A row erupted yesterday at Dawson International after the cashmere group's biggest shareholder launched an attempt to oust Mike Hartley, the chairman.

Leeds Group, which is controlled by Peter Gyllenhammar, the Swedish activist investor, wants to replace him on an interim basis with David Bolton, one of its nominees, who has been on the board since last July.

Dawson, which used to own Pringle and which supplies cashmere to Prada, Gucci, Christian Dior and Burberry, argues this would hand Leeds Group control of the company without paying a takeover premium.

Leeds snapped up a 28.8 per cent stake in Dawson in May last year when the shares, which closed unchanged last night at 2.75p, were 1.5p. At the time, Dawson was in negotiations to sell itself to Zhongyin Cashmere Company of China, one of its key suppliers — but these talks ended in early June. Subsequently Leeds succeded in getting two of its nominee directors on to the board, one of whom was Mr Bolton, in the face of opposition from Dawson.

Speaking from China, where he was visiting suppliers, Mr Hartley told The Times: “David is not best-equipped to do the job, and he certainly wasn't successful when he was last in textiles, in the late 1980s. I was planning to retire from the board anyway but, having turned around the company, I was keen to leave it in the right hands.”

Mr Hartley, a former main board director of Coats Viyella, when the textiles group was a FTSE-Mid 250 company, added: “I have spoken to Peter Gyllenhammar a few times and obviously we have a total disagreement. Peter is somebody who knows only one way — his way — and he doesn't brook any argument.

“Being realistic, there's a fair chance of this motion passing but that doesn't mean that one should kowtow to people just because they tell you they want their own way. That's not the way public limited companies should be run.”

But Mr Gyllenhammar hit back: “The background to this is that Mike Hartley declared his intention to resign some time ago and that was crystal clear. In my world, being chairman is a long-term commitment. I don't think it's good for an organisation to have a chairman who says he'll resign, then says he will stay on.”

Mr Gyllenhammar, who is well known in the smaller companies sector for taking stakes in businesses and then agitating for change, dismissed suggestions that Leeds was seeking control of Dawson without a premium.

He added: “If we had wanted to take control of the company, for a particular reason, we could have done so a long time ago. It is very clear to us that the only thing we want to do is to act in the interests of all shareholders and ensure that the company is efficiently managed.

“There hasn't been a penny paid to shareholders in dividends since Mr Hartley was chairman and, under his fiefdom, the share price has fallen by 80-90 per cent. To me, it's not even that clear he is that committed to the company — he sold a big chunk of his shareholding in March 2006.”

Mr Gyllenhammar was also scathing in his criticism of David Cooper, Andrew Bartmess and Stephen Russell, Dawson's three independent directors, who wrote to shareholders yesterday urging them to keep Mr Hartley on the board.

He added: “I laughed out loud when I saw their letter. To the best of my knowledge, they have taken £800,000 out of the company in fees yet they only have £500,000-worth of shares between them. It's an absolute joke.”

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