Waste chief gives evidence in �90m Easco lawsuit

A leading light in the waste industry has claimed a 'culture of dishonesty' ran through a Norfolk scrap metal business, sold for more than �90m three years ago.

David Palmer-Jones, chief executive Officer of SITA UK Group Holdings, told a High Court judge that, had the French-owned waste giant known the truth about Lenwade-based Easco Group, it would 'not have touched it with a barge pole', let alone paid �91.5m for its business.

The company is suing scrap metal mogul Andre Serruys, who heads a business empire from a �2m moated home, Stanfield Hall, near Wymondham, and his company, SPC (Norwich), claiming Easco was riven by corrupt practices, 'endemic' fraud, kick backs and 'black money' scams.

Mr Serruys vehemently denies the allegations, and insists SITA got what it paid for when it bought Easco in 2007.

Speaking from the witness box yesterday, Mr Palmer-Jones said it was 'a big shock' to SITA when it discovered the extent of 'incorrect practices' within Easco and, had he known about them at the time, he would have 'strongly advised against the purchase'.

He told the court: 'SITA is a reputable company. We would not want to be involved in this type of behaviour. I think any form of dishonest practice would have alarmed us.'

Adrian Beltrami QC, for Mr Serruys and SPC, put to the executive that he 'would not have been surprised' that cash-trading played a part in Easco's business, which was 'in some respects rather old-fashioned'.

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He added that, given the strategic importance of the Easco deal, it was 'unrealistic' to suggest SITA would have withdrawn from the purchase had it discovered that some of the company's practices 'were not up to SITA standards'.

Mr Palmer-Jones, who was SITA's operations boss at the time, said his main role was to look into potential 'synergies' between the two companies and he was not involved in the nitty gritty of investigating Easco's financial affairs or negotiating the purchase.

He said he was aware of the Steptoe and Son 'caricature of a scrap metal dealer with cash in one hand', but the level of cash trading within Easco had still come as a surprise.

He added: 'Had we been aware of significant incorrect practices, we would not have proceeded with the purchase.'

Mr Beltrami said the practices of 'skimming' - in which loads of scrap metal are under-weighed - and 'blending' - where valuable scrap is mixed with less valuable items - would not have discouraged SITA from going through with the deal.

'These practices were not exactly engrained in the business. They were practices that could be stopped pretty easily... this would just be a matter of training and procedures', he added.

But Mr Palmer-Jones said the price SITA paid for Easco was based on historic business trends and the figures on which the deal was based 'could not be relied upon'.

SITA's counsel, Anthony Temple QC, has already claimed that Easco was 'replete with dishonest practices and built on a dishonest business model' and was effectively worthless.

However, Mr Beltrami denies that Easco's success was based on dishonest practices, or that the sale to SITA was 'a sham', and said SITA's 'unrestrained' and 'extravagant' accusations 'ought never to have been made'.

Allegations 'of the gravest nature' against Mr Serruys were groundless, he said, and SITA's case that Easco was 'a thoroughly corrupt business' was built on a 'catalogue of paradoxes' and 'inherent improbability'.

The barrister has accused SITA of 'opportunism' and trying to get 'a successful and thriving business' - Easco - for free. He says the company was sold after an 'open auction process' and it 'was worth the price that SITA paid for it'.

The High Court hearing, before top judge, Mr Justice Davis, continues and is expected to last at least until Christmas.