Boss set to sue DTI as firm crashes

MADI Sharma should be feeling on top of the world. After all, not many people can boast of creating a successful business from scratch in only a few years.

Starting humbly at her kitchen table, Sharma founded the Original Eastern Foods company, a venture designed to fill the gap she had spotted in the market for quality Indian snacks.

Almost overnight, it seemed, her new company had racked up more than £1m sales. Turnover each year was running at £200,000 and there were 35 people on the payroll at her Nottingham headquarters.

Sharma herself was feted in the Press, she was showered with business awards including the prestigious Asian Women of Achievement Entrepreneur. She was also invited into the New Labour circle to advise the Government on business employment issues and women in business.

But that was where Sharma's charmed rags-to-riches fairytale ended. Her collapse was as meteoric as her ascent had been. By the end of last year, Original Eastern Foods was in voluntary liquidation after running out of cash, owing its banks and trade creditors more than £340,000.

Sharma and her 15 remaining staff were out of a job. At the time, she blamed tough trading conditions.

But now Sharma is pointing the finger at someone rather closer to home for the failure of her company. As an ambitious business woman, she had welcomed the arrival of a business adviser placed with her company by the Nottinghamshire branch of Business Link - an advisory network sponsored by the Department of Trade and Industry.

That adviser was Peter Grandfield. And what Sharma did not know at the time Grandfield arrived was that he was a disqualified director. He had been struck off by the same DTI that was now offering his advisory services.

Sharma is about to launch legal action for compensation from Business Link, arguing that the poor advice given by Grandfield to her company caused it to go under.

A spokesman for accounting firm Mazars, who were appointed liquidators to Original Eastern Foods, told Financial Mail on Sunday: 'As liquidators, we are looking at the question of whether one of the advisers was acting as a shadow director to the company and whether the advice he gave was appropriate. We are anticipating launching legal action, which could be against Business Link, the DTI or the individual concerned.'

Mazars is working with Sharma's lawyers, Gateley Wareing, to pursue the claim. As an Asian divorcee and mother of two, she overcame more hurdles than most budding entrepreneurs on her way to building her business.

Not only did she base her company in a regeneration area, but she focused on trying to give jobs to the long-term unemployed.

Quoted in the local Press, Sharma said: ' Business Link Nottingham failed to tell us that Peter Grandfield was a disqualified director and that was unacceptable. I believe they owed me a duty of care and they failed.'

But Business Link Nottingham sees things differently. A spokesman told Financial Mail: 'It is a terrible thing when a business you have founded goes under and it's a very human reaction to look for someone to blame. But all the evidence we have seen suggests that there are no grounds for a successful legal action.'

According to Business Link, Grandfield was an experienced business adviser who specialised in helping businesses in trouble. He was drafted into Oriential Eastern Foods in summer 2002, but only when the company was facing serious financial difficulties, the organisation claims.

'Peter went the extra mile to get additional funding for the business, but at the end of the day he wasn't a miracle worker. His record of saving 98% of businesses he has worked for is outstanding.'

The spokesman did admit that Business Link had not known Grandfield was disqualified, but said this arose from a gap in their procedures.

'There is no question of dishonesty,' said the spokesman. 'At the end of the day, it is a tragic thing for a company to go under. But there is a massive leap from being a disqualified director because your company went insolvent to giving a company bad advice.'