A KIDNAP gang watched two businessmen and their families for four weeks before they struck, a court was told yesterday.

John Wood, 36, and David Langhorn, 40, who were snatched from Mr Wood's factory in Hartlepool were told the gang knew where they lived, the court heard.

The men threatened that unless they were paid £600,000, they would kill the pair, rape Wood's wife and kill his children.

Mr Wood told the jury: "I was petrified, absolutely terrified,"

He said that he and Mr Langhorn were beaten up, handcuffed, had their heads covered with pillowcases, and were driven 200 miles in the rear of a van to north Wales, where their captor was revealed as millionaire Volker Kappler.

The court heard that guns were placed against their heads and that Mr Kappler, who owned a plastics firm, gave them a three-day deadline to pay £600,000, which he said was owed to his supply company, Superflexibles, by the pair's business associate, Paul Thompson.

The court was told that Mr Kappler demanded that they confirm they had received VAT rebates totalling £800,000 for their companies, Asgard UK Limited, owned by Mr Wood, and Formel E, owned by Mr Langhorn.

Superflexibles supplied material for industrial hoses to Mr Thompson's firm, VPS, of Bishop Auckland, County Durham, which were sold through Asgard UK Limited and Formel E to a company in Dubai, in which Mr Thompson was a shareholder.

The men were reported missing in March after police found Mr Wood's car unlocked outside his factory, which was also unlocked, Teesside Crown Court was told.

They were found in The Wirral after they were left still hooded in a field. They were wearing tracksuits and trainers given to them by the gang, who stripped them of their clothes.

The court heard that Mr Wood was so terrified that he ordered the transfer of £600,000 into a bank, but then he cancelled it and the men went to the police.

He said that the gang of three or four men had walkie-talkie radios and spoke of changing a plan to take them to Liverpool because they were co-operating.

He denied an allegation by Paul Batty QC that there was a VAT scam over the Dubai connection, or that cigarettes were being smuggled into the UK.

Mr Kappler of Llanfairtalh, Conwy, Wales denies two charges of kidnap and two of blackmail.

The case continues.