Queens Moat wins £5m settlement from former auditors

The former auditors of Queens Moat Houses have paid the hotel chain £5m in settlement of a claim against them of alleged false accounting.

The payment relates to QMH's collapse in 1993.

In April 1991 QMH reported £94.1m profits for 1990. But a report by the accountancy watchdog said most of this had been derived from "inappropriate accounting", including a deal with some individual hotel managers that they would run their hotels through separate companies, pay an annual fee to QMH and, in return, keep the profits.

The whole of the fees paid were shown as profits for the year to 31 December 1990.

The watchdog also accused company auditor Maurice Hart, a partner in accountancy firm Bird Luckin, of failing to identify manipulation by directors of the firm's accounts.

The firm's management resigned in 1993 and the company was restructured. It was re-listed on the stock market in 1995.
Four of the former directors tried to sue QMH for constructive dismissal, but three of them paid a settlement themselves when the court upheld a counter-claim lodged against them by QMH.

One of them is seeking leave to appeal to the House of Lords against the decision.

QMH threatened Bird Luckin with legal action last year after the accountancy firm was criticised by the judge at the hearing against the four former directors.