Chips are down in family feud for food empire

THE children of Florenceville, New Brunswick, will soon get their annual break from school to help their families harvest this year's potato crop. Potatoes, and families, are important in the sleepy village near Canada's Atlantic coast. Yet that has not stopped its leading citizens, masters of a pounds 1.5bn global food company, from lunging at each others' throats.

Brothers Harrison and Wallace McCain, founders of the world's largest frozen chip company, are in a vitriolic battle for control of McCain Foods. The feud has even threatened their relationship with McDonald's, their main customer.

Wallace wants his son Michael, 34, the head of the US division, to get the chief executive's job. Harrison favours their nephew Allison, 45, the boss of the Yorkshire-based UK subsidiary. Last week Harrison won shareholder support to have Wallace ousted. The loser is taking the fight to court.

The feud has torn the family apart and threatens to do the same to the company. Andrew McCain, 40, chairman of the McCain holding company and the brothers' nephew, says the rift has hung over the company's day-to-day management for more than two years.

'The problem, as I saw it, was we had two co-CEOs who were involved in a war in the middle of our company,' he told Wallace's lawyer during examination. Other court documents reveal a bitterness redolent of a TV soap opera. 'You consistently misrepresent my position with friends, colleagues and the public,' Wallace wrote. 'To accuse me of trying to manipulate people is akin to the pot calling the kettle black in the extreme.' And in an affidavit Harrison said: 'Should Wallace remain as co- CEO, the result will be . . . to cause serious harm to the McCain business.'

By all accounts the brothers used to be close. Their houses sit side by side, overlooking their flagship plant. Both branches of the family attend the same Anglican church.

At 66, Harrison is the elder. Balding and shorter than his brother, he is gruff, even abrupt, in manner. Wallace, 64, is thinner, with a shock of white hair and a softer voice.

McCain Foods was founded in 1956 when Harrison, Wallace and two other brothers, now deceased, gave up farming and invested pounds 50,000 to build one of the first plants using the latest technology to freeze potatoes. Over 38 years they have turned the family firm into an international specialist able to hold its own against conglomerates such as Heinz. By 1993 McCain was making profits of more than pounds 40m. Its UK division came top of the league with profits of pounds 15m. The US - with profits of just pounds 40,000 - was the only big market where its branded chips were not a household name. Harrison and Wallace shared the chief executive's job, and a hand-picked board of sons and nephews representing the 33 family shareholders was groomed to take over the firm.

The first hint of trouble came when Wallace appointed his son Michael to head US operations, against his brother's wishes. He then enlisted the Ontario Teachers' Pension Plan Board to put pounds 50m into a pounds 500m buy-out of his relatives. Incensed, the McCain board retaliated by voting to oust him. The fight became public when Wallace went to court to counter the move.

After a three-month hearing, the judge recommended the brothers step down and hire an outside chief executive. Dissatisfied, Harrison again tried to have Wallace removed. This time he called for a shareholders' meeting to amend the company constitution. Wallace suggested they take the firm public or split it in two.

By then, the second generation was embroiled in the feud. Wallace's sons, Michael and Scott, launched legal action against the board to stop Harrison's motion. They claimed the resolution needed a two-thirds vote to pass, which would give Wallace, with slightly more than a third of the stock, a veto.

Allison McCain has attacked Michael's performance in the American job. 'Michael has no interest in what the other shareholders want,' he said. 'Michael has a very great interest in Michael McCain.'

(Photograph omitted)