A businessman accused of covering up an £11 million black hole in the accounts of a Birmingham company which was set up by Midland MP Geoffrey Robinson was described in court yesterday as a man of "good character".

Richard Carr, of Snitterfield Road, Bearley, Warwickshire, faces seven counts of fraud relating to his time as the chief executive of TransTec, which collapsed in 1999.

Mr Robinson, a former Coventry North West MP and Paymaster General in Tony Blair's Cabinet, left the company in May 1997 and is not implicated in the alleged fraud.

The charges against Carr centre on a failure to declare an £11 million ($18 million) compensation settlement deal with Ford to the company board, auditors, shareholders or the Stock Exchange.

Bill Jeffrey, the company's finance director, has already pleaded guilty to seven similar counts.

However, Birmingham Crown Court heard yesterday that the payments were not a compensation deal with Ford over TransTec's failure to meet a contract to supply single overhead cam shaft cylinder heads for the engines of the Ford Explorer in 1993.

It had been alleged earlier in the trial that Carr and Jeffrey agreed to pay the cash in 1996 after Ford discovered seven cylinder heads had cracked casings and leaking engines.

The court heard yesterday that the payments represented a "cost down agreement" between TransTec and the US car giant which would then secure future trade between the two companies.

This would have meant that the agreement was not "contractual", and it would not have been necessary for the funds be shown in the accounts, the court heard.

Judge Derek Stanley, during his summing up, said defence barristers had argued that even if this scenario was not correct, there was no evid ence to prove Carr's dishonesty.

He said: "The defence case is that the agreement was in reality an additional cost down agreement in respect of further trade and that its conditionality meant there was no need for it to be shown in the accounts in the way that the prosecution contend.

"Furthermore, the defence say even if they are wrong, there is no evidence that Mr Carr was acting dishonestly.

"There was no evidence that he was 'in' with Mr Jeffrey and that he too was deceiving the auditors in the way that the prosecution contend.

"We have heard that he was a man of good character not just in a sense that he had no convictions, but witnesses have spoken positively of his good qualities.

"They spoke extremely highly of Mr Carr, referring to his integrity, saying they would trust him impeccably."

The defence also alleged that Carr and Jeffrey were not working as part of a "joint enterprise" as they had "different jobs and different responsibilities".

The pair "shared" in the negotiations about the "original agreement" but "nothing about Jeffrey" changed the defence's position that this was a "trade agreement" which had nothing to do with compensation, the court heard.

The defence had also alleged that Jeffrey had "made a mistake" in pleading guilty.

The trial continues.