THREE former directors of Diamond Group, the collapsed car breakdown insurance firm, have been banned from holding company directorships for periods of up to six years.
The company, which was largely run by Scottish businessmen, was floated on the Stock Exchange in a blaze of publicity in May 1989, but collapsed six months later with an estimated deficiency of #2.9m.
The Department of Trade and Industry's Insolvency Service said yesterday that Victor Diamond of Whitecraigs, Glasgow, a co-founder and one time chairman of Diamond Group, had been banned by from holding a company directorship for six years.
Diamond's successor as chairman, Michael Housley of Chigwell, Essex,was banned from holding a company directorship for five years.
And Diamond Group's former finance director, Ian King of Ellis Street, Kilmarnock, received a four-year ban.
There was no word of any sanction being applied to Diamond's other co-founder and former managing director Clive Miller, who left Scotland for Florida several years ago.
The Companies Court found that Victor Diamond had misled Diamond Group's auditors, Arthur Andersen, and that he had instituted a policy of under-reporting insurance claims paid in Diamond Group's reports to its underwriters.
Diamond was found to have wrongly recorded a payment of #792,000 into the company by himself and a colleague as a reimbursement from the underwriters. And he failed to provide Diamond Group's auditors with the complete details of an agreement with the underwriters, under which the company was liable for additional premiums of #250,000.
The court also found that Diamond had ''recklessly'' allowed misleading statements to be made in the company's flotation prospectus and that he had ''recklessly'' allowed important facts to be omitted from it.
King was found to have been in breach of his duties to Diamond as finance director by under-reporting claims paid to the company's underwriters. He was also found to have made statements in the prospectus ''that he knew to be misleading'' and to have ''concealed material facts from inclusion in the prospectus''.
Details of the ''unfit conduct'' which led to Housley being sanctioned with a five-year ban were not immediately available.
Diamond Group was founded in 1979 and grew to be the third-largest supplier of mechanical breakdown insurance packages to the motor trade by the time it was floated on the Unlisted Securites Market in May 1989.
It was based in Yorkshire and employed 140 people. The company claimed in its prospectus to have made a profit of #1.2m on turnover of #5.5m in 1988, but was subsequently accused of having made a #726,000 loss that year.
Diamond Group's shares were suspended in October 1989 after a dispute with its auditors delayed publication of the company's interim results. It subsequently emerged that Diamond had made a huge loss and receivers were finally appointed in December 1990.
Shareholders who had invested in the firm lost all their money - more than #4m.The biggest casualty was the Post Office pension fund Postel, which lost #832,000.
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