Barclays demand for money 'was close to blackmail'

The Maxwell Trial Day 87
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The Independent Online
A week after his father's death, Kevin Maxwell went to the Bank of England to discuss the group's problems with the then deputy governor Eddie George, the publisher's son told the Old Bailey yesterday.

Kevin Maxwell, who was accompanied by John Melbourn, a senior NatWest executive and Mr George, now the Bank's governor, went through a long list of problems, some of which had been notified to the Bank of England by other banks.

Asked by his counsel Alun Jones, QC, what the Bank of England's attitude was, Kevin Maxwell said: "First of all they thought it was responsible to have come to tell them directly, face to face, the problems they were hearing from other banks. They encouraged me, and specifically the company, to work closely and rely on John Melbourn. Eddie George said he had tremendous experience in handling this type of situation and we could not have a better man to help us."

Earlier this week, Kevin Maxwell accused Mr Melbourn of threatening him and refusing to hand back shares which the bank had been holding as security, even after a promised amount had been repaid.

He said Mr Melbourn threatened that NatWest would not support a standstill proposal unless Kevin Maxwell withdrew instructions over the payment of an inter-company debt.

Kevin Maxwell yesterday accused Barclays Bank of demanding money - also in the troubled days after his father's death in November 1991 - in "circumstances as close to commercial blackmail as I have ever experienced".

He said Barclays too threatened to "destroy" the standstill proposals unless they got a share of money held by Maxwell Communications (MCC) at NatWest. "Their attitude was they were going to be damned if all the proceeds went to NatWest and none to them. It was extremely tough. It was threatening and, as I said, commercial blackmail," Kevin Maxwell told the jury. He said that he and the MCC board had agreed the payment to Barclays in the face of the threats.

Earlier, the Maxwell Group's relationship with Barclays had been more cordial. The bank had been the second or third biggest lender to Maxwell companies. At one stage, Barclays lending, which Kevin Maxwell described as "heroic", peaked at pounds 500m. But by 1991 it had dropped to about pounds 200m. Kevin Maxwell put down the "explosive growth" of the bank's lending in the 1980s to his father's close friendship with Barclays' chairman Sir John Quinton.

The court has heard extracts from the hundreds of letters of condolence Kevin Maxwell and his brother Ian received after their father's death. He read further extracts from letters written by Lord Rippon QC, a member of the MCC board, and from the former cabinet minister Peter Walker.

Lord Walker had been earmarked to take over as chairman of MCC until Robert Maxwell had a sudden change of heart, paid him off and invented a misleading account of the incident for the City, the court has been told. Lord Rippon wrote of Robert Maxwell: "I will always remember him with affection and admiration. He was truly a great man in every way, generous and warm-hearted ... His word was his bond."

Lord Walker said the tycoon was "a very remarkable character". In his letter, he said that bankers had been telephoning him about the underlying quality of the Maxwell Group. He wrote that he had told them the quality of Kevin and Ian.

Kevin Maxwell, 36, Ian, 39, and Larry Trachtenberg, 42, a former Maxwell financial adviser, deny conspiracy to defraud the pension funds by misusing shares.

The trial was adjourned until Monday.