A �130m court action has been launched against the former chairman of Scotland's largest construction firm, Sir Fraser Morrison.

The move by Anglian Water (AWG Plc) follows the deal in September 2000 to buy Morrison Construction for �262m.

The High Court action relates to claims AWG was induced to acquire Morrison by representations about the construction firm's profit forecast.

Sir Fraser denies the allegations

The allegations against Sir Fraser and his Group Operations Director, Stephen McBrierty, include fraud and negligence.

Sir Fraser and Mr McBrierty have denied the allegations.

AWG announced that through its subsidiary AWG Group Limited it has launched a claim in the Chancery Division of the High Court in London for damages.

Legal documents were issued by AWG and have now been served.

AWG alleges that Morrison's profit forecast for the then current year to March 2001 was �30.5m.

In fact, Morrison made a loss for that year of �46.4m, meaning the company was �76.9m worse off than expected.

Accounts row

Sir Fraser said he would vigorously contest the claims and he branded AWG's integration of Morrison "a text book example of mismanagement and financial damage".

"It is simply an attempt by AWG to distract attention from its failure to manage properly the Morrison business and its integration into AWG," he said.

But AWG dismissed Sir Fraser's explanation of the loss.

AWG insists Morrison's September 2000 management accounts were prepared by Morrison's existing management without any input from AWG.

They claim the accounts showed a half year loss of �11.1m as opposed to a forecast profit of �9m, sparking their investigations.

Proceedings under way

"Ours is a robust claim, which will be pursued with vigour," the firm added.

A spokesman for AWG said: "This is not a course of action which we have taken lightly.

"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.

"The Particulars of Claim make very serious allegations about the conduct of Sir Fraser Morrison and Stephen McBrierty including allegations of fraud and negligence."

A hearing is not expected until at least spring 2004.