Alleged threat to knighthood for 3M chief executive could lead Ministry of Defence to sue private equity boss
The government has distanced itself from a private equity boss for threatening to use his political muscle to "blackmail" the head of one of America's biggest companies.
The Ministry of Defence stepped back after Harvey Boulter, chief executive of Porton Capital, allegedly claimed he would use his government influence to interfere with a knighthood awarded to the British-born chief executive of Post-it note maker 3M.
Boulter suggested he had the backing of the defence secretary, Liam Fox, when he allegedly demanded 3M pay $30m (£18.5m) from 3M to settle a long-running court case over disputed payments for potentially life-saving MRSA technology part-owned by the MoD.According to 3M's lawyers, Boulter told them that if the case were not settled out of court, the government might reconsider a knighthood recently awarded to George Buckley, 3M's chief executive officer.
The US firm has launched a countersuit accusing Porton Capital and Boulter personally of "blackmail".
The MoD has refused to rule out launching its own legal action against him, for bringing the government into disrepute.
"Dr Fox met with Mr Boulter to discuss an entirely different matter. At no point did he enter into any discussion about this legal case, nor was there any mention of anyone's knighthood," the MoD said.
The legal battle centres on emails Boulter sent to 3M lawyers 10 days ago.
"As a result of my meeting [with Liam Fox, the defence secretary] you ought to understand that David Cameron's cabinet might very shortly be discussing the rather embarrassing situation of George [Buckley]'s knighthood," Boulter said in the first email [see footnote]. "It was discussed today. Governments are big and sometimes decisions in one part are not well co-ordinated."
When 3M did not respond to the apparent threat, Boulter sent a second email demanding an answer within 12 hours.
The emails form the basis of 3M's lawsuit against Porton Capital, and Boulter personally. "Instead of awaiting the outcome of the pending litigation, defendants and their investors have engaged in an unlawful campaign to blackmail 3M into paying $30m in order to avoid the continuation of the campaign by which defendants seek to publicly defame 3M and its chairman and chief executive, and to tortiously interfere with 3M's legitimate business pursuits in the UK," 3M said in its legal filing.
The legal action by 3M is a countersuit to one from Porton that claims 3M owes up to £41m for MRSA technology part-owned by the MoD.
Boulter refused to comment.
• This article was amended on 15 July and 14 October 2011 to remove text that suggested the government had attacked Harvey Boulter, chief executive of Porton Capital. This has been corrected. In addition the following clarification was appended: In the story above, reporting the background to a legal dispute between an investment company, Porton Capital and US conglomerate, 3m, we quote an email from Harvey Boulter, Porton's chief executive, to William Brewer, a lawyer acting for 3m: "As a result of my meeting [with Liam Fox, the defence secretary] you ought to understand that David Cameron's cabinet might very shortly be discussing the rather embarrassing situation of George [Buckley]'s knighthood". Boulter has contacted us and asked us to state that the meeting at which Buckley's knighthood was discussed was not the one with Fox but was at another meeting he had that day connected to the dispute.