Union chief accused of ?130,000 fraud

Allegations that Roger Lyons, the general secretary of the Manufacturing, Science and Finance Union defrauded the union of nearly £130,000 from "shell" bank accounts were made yesterday in an unfair dismissal case being brought under the government's whistleblower legislation.

Marcia Solomon, 32, a former secretarial assistant to Nelson Mendes, the union's head of finance, claims she saw cheques worth about £34,000 drawn from fake union branches - £5,000 payable to her boss and £29,000 to the general secretary.

She also alleged in a written memo to John Chowcat, then assistant general secretary, that "payments from shell accounts amounting to nearly £130,000 in the year 1997" were made to Mr Lyons and Mr Mendes. The shell accounts were in the names of two defunct branches.

She also passed details of Mr Lyons' and Mr Mendes' expense accounts to Mr Chowcat - placing details of "financial irregularities" on his desk. She alleges Mr Mendes tried to conceal the accounts after being seen leaving his office in the early hours after removing numerous box files.

The union says an investigation by its accountants, HW Fisher and Company, did not find any evidence of financial impropriety against Mr Lyons or Mr Mendes. It also says the accountants' findings were cleared by the certification office for trade unions, which found HW Fisher's report "admirably thorough".

Mr Chowcat - who is to give evidence on Ms Solomon's behalf at the employment tribunal in central London - also withdrew the allegations of impropriety against Mr Lyons and Mr Mendes. He later left the union, receiving a £250,000 payment after signing a confidentiality agreement. The tribunal decided yesterday that details of the agreement would have to be released to the hearing.

Lawyers for both sides outlined the case yesterday. Jason Galbraith-Marten, for Ms Solomon, said she was bringing two cases against the union - for unfair dismissal and wrongful dismissal. An action for racial discrimination had been withdrawn.

He told the hearing that Ms Solomon would have to prove "she acted in good faith" under the new whistleblowing legislation in reporting the alleged fraud and impropriety to Mr Chowcat.

She intended to argue that she had a genuine belief that both were engaging in fraudulent activity and reported them to Mr Chowcat as he had responsibility for staff matters.

Sarah Moor, for the MSF, said the union's case was that she knew the allegations were untrue when she made them. She could not claim protection from dismissal as a whistleblower and had been dismissed for "gross misconduct".

The union denies Mr Mendes destroyed evidence and says she passed the information on to Mr Chowcat because of his dislike for Mr Lyons. It also points out that she did not cooperate with the union's inquiry into the matter.

The union is not challenging the details of Mr Lyons' expenses - which included using his union's credit card to pay for a 25p croissant and buying two radios, a video recorder, linking to the internet at home and buying a leather briefcase and luggage trolley.

He also charged "sustenance" figures of £4 after meeting Tony Blair and £19.65 after meeting Gordon Brown. He claimed these were to buy drinks at the Red Lion public house in Whitehall after the meetings.

He also regularly spent money on takeaways and wine when he returned home. He was cleared by the accountants of breaking union rules.

Mr Lyons - who earns nearly £97,000 a year from his a job and as a member of the competition commission - has opted not to give evidence.

Today Ms Solomon, who earned £19,500 a year in her MSF job, will give evidence.