Gaming grant for bankrupt stopped

THE DEPARTMENT of Trade and Industry said last night that a government grant offered to help a business run by a bankrupt, who claims to be a friend of John Major, will not be paid.

Yesterday the Independent said Gordon McNally had been offered a development grant to make gaming machines in Nottinghamshire. It was also learnt yesterday that Mr McNally secured a large bank loan on property he was renting and did not own, and that he raised pounds 500,000 from a second bank after bankruptcy proceedings had started.

Robin Cook, Labour's trade and industry spokesman, said last night: 'I have asked Michael Heseltine to confirm that the DTI has upheld the law on bankruptcy in this alarming case.'

Mr McNally, who hosted a constituency party for the Prime Minister in autumn 1992 at his luxurious Mayfair flat, will not now receive the money which he said was to develop an automatic roulette machine.

The Independent revealed yesterday that the maximum pounds 25,000 grant was offered to McNally Industries (Mansfield) Ltd, a company in which Mr McNally is very active, although he is not a director. According to its records, the company is run by Mr McNally's actress wife Henrietta and two other people.

Mr McNally, who has said that he and his wife have met Mr and Mrs Major socially on several occasions, hosted the constituency party at the Mount Street flat for Mr Major to thank workers and business sponsors in the Prime Minister's Huntingdon constituency for help with the annual association ball.

The McNallys have no connection with Huntingdon. Barry Simmons, Mr McNally's press representative, said Mr McNally had met the Majors on at least 'half a dozen occasions'.

Last night Downing Street said the McNallys and the Majors were not personal friends and that the Prime Minister and Norma Major had never been entertained by the McNallys. Peter Brown, Mr Major's constituency agent, said the Mayfair party was hosted and paid for by Huntingdon Conservative Asssociation.

The DTI said McNally Industries did not meet the criteria necessary to receive a grant.

It has also emerged that Mr McNally set up a business near Bridgend, in South Wales, to make roulette machines. Records show the company, McNally Industries, raised a loan with Hambros bank in 1989 using as security the factory building - an Enterprise Centre unit in Tondu, Mid-Glamorgan.

Officials at the centre, a private concern supported by some public grants, expressed surprise that the company would have used the rented unit as collateral.

Mr McNally also raised pounds 500,000 from Hill Samuel, the merchant bank, to make a feature film. The bank confirmed last night that the money was paid two years ago to Gordon McNally Productions Limited, which is now in liquidation.

Mr McNally did not return calls yesterday.