A FORMER brewery chairman today launches an attack on the company which sold it off, claiming that profits from the deal were grossly over-estimated.

Sir Paul Nicholson says that four years after the Swallow Group closed Vaux brewery, in Sunderland, the decision has proved to have been wrong.

The move was prompted by Swallow's desire to concentrate on its hotels business. It marked the end of a 162-year tradition of brewing on Wearside and the loss of more than 440 jobs.

Sir Paul's brother, Frank, led a management buy-out attempt, but Swallow rejected the £70m offer for the brewery and some of the 664 Vaux pubs. The board was told it could receive £15m more by opting for an asset strip.

Sir Paul, company chairman for 22 years and previously managing director, resigned in March 1999 when the closure was confirmed.

Sir Paul, whose memoirs are published this week, says that while the board believed it was going to make £15m more, it actually received between £2m and £3m less than what the management buyout offered.

He attributes this to the pensions deal costing millions more than planned and the pension fund having insufficient surplus.

Speaking on BBC1's Inside Out, at 7.30pm tonight, he says: "There should still be a brewery here and there could have been a brewery here, employing hundreds of people."

Peter Catesby, the chief executive who steered Vaux through its break-up, says: "Regrettably, we had been buying trade through giving loans to people with insufficient security for the loan. Very often, these were loans called in by other breweries."

He says the packages offered to Vaux employees were the best ever from a North-East company.

"They were a very reasonable reward for the hard-working people who had been very loyal to Vaux for a long time," he says.