Questions are being asked over compensation at the firm

The Friction Dynamics car parts manufacturer, near Caernarfon, is the site of one of the UK's current longest-running industrial disputes.

A new company called Dynamex Friction took over the plant last week and administrators of the affairs of Friction Dynamics have confirmed that many of the original firm's assets have been sold to companies connected to American owner Craig Smith.

A spokesman for the DTI said: "If it appears to the administrators that there has been misconduct on the part of the directors, then such matters must be reported to the secretary of state within six months of their appointment."

He added that the minister then had the discretion to apply to the court for a disqualification order against the directors.

General Secretary of the T&G Union Sir Bill Morris has written to the trade and industry secretary to ask for an official inquiry into Friction Dynamics.

Local politicians AM Alun Ffred Jones and MP Hywel Williams have joined calls for an investigation.

They want to know how the firm's controversial American boss, Craig Smith, may manage to avoid paying court-ordered compensation to his sacked workers.

At the same time they are querying how he may have managed to buy up the company's assets through other firms he runs.

Mr Williams has asked if the company had the right to dispose of machinery bought with a �1m government grant and if the taxpayer could get any of that money back.

Our members are being cheated out of the compensation owed to them Sir Bill Morris, General Secretary of T&G Union

The new company Dynamex Friction has been set up by Mark Jones, a former factory manager at Friction Dynamics.

It has re-employed 40 staff and says there are plans to up this to 62, about two thirds of the number employed at the factory until two weeks ago.

Sir Bill said the administration of this company and the sale of its assets must be investigated.

"We believe it is a tactical manoeuvre designed to avoid making the compensation payments to the 86 unfairly dismissed workers and to put the financial burden onto the taxpayers of this country," he said.

"The 'new' company name is an insult to the workers at Friction Dynamex.

Sacked staff picketed factory for two years

"Our members were sacked for taking part in lawful industrial action and are now being cheated out of the compensation owed to them."

Two years ago, 86 Friction Dynamics workers were sacked during a dispute over pay and conditions.

They have picketed the plant ever since - they recently won a court battle, and had hoped to get substantial compensation from Friction Dynamics.

But that pay-out now looks unlikely.

Two weeks ago, the company went into administration and sacked its remaining 93 workers.

The DTI said that there were provisions to pay employees of insolvent companies under the terms of the Employment Rights Act.