Administrator to sue former MCC advisers: Price Waterhouse finalises writs (CORRECTED)
PRICE Waterhouse, the administrator of Maxwell Communication Corporation, is putting the final touches to a series of writs against former advisers to the company that will be sent out in the next few weeks.
The writs will claim hundreds of millions of pounds from MCC's auditors, Coopers & Lybrand, and legal advisers, including Titmus Sainer Webb and Clifford Chance, for failing to highlight problems at the teetering empire in the months before Robert Maxwell's death in November 1991.
They are the first writs to be issued against the professional advisers, although it is expected that the administrators of the private companies, the liquidators of the pension funds and the directors of Mirror Group Newsapers will also take legal action against lawyers and accountants.
In the last few months of Maxwell's life, pounds 250m of cash and the group's shares in Berlitz, the language teaching group, were taken from MCC to shore up the finances of the Maxwell private empire.
Price Waterhouse is already suing for return of these assets, and has been accepted as a creditor of the Maxwell private companies, where Arthur Andersen, another large firm of accountants, is the administrator.
Following extensive probing led by David Lee, Price Waterhouse's head of investigations, the administrators are ready to start suing the advisers.
The writ against Coopers will allege that the firm was not rigorous in its auditing of the group; did not monitor the financial position of the company closely enough; and faced serious conflicts of interest because of its relationship with other Maxwell companies, not just as auditor to the Maxwell private firms and pension funds, but because it provided corporate finance, tax and management consultancy advice to MCC.
The lawyers are expected to face claims of negligence in not stopping Maxwell using the public company as his private fiefdom, and being unable to stop him taking money from the group despite worries expressed by some of the directors who turned to an outside legal firm not used by Maxwell for advice on how to combat him.
Maxwell was allowed to delegate all decisions about finance to a sub-committee of the board that consisted of just one person - himself. This arrangement was set up in the early 1980s and existed, unchallenged by directors, lawyers and accountants, until a few months before Maxwell died.
The group also allowed its treasury functions to be controlled by a unit that worked for MCC and for the Maxwell private companies, Mirror Group Newspapers and the pension funds. The records of this unit have proven difficult to unravel.
Shareholders of Invesco MIM, which managed some of the Maxwell empire pension funds, are expected at today's annual meeting to voice their concerns about the firm's role in the saga and the fine of pounds 750,000 imposed on the fund manager by the Investment Management Regulatory Organisation.
Price Waterhouse, administrator of Maxwell Communication Corporation, said that it was not proposing to issue proceedings against Clifford Chance, contrary to an article in the Independent yesterday. It confirmed that it was considering the position of MCC's auditors, Coopers & Lybrand, but that no decision had been taken. It is also assessing the situation of Titmuss Sainer & Webb, but legal proceedings are not imminent.
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