£300m hanging on last-ditch Maxwell talks

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The Independent Online
Crunch talks are taking place this weekend in a last-ditch attempt to head off a blizzard of litigation over the Maxwell pension funds scandal.

The negotiations, before Thursday's final deadline for a global settlement, will decide whether pension funds representing 20,000 Maxwell pensioners will receive up to £300m in compensation from a series of international financial institutions, or be forced to take expensive and lengthy legal action.

The stakes are high. The institutions, such as Lehmans, face claims of over £80m while the auditors of the Maxwell companies, Coopers & Lybrand, face claims for negligence totalling £305m.

If the final talks are successful, four years of uncertainty for the pensioners will be nearly over. Pension trustees need £300m from City institutions involved in the saga to replace funds looted by the late Robert Maxwell, but so far have been offered significantly less. Some sources put the institutions' offer as low as £230m.

If the talks fail there is a real possibility that the trustees of the Maxwell pension funds, acting on behalf of the pensioners, will be forced to sue the institutions holding disputed pension fund assets, adding further years of uncertainty, with no guarantee that they will win.

There is much enthusiasm for an out-of-court settlement involving all the biggest claims - and not just from the pensioners. If Sir John Cuckney decides that the possibility for a once-and-all global settlement is not there, the institutions will face further years of bad publicity arising from the Maxwell scandal. This will be made worse if they are sued by the pension trustees, as is likely in the event of a breakdown of the talks.

Institutions, including Goldman Sachs, Credit Suisse and BNP, stand to gain much if the settlement talks can continue.

There were widespread fears before Christmas that the talks would collapse altogether, leading to a litigation meltdown. The then leader of the global settlement talks, former judge Sir Peter Webster, decided to step down after one of the parties droppedout of the discussions. Sir Peter had always said he would give up his role if any of the parties left. Sir John Cuckney, who has worked alongside Sir Peter in an attempt to sort out the Maxwell mess behind the scenes, then took up the reins.

He set a new urgency, despite cycnics pointing out that deadlines in the 18-month-old talks had come and gone - the earliest passing nearly a year ago in Easter 1994. But 9 February is now commonly agreed as a make-or-break moment.

The claims are complex because of the cat's cradle structure of Robert Maxwell's business empire, which consisted of more than 800 companies worldwide. The liquidator of the main Maxwell-controlled pension fund, Bishopsgate Investment Management (BIM), is pursuing over £440m looted from the funds, and still has a number of big claims that could be settled by the current talks.

These include a £305m claim for negligence against Coopers for the 1988 and 1989 audits of the Maxwell Central Investment Fund, and the 1988-1990 audits of BIM.

The liquidator of BIM, Neil Cooper of Robson Rhodes, also has claims for over £80m against Lehman and £26m against Credit Suisse for stock "lent" by Maxwell from pension funds.

A problem overshadowing the talks is the possibility that the Department of Social Security will demand the repayment of £115m of pensions contributions which it has made to Maxwell pension funds since the discovery of the missing assets.