Court throws out action against C&W

ALL the $3bn (£1.63bn) class actions lodged against Cable & Wireless and its former chairman Sir Ralph Robins were dismissed by US courts last night.

The judge in the US District Court, for the Eastern District of Virginia, said allegations that C&W had violated US securities laws 'failed to state a claim' - in other words there was no case to answer.

The case, filed in February last year by infamous class-action lawyers Milberg Weiss and joined by UK group Class Law, has been hanging over C&W as the last remnants of the disastrous foray into the US internet world under former chief executive-Graham Wallace.

Accusers in the States, led by West Virginia Investment Management Board and the State Universities Retirement System of Illinois had alleged C&W made false statements about its financial health by failing to disclose it had a potential £1.5bn tax liability after its sale of mobile phone network One2One.

The action also claimed C&W had billions of dollars of property lease commitments which it failed to disclose. In November 2002, C&W revealed it had £2.2bn of such commitments.

C&W can only claim costs if it can show that the complaint was 'frivolous'. It has yet to study the full ruling by Judge Bruce Lee.

Costs are expected to run into hundreds of thousands of dollars. C&W was represented by law firm Howrie Simon.

In March, the Virginia court backed C&W's action to have two of the three class actions dismissed, but allowed one action on behalf of non-US shareholders to proceed.

Last night's ruling found against all the class actions and forbade them being amended. However, the plaintiffs can still appeal.

The potential tax liability came when C&W sold its stake in UK mobile arm One2One to Deutsche Telekom in 1999.

Unknown to shareholders, C&W had ag reed to indemnify Deutsche against any tax liabilities arising from the sale, up to the tune of £1.5bn.

However, this was not revealed to shareholders until three years after the sale.

C&W said today it could not comment further until it had seen the entire memorandum of opinion and orders from the Virginia Court.

Shares in the telecoms group, now chaired by Richard Lapthorne rose 1 3/4p to 129 1/4p today, but are still less than a tenth of their value at the height of the tech boom in 2000.