Mitchell group to sue C&L for 'fraud'

Shareholders in failed contractor Mitchell have formed an action group which plans to sue Coopers & Lybrand for alleged fraud - the group wants damages of œ150 million.

David Morrell, chairman of Mitchell and a member of the action group, also hopes the move will lead to a reform of public standards. He told CJ this week: 'I have found so much sleaze. I want to stop the same thing happening to someone else.'

But news of these latest moves left Coopers & Lybrand unruffled. A spokesman said: 'We do not feel threatened. Everything Morrell has claimed has been thrown out by the courts years ago. We don't intend to dignify his action by passing comment.'

Action against C&L will be funded by the issue of new shares in Mitchell, a City underwriter having promised to buy all shares not taken up - Morrell sees this gesture as a firm vote of confidence.

Mitchell's œ150 million claim is based on the value (œ87 million) of the company when it crashed back in 1973 together with modest interest over the following 22 years.

The firm's collapse followed its disastrous involvement in an underground hydroelectric scheme on the north bank of the Kariba Dam in Zambia (CJ, 1 June 1995).

Unknown to Mitchell, the project was a bizarre conspiracy to supply power to Rhodesia when political sanctions were starving it of energy.

Morrell claims that a secret 200-page C&L document shows C&L knew Mitchell was financially sound at the time when it issued a summary report saying the firm needed œ17 million to survive.

Morrell alleges that C&L sold the firm within five hours of putting it in receivership in order to cover up the fact that C&L was also accountant to the Central African Power Corporation in Salisbury, the shadowy client for the scheme.