The writ, which was taken out in the High Court on Tuesday, relates to the sale of contractor Morrison to AWG for £263m in August 2000. AWG is alleging that Sir Fraser and McBriety made false representations about the financial position of the company and are "accordingly liable for fraudulent misrepresentation".
Sir Fraser immediately issued a statement saying that he intended to vigorously contest the claims and that the writ was an attempt by AWG to distract attention from its failure to manage properly the Morrison business, and its integration into AWG.
He said: "I am deeply disappointed by the damage done to the Morrison name over the past two years under AWG's ownership."
The writ claims that Morrison's profit forecast for the year to March 2001 was £30.5m. AWG says this forecast was wrong; the contractor in fact made a loss for the year of £46.4m.
After it began the action, AWG issued a statement saying that it had done so after an investigation by legal and forensic accountants, and after the former owner had been given a chance to respond to the allegations.
The statement said: "We have a duty to our shareholders to seek to recover losses, which we have sustained as a result of the alleged actions of the defendants."
Sir Fraser said he felt so strongly about the decline of the business that he had recently offered to buy back parts of it. He said he had offered a substantial sum for two Morrison businesses that were surplus to AWG's requirements and that could generate realistic value for shareholders.
It first emerged that Morrison Construction would face legal action in August 2002. Gordon Morrison, who left AWG's board in June 2001, is not the subject of this action. He left the day before the group announced that the contractor had made a £33.8m operating loss in the six months before it was bought by AWG. This led AWG to slash the firm's value by £22.9m.
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