Firm was 'close to pounds 2m ransom deal'

GRANGER TELECOM was negotiating to pay a kidnap ransom against the express advice of the Foreign Office when the four engineers were executed.

Granger, advised by security consultants Control Risks, was in the process of trying to arrange a settlement, believed to be in the region of pounds 2m. Just last week each of the four men had spoken to company officials to prove they were alive and as recently as last weekend Granger executives were hopeful that an arrangement was imminent.

Yesterday the Foreign Office admitted it was aware of the company's intentions and had advised it against following such a course. "The company was keeping us informed as to what they were doing although we were not aware of the precise details," a Foreign Office spokesman said yesterday.

"The company was made very clear of Her Majesty's Government's position that it does not pay ransom. We made clear our long-standing position on ransom-paying."

Yesterday afternoon, Foreign Office minister Tony Lloyd chaired a meeting of civil servants and representatives from Granger, British Telecom and the New Zealand High Commission to discuss developments. Representatives from Control Risks were also present. After the meeting Mr Lloyd told the Commons there was no question that the Government had given anything other than "clear and unambiguous" advice to Granger about operating in Chechnya.

Mr Lloyd said the murders of Rudolf Petschi, Stanley Shaw, Darren Hickey and Peter Kennedy were "barbaric and senseless". "I am absolutely of the view that the advice given was specific and could not have been misinterpreted. Granger Telecom did meet with Foreign Office officials who gave that advice in very clear terms," he said.

Earlier, Philip Hammond, Tory MP for Runnymede and Weybridge, where the company is based, said it appeared the Foreign Office had issued conflicting signals to Granger.

The Foreign Secretary, Robin Cook, had earlier spoken of the difficulty of trying to find out what exactly happened to the hostages. After meeting the Russian Foreign Minister, Igor Ivanov, on the sidelines of a Nato meeting in Brussels, Mr Cook said: "Neither the Russian Foreign Minister nor I underestimate the difficulty of making progress in the lawless state in Chechnya. The Russian government throughout has sought to be as helpful as it can within its power, but that power is very limited in Chechnya."

It was revealed that the building of the Chechen company behind the telecom contract was yesterday attacked by grenade launchers. Reports said one guard was wounded after the premises of Chechen Telecom came under fire.

The incident took place amid rumours in London, Grozny and Moscow about the causes of the murders. These include suggestions they may have been the result of a squabble over money between several of the groups involved in Chechen hostage-taking.

Reports have circulated that despite Foreign Office denials, a ransom was paid for the the two British aid workers, Camilla Carr and Jon James, who were released earlier this year.

These claims hardened recently when the Chechen President, Aslan Maskhadov, publicly attacked the chief architect of their release, business magnate Boris Berezovsky, for paying out "suitcases of cash". Unconfirmed reports circulated in Russia yesterday suggesting that the murders followed a dispute over the share-out of the spoils.

Other theories suggested the murders may have been carried out by Wahhabist warlords - devotees of Saudi Arabia's fundamentalist form of Islam. Until now, they appear to have been motivated more by money than faith, but the executions may have been an attempt to assert anti-Western sentiments, and to send a message to the pro-British Mr Maskhadov to steer clear of the West. There are also likely to be allegations that regressive pro-Soviet elements within Russia were involved.