Guinness Accuses Former Chairman of $4.8-Million Fraud; He Denies It

The Anglo-Irish brewing firm Guinness PLC Wednesday accused its former chairman Ernest Saunders of receiving more than $4.8 million in a secret operation he organized as part of the Guinness takeover of Scotch whisky-maker Distillers last year.

Guinness director Shaun Dowling told Britain’s High Court that the company suspected Saunders and Thomas Ward, a U.S.-based Guinness director, of paying out $8.3 million from Guinness funds into a bank in the channel island of Jersey.

Saunders, who was sacked as chairman in January, told the court that he entrusted the financial side of the company’s affairs to managing director for finance Oliver Roux, and denied Guinness’ allegations of fraud and breach of trust.

Both Dowling and Saunders submitted sworn statements and were not in court.

Saunders and Ward have gone to the High Court asking the judge to lift a freeze on their assets of up to the $8.3 million granted to Guinness on March 18.

Britain’s Trade and Industry Department launched an inquiry into the company’s stock dealings last year, after allegations that Guinness bought some of its own shares to bolster their price during the Distillers takeover.

Guinness on Wednesday confirmed Scottish industrialist Sir Norman Macfarlane as chairman for the next two years. Macfarlane was appointed caretaker chairman in January after the company fired Saunders and said it uncovered improper conduct during the $4.1-billion takeover.