Bank not told of pounds 100m shares debt when asked for loan

The Maxwell Trial; Day 35
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The Independent Online

Financial Correpsondent

Three months before Robert Maxwell's death in 1991, NatWest Bank calculated that pounds 150m to pounds 200m had apparently "gone missing" from the group's funds, the jury heard yesterday.

David Leal-Bennett, an executive of the bank's corporate division, said he confronted Kevin Maxwell about the crisis, implored him to "come clean" and told him to lay his cards on the table so that the bank could help to sort out the situation. NatWest had become very concerned about large loans that had been advanced at the end of July 1991, to meet urgent payments, the jury was told.

The loans, pounds 112m in excess of the group's lending limit, had been granted after Robert Maxwell had telephoned from his yacht stressing how important it was to him that the money was advanced. Repayment was promised before the end of the same day from money expected from America.

Two days later, Mr Leal-Bennett had confronted Kevin to demand: "What is going on and why have the funds not come in?" Kevin said that he did not know the precise details of the transaction and it seemed there was "considerable confusion in the Maxwell organisation".

He saw Kevin again and asked him what had gone wrong. "I did not get what I would call a satisfactory answer," he said.

The following day, when he had seen Robert Maxwell, the tycoon had merely re-emphasised his long relationship with the bank and told him there were "plenty of assets to sell". Mr Maxwell was clearly in a "liquidity crisis" at the time and Mr Leal-Bennett warned that he was thinking of reporting the whole matter to the deputy governor of the Bank of England. He pointed out to Robert Maxwell that there had to be a sensible arrangement over the problems or the banks would walk in and the companies would collapse.

When the tycoon left the room, he had spoken with Basil Brookes, finance director of Maxwell Communications Corporation.

"You have no idea how bad things are here," he was told by Mr Brookes, who then revealed that loans up to pounds 190m had been given by MCC to private Maxwell companies.

"It was the first time I had come across the inter-company arrangements," said Mr Leal-Bennett.

NatWest had also not been told that pounds 100m from the sale of Scitex shares had to go to the Maxwell pension fund company, Bishopsgate Investment Management, instead of paying off bank debts.

"If we had been aware of any liability to the pension fund... there is no doubt that we would not have lent any money against those shares," he said, in which case "the company would have gone under".

Kevin Maxwell, his brother Ian and two former Maxwell aides, Larry Trachtenberg and Robert Bunn, deny conspiracy to defraud. Kevin alone pleads not guilty to conspiring with his father to defraud the pension fund by misuse of pounds 100m in Scitex shares.