UK Secretary of State for Defence Liam Fox has confirmed he was made aware of a legal dispute between private equity firm Porton Capital and US technology conglomerate 3M during a discussion with the buyout firm's chief executive in the UAE earlier this year. A spokesman for Fox said he did not discuss the issue in detail however.
According to press reports, Fox previously denied discussing the case with Porton head Harvey Boulter during his UAE trip but later changed his stance after UK daily The Guardian reportedly presented Fox with fresh evidence demonstrating otherwise.
What began as a dispute over a sour deal made by the government and Porton to 3M has since ballooned into allegations of blackmail and libel, placing Fox in the uncomfortable position of explaining his involvement in the affair.
The dispute began when Porton Capital and Ploughshare, a subsidiary of the UK's Ministry of Defence, commenced legal proceedings against 3M following the latter's purchase of medical technology company Acolyte in 2007. The two sellers claimed they were due earn-out payments as part of the deal, alleging 3M failed to properly commercialise the business and develop it to its full potential.
3M however launched its own lawsuit against Porton Capital earlier this year, alleging Boulter had tried to blackmail the company into settling the initial case for $30 million.
An email, seen by Private Equity International, sent shortly after that trip from Boulter to a lawyer representing 3M said “…in Dubai, I had 45 minutes with Dr Liam Fox, the British Defence Minister, on our current favourite topic”.
The email continued, saying litigation brought against the company was ultimately “about losing face” and implied that unless a settlement was reached 3M’s British-born chief executive George Buckley could lose his recently awarded knighthood.
Failing to settle would leave the British government “quietly seething, with ramifications for a while – they have memories like elephants”, the email said.
3M is currently in negotiations for a number of new business relationships with government units in the UK, according to court documents.
Fox could potentially be summoned to explain his involvement under oath in the US, according to reports.
An MoD spokesman said: “Dr Fox was in the UAE on official business transiting through from a visit to British Forces in Afghanistan and undertook a number of Gulf media engagements while there. During their meeting Mr Boulter disclosed his involvement in a legal case as a matter of propriety, but Dr Fox did not enter into a discussion about this in any respect and at no point raised or discussed the issue of a knighthood.”
Boulter, who denies the charges of blackmail, has reportedly begun proceedings against 3M, accusing the company of libel.