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Old 03-26-2004, 05:42   #1 (permalink)
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U.K.:Ford puts warranty arm into administration

Financial Times
By James Mackintosh in London

Ford Motor, the US carmaker, put its British used car warranty business into administration on Thursday after police were called in to probe an alleged multi-million pound fraud.

Warranty Holdings, the trading name of Oriel Investment Corporation, made a quarter of its 400 employees redundant and said it would not sell any more insurance. Existing customers will continue to be covered.

The failure of the business is an embarrassment for Ford, which paid about 10m-15m for it in 2001 as part of an ill-fated acquisition spree. Kwik-Fit, the repair shop chain bought for 1bn in 1999, also suffered from accounting irregularities and was sold last year for just 330m.

Ford refused to reveal the nature of the alleged fraud, which is understood to involve the theft of millions of pounds. But one insider said: "We are not talking about somebody smoking cigars on a yacht."

The company refused to put blame on any individuals. David Shapiro, former managing director, left in November. Peter Head, chief executive, left a fortnight ago "to pursue other business interests". Mr Head did not return calls seeking comment.

Ford had already decided to sell Warranty Holdings before discovering what Grant Thornton, the administrators, called "serious business irregularities" last year.

After telling its insurance partners, Axa and National Insurance and Guarantee, about the alleged fraud it decided to close the operation. The two companies would continue to meet claims under the company's warranties, it said.

Grant Thornton said it would meet potential buyers of parts of the company in the next few days. Warranty Holdings, which is based in Waltham Cross, Hertfordshire, sold breakdown insurance through second-hand car dealers, covering other makes as well as Ford.

It had more than 1m customers and a turnover of 97m in 2001, according to its latest accounts. It missed a deadline to file accounts for 2002 this January.

Ford is not expected to have to take a significant write-down on the value of the operation, which was mostly written off in a general charge for disposals that was taken last year.

Police in Hertfordshire confirmed they had been called in by the company. "Investigations are at an early stage and are on- going," the police said.
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My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

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