Airport bid partner in debt case

being sued by an American bank for $20m, encompassing alleged

non-payment of a construction loan and recovery of legal fees.

The revelations come as the airport deal is, apparently, on the verge

of conclusion and amid claims they are part of a ''dirty-tricks''

campaign designed to blight the chances of the Younger consortium, which

is seen in some quarters as being the current front-runner.

Another consortium involved, AAP, which includes the former Scottish

Airports managing director, Mr Gordon Watson, rejects suggestions that

it is involved in a smear campaign.

Mr Watson said: ''We are not involved in any kind of 'dirty-tricks'

campaign. We are involved in getting the future of Prestwick Airport

resolved as soon as possible.''

Mr Matthew Chance Hudson, who now stays in Ayrshire, ran a property

group in America which ran into severe financial difficulties. He is

contesting the action being brought by the First Fidelity Bank of New

Jersey and maintains he has been the ''fall-guy'' for a deal which went

sour.

The bank has now instructed lawyers in this country and, depending on

the outcome of the American litigation, the case is set to continue at

the Court of Session in Edinburgh.

Mr Hudson is a director of the Ayrshire Community Airport Project Ltd,

a company formed earlier this year to bid for Prestwick Airport, which

is to be sold off by the British Airports' Authority.

In addition to the local MP, Mr Younger, the other directors are

listed at Companies' House in Edinburgh as being Scottish businessmen Mr

Bill Miller, Mr James Moffat, Mr Stanley Morrison, Mr Robert Macdonald

and Mr Peter Paterson.

Mr Younger, a former Defence Secretary and Secretary of State for

Scotland, who has been the Ayr MP since 1964 has, also, not filed his

ACAP directorship with the House of Commons register of members'

commercial and financial interests, although he maintains his

involvement is common knowledge and that it had come about after the

annual return of members' interests had been completed.

Initially, Mr Younger refused to comment about the First Fidelity case

and Mr Hudson. He declined to respond on whether, in his capacity as

Royal Bank of Scotland chairman, it caused him any embarrassment or

whether he was aware of the court action when he became involved with

ACAP.

He said: ''I'm sorry, I am not characteristically unhelpful but I

think I must make no comment at all on these matters.''

However, a short while later he contacted the Glasgow Herald to say he

had taken the opportunity to consult his records and that he had,

indeed, known about the First Fidelity case when he became involved with

the airport project and Mr Hudson.

''I did know about the situation and decided that there was no action

called for on my part. If I may suggest it, and I'm sure you would in

any case, please be very careful about making any wild allegations.''

The case being brought by the First Fidelity Bank of Newark, New

Jersey, against Mr Hudson involves a principal sum of $11,814,807 which,

it is claimed, is the residue of a $15m loan granted to his Market

Towers Associates property company in 1983.

The loan was for the construction of a 14-storey condominium project

known as the Marina Club in Atlantic City, New Jersey. The First

Fidelity Bank alleges that the borrowers defaulted on their obligations,

leaving Mr Hudson liable for the unpaid portion of the outstanding loan

together with interest, costs, expenses, and legal fees.

According to lawyers acting for First Fidelity, the total amount now

being claimed, with interest and costs added, is in excess of

$20,047,590.

The bank has pursued the case through the American courts. According

to a written opinion by Chief Judge John F. Gerry in the US District

Court of New Jersey in June of this year, the only outstanding point is

current ownership of the Marina Club project and whether the value of

the property should be deducted from the total sum owed.

Lawyers acting for First Fidelity are now taking legal action against

Mr Hudson in the UK. Mr Peter Sarasohn, of Ravin, Sarasohn, Cook,

Baumgarten, Fische and Baime, the New Jersey law firm which acts for the

bank, flew to the UK when writs were served on Mr Hudson.

The Edinburgh law firm, McGrigor Donald, has been instructed to pursue

the case in Edinburgh. Ms Anne Swarbick of McGrigor Donald said

yesterday the initial stages of the case had been completed and the

matter was now at the ''closed record'' stage.

Mr Hudson maintains the timing of the publicity surrounding his

problems and the delicate stage of negotations with the British

Airports' Authority are not coincidental.

''I am the vulnerable one. They can't get to George Younger but they

think they can get at me. I am the stooge. I'm also the spark plug of

this operation and if you take away the spark plug then the car doesn't

run very well.

''I have lived with this hanging over me for a very long time. I'm one

guy against a major bank. It's the last thing I think about before I go

to sleep and the first thing I think about when I wake in the morning.

''Do people realise that you can be sued for $20m by a bank and still

not be a bad person? I have this bank across my throat and I don't know

how I am going to get them off. It is a terrible feeling.

''The only reason I got involved with Prestwick was because I was

asked and because I think that a healthy Prestwick Airport is crucial to

the future well-being of Scotland. British Aerospace, who are involved

with us, are aware of the situation between me and the bank.

''I have to tell all my business associates, once I know them well

enough, that there is something they should know about me. But knowing

about it and having it all over the Glasgow Herald is something else,''

he said.

He declared: ''The facts of the matter are quite simple. I was the

executive chairman of a company and the secondary guarantor of a loan.

''I was asked to guarantee it by the bank to make sure that the

building was built on time and on budget because I was the person in

charge of the project. It was built on time and on budget but the

project got into trouble. I was living in England at that time and the

bank, for reasons of their own, decided not to pursue the first

gaurantor, which was a British company called Espley-Tyas.''

Mr Hudson maintains he was the victim of a legal error involving the

signing of mortgage documents and that he was left to carry the can when

the Espley-Tyas company ran into financial and legal difficulties of its

own.

''Everybody that I deal with is aware of the situation with the bank

suing me. Everybody knows that. I have no secrets. I am not the party

that did any wrong in America. I am the wronged party,'' said Mr Hudson.

Mr Hudson said: ''Let me say one thing. I am actually one of the good

guys in life, not one of the bad guys. One other time after I came over

to this country somebody in a business deal thought they were going to

lose out.

''They started a similar campaign against me and I took very strong

legal action. I want you to know that they were spreading similar

stories. All I can tell you is that I got a very satisfactory settlement

from the other side in a fairly short period of time.''

He added: ''I don't mind what you say about me so long as it is true.

That is your right. I hope you will appreciate that this is not meant to

be unpleasant but I just want you to know ... that if you print anything

about me which is not true and which I consider to be damaging to myself

and to my family then I will take every step available to me within the

law to right the situation.''

Mr Hudson said the case had been going on for years and all that had

happened in the US courts was that one particular Judge had reached an

''opinion'' on some of the issues. He had not yet decided on other

issues and once a judgment had been issued formally an immediate appeal

would be lodged.

He maintained that the issue of ownership of the Marina Club building

was an important one because at one time the building was worth

considerably more than the amount being sued for. ''Depending on what

has happened to it in the meantime it could mean that I don't owe them

anything.

''The bank have offered to settle previously for a sum much smaller

than they claim now and I have said that I would not settle because I

don't owe them anything. I think if good people don't stand up for what

is right then eventually gossips run the world.''

According to First Fidelity's lawyers, Mr Hudson's Kirkoswald home,

Blanefield House, is the property of a company called Blanefield

Investments CV, a company registered in Curacao, in the West Indies.

Mr Hudson said this was a trust fund set up for the benefit of his

children. ''This trust was established before I even came to the United

Kingdom. Actually at the time this particular guarantee was signed for

the bank, at their request by the way, I had all of my assets, for the

most part, in my children's names. For tax planning purposes long ago,

assets such as I had at that time were put in the children's names.''

Mr Hudson's Chicago lawyer, Mr Michael J. Rovell, told the Glasgow

Herald that his client was the wronged party in the dispute and that

irrespective of Judge Gerry's issued opinion the case was far from over.

''This is like World War Two. You guys lost at Dunkirk but went on to

win the war. That's how we see this case. When it gets to the judgment

stage and if Judge Gerry's current opinion becomes that judgment, then

we will immediately appeal to a higher court and I am confident that we

will win.''

Mr Rovell, who was on a Miami golf course when he took the Herald's

call, added: ''I gotta tell you I've known this man since 1983. He's a

good man. He's a lawyer. He's had a lot of things happen to him that

were not his fault and in which he has tried to be honourable, including

this particular deal. He was a gaurantor because Espley-Tyas was coming

in in front of him but he got left holding the bag. That's where it's

at.''

* Yesterday, a Scottish Airports official, acting for BAA, said that

''letters of confidentiality'' giving commercial and business details

relating to Prestwick had been sent to five interested parties but no

definite offers had yet been lodged. ''It is still an on-going

situation.''