A clan heir who fraudulently tried to fatten up his ailing computer firm in readiness for flotation is facing jail after the firm went bust with debts of more than £4 million, a court heard today.

Disgraced company director Charles Forsyth, of the wealthy Clan Forsyth, which once owned Ethie Castle, near Arbroath, sold sub-standard computers as new from his North Yorkshire company.

He then secured more than a £1.5 million in overdraft and credit letter facilities by telling The Yorkshire Bank he once ran the sales department of Viglen Computers, previously owned by Alan Sugar, and built it up to a £25 million-a-year turnover.

Forsyth was due to stand trial at Newcastle Crown Court this week but on Tuesday admitted a string of fraud and copyright offences relating to his firm, Personal Computer Science Ltd (PCS), which went into receivership in 1999 with the loss of 150 jobs.

The charges relate to a period between November 1997 and April 1999 when Forsyth supplied defective computers, hardware and software.

The charges he admitted included securing a £750,000 overdraft facility and a 1.5 million dollar (£830,000) letter of credit from the Yorkshire Bank.

Forsyth, 45, of Littleworth, Wheatley, in Oxford, also admitted securing a Regional Selective Assistance grant from the Department of Trade and Industry for £250,000.

The other charges relate to breach of copyright.

Newcastle Crown Court heard today that defective computers, some of which did not have hard drives and which were returned by disgruntled customers, were re-packaged and sent out to other unsuspecting buyers as new.

At one stage he had multi-million pound contracts with major supermarkets and retailers but once the complaints started flooding in the contracts with such firms as Tesco and Comet were cancelled.

In some stores returns reached a peak of 70%, while at many others they averaged 30% to 40%.

Gary Burrell QC, prosecuting, told the court: ''Retailer after retailer started raising concerns until eventually all of them refused to sell his products.

''We don't contend he was hiding money illegally but the more successful the business became the more he would benefit financially.

''The icing on the cake was the intended flotation on the Stock Exchange which fuelled his expansion of PCS.

''He was going to get £1.5 million up front and the rest in shares.''

Forsyth ran the company with a rod of iron and threatened to sack anyone who disagreed with him.

Mr Burrell added: ''Charles Forsyth had a number of nicknames at PCS including the Fat Controller and Scrooge.

''Anyone who disagreed with him was moved out of the company. He carefully got rid of staff who found him out and would lie without shame.''

During the Serious Fraud Office investigation Forsyth fled the country and travelled to Australia where his family now lives.

He was arrested in November 2002 - when he was found to have a false passport and false driving licence - and held in an Australian prison for almost a year.

He was extradited from Australia in January 2004.

Judge Guy Whitburn QC has warned Forsyth to expect a custodial term when he is sentenced tomorrow.