City agrees to £276m Maxwell compensation

Click to follow
The Independent Online
Coopers & Lybrand, Goldman Sachs and Lehman Brothers are among City institutions that yesterday agreed to pay £276m in compensation to the pension funds looted by the late Robert Maxwell. The settlement means that pensioners will not have to embark on years of expensive court action to recover more than £440m stolen from the pension funds by the late tycoon.

Mirror Group said last night that the settlement could release more than £100m in provisions that the newspaper group had made for lost pension funds.

In return for the £276m, the trustees of the pension funds will drop all legal claims against the institutions. The Government has also tacitly accepted that some of the £115m it is owed by the pension schemes, representing State Scheme Premiums, will never be repaid. MGN will have to pay out the £70m-odd sum it owes for SSPs over a long period, whereas the other pension funds will be treated more leniently, since the companies they served are insolvent.

The £276m sum also includes significant payments by the administrators of Maxwell Communication Corporation (MCC) and admininistrators of the Maxwell private companies. Together they held over £200m in disputed pension fund assets pledged by Maxwell against loans to his business empire.

The settlement means that the MCC adminstrators could double the amount they pay out to their own creditors.

The settlement took 18 months of tortuous negotiations by two government- appointed arbiters, former judge Sir Peter Webster and more recently Sir John Cuckney. When the £440m black hole was discovered in the pension funds the Government commissioned Sir Peter to broker a "global settlement" of all Maxwell-related claims. This was watered down last year to become a "major settlement". Several institutions did not take part in the talks, notably Crdit Suisse and Banque Nationale de Paris.

Liquidators of the main Maxwell pension fund, Bishopsgate Investment Management, and trustees of the Mirror scheme are both suing Crdit Suisse for a total of over £80m, and the trial of the case has already lasted over 70 days. A judgment may not emerge before 1996 or even 1997. Liquidators are also suing BNP for £33m in a hearing that started in Paris yesterday.

Tony Boram, chairman of the the 12,000-strong Association of Mirror Pensioners, said: "I am much relieved - in particular for those people who have been in such dire straits for so many years. We are confident that all our members will receive a pension. The fund was in danger of running out in 18 months. It was being kept afloat by donations from business and charity.

"Now pensioners know they will receive a guaranteed income, however paltry."

Mr Boram, a former print worker said: "Some have been at the end of their tether, facing losing their homes, everything they had ever worked so long and so hard for.Some did not even realise they were working for Maxwell. He bought and sold on the companies, after ripping them off."

He added: "Now they can have some confidence in the future. Things are not so terrible. They have an income they can at least survive on."

The pressure group began legal action against the tycoon almost a year before his death when they realised he was not making mandatory contributions to pension fund.

Mr Boram explained: "We started legal action back in 1991 when we realised he had stopped making contributions and was not even paying the administration costs on the pension fund. More investigation showed the fund was invested in companies which interested Maxwell and not blue-chip firms. It's been a long, hard battle. We are all just very relieved Mirror Group pensioners will be getting what they put in for."