Lotus car group sues former directors

Group Lotus, the UK sports car maker, yesterday issued writs against two former directors in a bid to recover several hundred thousand pounds.

The company alleges that Adrian Palmer, formerly managing director, and Andrew Tempest, ex-finance director, were behind unauthorised payments and expenses claims.

Both men were dismissed abruptly in August by Romano Artioli, head of Lotus's owner Bugatti, and have been consulting lawyers about launching claims for unfair dismissal of about pounds 500,000 each.

A firm of forensic accountants, Lee and Allen, was asked to sift through the Norfolk-based company's accounts. Yesterday, Lotus would only confirm that a writ had been issued for "several hundred thousand pounds".

Neither Mr Palmer nor Mr Tempest could be contacted yesterday and the pair's solicitors, Titmuss Sainer Dechert, were not returning telephone calls.

Last month, however, Mr Palmer told Autocar magazine: "Neither Andy Tempest nor I know why we were dismissed." He said attempts to negotiate compensation with Mr Artioli were rejected.

Bugatti is trying to head off bankruptcy through a financial reconstruction. According to one survival plan, a group of financiers has offered to invest around pounds 40m in Bugatti in return for a large stake in the company.

While Lotus is said to remain financially strong and untroubled by the financial problems at Bugatti, the affair has overshadowed developments at the UK company. Bugatti is said to owe up to pounds 50m to 20 creditors.

The new problems come at a time when Lotus is due to unveil its new pounds 20,000, mid-engined sports car, the Elise, at the London Motor Show this week. Mr Tempest and Mr Palmer were widely credited as having turned around Lotus, bought by Bugatti from General Motors in 1993. The company returned to profit last year, and has revamped its model range.

Sales of the Lotus Esprit are up by 13 per cent to 450 and more than pounds 2.5m of orders have been taken for the Elise. Lotus says the pounds 3.5m invested in its Norfolk facilities has come from its own resources, and that it could survive without the Italian backing.

Lotus has appointed former Ford special vehicles chief Rod Mansfield as its new managing director.Neeraj Kapur has taken over as finance director.