Regan plotted cover-up of Co-op bribes, jury told

Andrew Regan, the former chief executive of food manufacturer Hobson, masterminded an elaborate cover-up of bribes which he arranged to be paid to secure a lucrative deal with the Co-operative Wholesale Society, a court was told yesterday.

Douglas Day QC, for the prosecution, said Mr Regan, who is accused of stealing £2.4m in 1995 from his own company to pay the bribes, had gone to great lengths to conceal from Hobson non-executives two £1m payments to offshore companies controlled by Allan Green, CWS chief general manager, and David Chambers, chief buyer.

A jury at Snaresbrook crown court in east London was told how Hobson non-executive chairman David Wigglesworth, returning from a holiday in February 1995, was "surprised" to discover that the firm's exclusive supply agreement with 800 Co-op outlets had been extended.

In a series of phone calls and meetings, it was alleged, Mr Regan assured his chairman that "there was nothing to worry about... Hobson's financial advisers regarded [the deal] as something of a coup".

But Mr Wigglesworth was annoyed that a "brokerage fee" of £2.4m had been paid to Israeli businessman Ronald Zimet's offshore company Trellis International. He asked the law firm Allen & Overy to investigate the payment and Mr Zimet's role in negotiating with the CWS.

Mr Day told the jury that Mr Regan had spent nine hours in a meeting in March with two fellow Hobson executive directors to agree a "script" they could all use to explain the £2.4m payment.

Financial director Peter Hallett later told investigators from the serious fraud office that elements of the script - to which he had agreed - were untrue. According to the prosecution, Mr Regan said to his finance director: "Can you help me out here? I feel as if I'm being hung out to dry." Mr Hallett then agreed to changes to the script which he knew to be false.

Months later Mr Regan met Mr Zimet and allegedly offered him a similar "script". Mr Regan had told Mr Zimet everything would be all right if he stuck by the story.

Mr Day said that after Mr Regan's "cover-up" operation, solicitors at Allen & Overy investigating Mr Zimet's fee were handed a final version of the agreed "script" as well as letters from the executive directors, Mr Zimet and Trellis International insisting that none of the funds had been paid to CWS employees.

Mr Regan denies theft and Mr Green and Mr Chambers deny corruption. A fourth defendant, solicitor Paul Thomas, denies aiding and abetting. The trial continues.