries and a further £1.6 million was also paid out by the Trustee of the DeLorean parent company in the United States. 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."

The De Lorean Motor Company was placed in receivership in February 1982 following the injection of £77 million of government grants into a project that promised 2,000 jobs for Belfast. Within three months the factory had closed and the protracted legal wrangling dragged on for 25 years.

(SP)