THE parent company of a Kidderminster firm which closed last year has revealed it is to claim more than £2 million from its former boss.

About 100 employees at Folkes Forge, Stourport Road, lost their jobs when the plant closed last September.

The Folkes Group said it was seeking an out of court settlement with Constantine Folkes who resigned as group chairman last June and as chief executive and director in July.

In a statement, group executive chairman John Hartley said as a result of a comprehensive investigation by KPMG the group was seeking a "principal sum exceeding £2 million."

He added: "A material element of the claim relates to Remlane Properties Ltd, the private company controlled by Mr Folkes."

Mr Folkes, who was the eighth generation of his family to lead the Lye-based parent firm, resigned on June 14 amid an Inland Revenue probe into the group's tax affairs.

At the time of the closure announcement Mr Folkes blamed Labour government policies for the demise of the Kidderminster firm which dates back 300 years.

The latest announcement came as the company revealed a big increase in operating profits for the year ended December 31 2000 - up 37 per cent to £3.5 million.

Mr Hartley said that if the claim against Mr Folkes were successful, it would lead to a "significant recovery of funds."

But he added the group would still face a considerable outlay arising from any settlement with the Inland Revenue and HM Customs & Excise for corporation tax and VAT and any associated interest and penalties imposed. He said £1,850,000 would be set aside.

"I would emphasise, nevertheless, that in addition to the principal sum claimed, there will be a claim for recovery from Mr C J Folkes of any penalties, interest and professional costs incurred by the group in pursuing this whole matter."

He added the financial standing of the group would not be materially affected by the situation and the total amount recovered was expected to exceed costs incurred.