DIRECTORS WIN pounds 4.7m OVER SLUR; Brothers to be compensated for collapse of Colorvision stores.

Byline: Chris Brown 

TWO brothers have won almost pounds 5m compensation after their company collapsed following criticism by a Government watchdog. Merseyside-based Colorvision closed in 1996, just months after the Office of Fair Trading issued a statement warning the firm it could lose its licence.

The OFT had stated it was ``minded to revoke'' the company's consumer credit licence after examining a series of trading standards convictions against Colorvision.

The statement sparked a dramatic drop in the value of Col-orvision's shares, which ultimately led to the brothers' operation going into administration.

Eventually, 90 outlets closed with the loss of 700 jobs nationwide.

Last night, the OFT apologised for its part in the firm's downfall and agreed to pay Neville and Bernard Michaelson pounds 4.73m compensation.

Neville will receive pounds 3.48m, while his brother Bernard, 63, is to get pounds 1.25m. The announcement follows a seven-year legal battle by the men to clear their names, and a four-year investigation by the Parliamentary Ombudsman after the closure of the 32-year-old business.

Speaking to the Daily Post last night, Neville Michaelson, 58, said: ``This has been a night-mare for both of us and we are relieved that we can finally clear our name.

``We would like to thank the paper for the support they have given us and also to Lord Alton and Louise Ellman who helped us through the dark days.

``We are sorry to the people who lost their jobs through this but at least now we can prove that it was not our fault.

``Finally we can both hold our heads up high again. We feel vindicated.

``We have no plans for what we are going to do next. To be honest, I never thought this day would come.

``I hope this horror story cannot happen to anybody else again.''

OFT director general John Vickers publicly apologised to Neville and Bernard for the ``injustice'' of the body's statement issued in October 1995.

The apology follows the publication of a report by the Parliamentary Commissioner for Administration in March 2000, which concluded that there was ``substantial maladministration'' by the OFT during the affair.

The Ombudsman found ``the whole revocation process (was) so thoroughly compromised and unsound that it should have been abandoned'' and that the OFT's faults were ``fundamental and integral''.

Last night, Mr Vickers said: ``I apologise unreservedly to the Michaelsons for the misfortunes which they suffered as a result of OFT's maladministration six and a half years ago. Since that time, the OFT has reviewed its procedures and taken steps to ensure this could not happen again.''

The OFT has now reinforced its procedures to ensure that those taking licence revocation decisions do so only on the basis of sound evidence.

Its internal structure has changed to separate those investigating complaints to those deciding whether or not to revoke a licence.

The compensation figure takes into account losses in salary and pension contributions, the disposal of shares at no value, legal expenses and the effect on the brothers' health and reputation.