Guinness’ Ex-Chief Shredded Papers, Aide Says

Ernest Saunders, the deposed chairman of Guinness PLC, ordered files, appointment diaries and correspondence shredded in December after the Department of Trade began its investigation of the company, his personal assistant has said in a statement read in court.

Meanwhile, Guinness’ lawyer said the company was dropping its claim that Saunders had lined his own pockets with about $4.8 million.

Saunders’ former assistant, Margaret McGrath, said Friday in a sworn statement that she had destroyed a diary “with great reluctance, but Mr. Saunders had been unusually insistent.”

Among the documents that were destroyed, she said, were papers from Guinness’ files on its acquisition of Distillers Co. last year, his 1986 office diary, correspondence and address book entries.

All this was done despite a memo, circulated by former finance director Olivier Roux on Dec. 4, expressly prohibiting the destruction of documentation, she said.

The statement by McGrath, who is currently on the Spanish island of Majorca, was read in court by Guinness’ lawyer, David Oliver.

The court is hearing an application by Saunders, who was fired as chairman and chief executive in the scandal, and American lawyer Thomas Ward, a Guinness director, to end asset-freezing orders obtained by Guinness on March 18.

The temporary orders froze property or assets owned by Ward or Saunders worth up to $8.3 million, the amount Guinness paid into a bank on the channel island of Jersey last May in connection with the Distillers takeover.

The two men are also contesting orders requiring them to disclose the whereabouts of the money and to return it.

The conclusion of this hearing--which is expected to last several more days--has been set as the deadline for compliance with these orders, although the two men can apply for more time if they fail to get the order set aside.

Ward has said in court that part of the money is under his control in the United States and that the total was a justified payment for his services in the takeover bid.

Philip Heslop, Saunders’ lawyer, had tried to suppress McGrath’s statement, saying it was “in a technical sense, scandalous, irrelevant and oppressive.”

Guinness is under investigation by the Department of Trade and Industry for its tactics in its takeover of Distillers.

It has acknowledged arranging for the repurchase of its stock, apparently to boost its value to make its bid more attractive than a rival bid.

British law generally prohibits companies from repurchasing their stock or from inducing investors to buy their stock.

Guinness has filed suit in its effort to recover about $40 million apparently used to repurchase the shares.

Oliver said the company was no longer accusing Saunders of lining his own pockets with the money it had claimed he put into his Swiss bank account.

But Oliver said the fact that Saunders had not intended the money for his own use “did not render him any the less accountable” for the $8.3-million payment. Guinness still wants Saunders’ assets frozen, he said.