Saturday, October 02, 2004

Diana charity faces 14 million pound lawsuit in USA

Diana charity faces £14m lawsuit in US

KATE FOSTER
kfoster@scotlandonsunday.com


THE Diana, Princess of Wales Memorial Fund was last night facing a £14m crisis after a US firm was given the go-ahead to sue the charity for damages.

A Californian judge ruled an American souvenir firm could sue the beleaguered fund for compensation, the latest step in a long-running row over Diana memorabilia.

The Memorial Fund is being sued by the Franklin Mint over a failed legal bid six years ago to stop it producing Diana dolls, plates and other souvenirs. That left the charity with a £4m legal bill and the Franklin Mint is now counter-suing for malicious prosecution in the original case, which could mean the charity having to pay £14m in damages plus a second legal bill.

The long-running legal battle between the two has seen the Fund freeze all grants to charitable sources.

Yesterday, Andrew Purkis, chief executive of the Memorial Fund, insisted the action was "groundless and implausible" and insisted he was looking forward to the resolution of the case. The legal action will be heard on November 5.

Purkis said: "We are pleased that the damaging period of waiting will soon be over and we have full confidence in the great strength of our defence.

"We regret the waste of time and energy caused, and the interruption of much-needed humanitarian work among some of the world’s and the UK’s most vulnerable people."

The Franklin Mint could not be contacted yesterday but it has previously insisted the charity should be held accountable for its "bad behaviour".

Last year, a spokesman for Franklin Mint insisted the Fund had fought a "suicidal" legal action and should be held responsible.

The company has pledged that any money it receives from the latest legal action will go to charity.

The Diana Memorial Fund was set up in 1997 to channel £19m worth of gifts, donated during the outpouring of grief after Diana’s death in a Paris car crash, and £37m raised by Sir Elton John’s song ‘Candle in the Wind ’97’ into humanitarian projects.

The row began when the Memorial Fund accused the Franklin Mint of commercially exploiting the identity of the princess and falsely implying that its products would benefit her estate.

The charity embarked on the case claiming it had a duty to protect Diana's image, name and likeness from use on unauthorised merchandise. It accused Franklin Mint, owned by the Los Angeles-based billionaires Stewart and Lynda Resnick, of acting "like vultures feeding on the dead".

After that case finished, Franklin Mint said the Fund appeared to have sacrificed the welfare of its good causes to pursue the claim. It has defended its decision to pursue the case for compensation, insisting it is not a not a matter of money but principle.

It has also criticised the Fund for freezing grants to 127 beneficiaries and claimed it has been the victim of the "most nasty PR campaign" by the Fund.

The Memorial Fund stopped giving grants to projects last year as part of its fight against Franklin but said it had secured replacement funding so that no project collapsed. It has £48m in the bank.

Causes, including HIV/Aids treatment centres and landmine clearance projects, charities which were championed by Diana, are under threat because of the financial situation.

About 120 voluntary groups could be affected while 500 jobs at the Fund and its beneficiaries are under threat. A third of its staff have already stopped working for the Fund.

A spokeswoman for the Fund said they had secured an extra £6m to support ongoing projects while legal proceedings were underway. The ruling means the Fund will continue its freeze on grants to charities.

Evidence submitted to the Los Angeles court last month revealed the attorney-general rapidly developed serious doubts about the merits of the case against the Franklin Mint. Papers also showed the princess’s sister, Lady Sarah McCorquodale, president of the Fund, and the trustees believed they had been "misled" by their US legal adviser.

Last night a spokeswoman for the Charity Commission said: "It is always a shame when charities of this stature that have done such good work run into difficulties.

"Our advice is that voluntary organisations exercise great care before embarking on litigation.

"This is especially bad news as this is a high-profile charity with an international reputation for supporting hard-to-fund projects and an impressive track record of helping thousands of vulnerable beneficiaries.

"The Commission has given advice and guidance to the Fund throughout the proceedings but, ultimately, decisions about running the charity remain with the trustees.

"There are cases where charities have no choice but to got to court to protect their reputations. But this long-running case highlights the serious consequences that may arise from going to court, especially when the legal battle is joined with litigators overseas.

"The Commission will do what it can to support the charity and we very much hope that the Fund succeeds in its bid to keep its programmes running."