Auditor 'failed to ask about huge loans'

The Maxwell Trial; Day 25
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The Independent Online

Financial Correspondent

An auditor from Coopers & Lybrand was criticised for failing to question Robert Maxwell about "hundreds of millions of pounds" which were loaned from Mirror Group Newspapers to the tycoon's private companies, a court heard yesterday.

Mr Alun Jones QC, defending the tycoon's son, Kevin, accused the accountant, Stephen Wootten, of sitting silent like a "tailor's dummy" at a meeting four months before Robert Maxwell's death - instead of demanding explanations about the vast sums, including pension fund cash, being lent.

Mr Wootten rejected the criticism; he had not known about the sums referred to by counsel. Earlier in the day, however, he disclosed that he and colleagues at Coopers & Lybrand face an inquiry by the Institute of Chartered Accountants over the way the Maxwell empire's audit was conducted.

The firm audited hundreds of companies in the tycoon's empire until his death. Another Coopers' witness in the trial, Peter Walsh, two other Coopers' partners and the accountancy firm as a whole were the subject of inquiries on the Maxwell saga by the Institute of Chartered Accountants' Joint Disciplinary Scheme.

Earlier, both Mr Walsh and Mr Wooten had denied knowledge of an "intercompany debt culture" in which the tycoon transferred cash around his group, including the pension funds, at his own whim.

Mr Jones also suggested that everyone at the meeting on 23 July, 1991 had realised that Robert Maxwell would settle debts between the various companies only as long as the group as a whole survived. Mr Wootten told the jury that he could not speak for the others at the meeting but he was certainly not aware of such a situation.

Asked if he knew that there had been a pattern of pension fund money being lent to Maxwell's private companies, he replied: "No, I did not."

Mr Wootten also denied meet ing Kevin Maxwell before the meeting to discuss how it was to be conducted. Had he wanted to ask Robert Maxwell about inter-company loans he was free to do so. Mr Wootten denied being intimidated by Robert Maxwell, but accepted the suggestion that the tycoon was the "dominant force in all his companies." Mr Wootten also said he had not been aware at the time of the meeting on 23 July that Maxwell had the power to sign cheques personally.

The court heard that Coopers were paid pounds 3.6m for auditing most of the companies in the Maxwell empire. "We did a lot of work for them and received substantial sums," the accountant said. But when Mr Jones suggested that the "domineering Mr Maxwell" was such a valuable client that he would not dare raise the issue of inter-company loans, Mr Wootten replied: "That is not the case."

In the dock are Kevin Maxwell, his brother, Ian and two former Maxwell aides, Larry Trachtenberg and Robert Bunn. All deny conspiracy to defraud. Kevin alone denies conspiring with his father to defraud the pension scheme by misusing pounds 100m of investments.