Cuckney firm refuses Maxwell payout

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SIR JOHN CUCKNEY, the man charged by the Government with persuading the City to bail out Maxwell pensioners, has been caught in an embarrassing dispute over potentially lucrative Maxwell insurance policies.

The cross-party Social Services Select Committee is planning to call Sir John to demand why Royal Insurance, of which he is chairman, is refusing to honour fraud policies taken out by Maxwell companies.

Money received from a payout by Royal would have gone towards repaying the defrauded Maxwell pension funds. In his role as head of the Maxwell pensioners' rescue fund, Sir John has only managed to persuade the City to stump up around pounds 5m so far.

Royal is part of two consortiums of insurance companies that have refused to pay out on pounds 51m worth of claims made by Maxwell companies and their pension funds for losses caused by the fraud and dishonesty of the late Robert Maxwell. Mr Maxwell stole more than pounds 400m from the pension funds, and a similar amount from the companies he ran. This is despite the Maxwell empire having paid more than pounds 3m in premiums to the insurance groups in the last three years of the tycoon's life.

Although Royal did not lead either of the groups, it was a significant member of both and is understood to be facing a payout of up to pounds 5m if the claims are found to be valid.

The largest policy is for 'Comprehensive Dishonesty' and could pay out pounds 50m. The leader of that consortium, the New Hampshire Insurance Company, has told the pension funds that the policies are void on the basis of non-disclosure of the dishonesty of Robert Maxwell.

One insurance company, Guardian Royal Exchange, has offered to pay back the premiums it received, but Royal has yet to follow suit.

Kenneth Trench of the Maxwell Pensioners Action Group said: 'The basis for voiding the policies is that Maxwell should have told them that he was a crook.'

The select committee said in a recent report it is 'alarmed that the various insurers . . . have sought to avoid the policies'. It is writing to the insurers, including Royal, to question this stance.

Sir John is understood to believe he has no conflict of interest, and has taken to excusing himself from Royal's board meetings when Maxwell questions are raised. He feels the same when it comes to mediating between parties with claims, as he has passed on that responsibility to Sir Philip Webster, deputy chairman of the Maxwell Pensions Unit.

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