Goldman pays into Cuckney fund

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The Independent Online
Goldman Sachs, the investment bank used by Robert Maxwell as an unwitting conduit for pension fund money, has emerged as a large contributor to Sir John Cuckney's relief fund for pensioners in the late tycoon's business empire.

Gene Fife, head of the London operations of Goldman, told the Independent that the bank supported Sir John, had been in a dialogue with him and had made a contribution to the fund that amounted to a substantial part of the total.

The bank is understood to have given more than pounds 1m of the pounds 5.5m in private contributions at present in the fund, which was launched in July.

Mr Fife said: 'The cynics will say it is guilt money or something. If that is the interpretation, so be it, but the motivations for it are much more genuine.'

He added: 'We do not support the fund because we feel that somehow we were engaged in improper behaviour with Mr Maxwell. We really are supporting it because we feel that the pensioners have been harmed, that the City has a responsibility to help solve that problem, and we consider ourselves to be a member of this community.'

Goldman has not been passing a hat round the banks for the fund, but it has been pressing the case for more City contributions.

Sir John Cuckney said yesterday that he was planning to change the emphasis of the appeal to target companies directly involved in the Maxwell affair, some of which have not yet contributed or have paid only small amounts. There is still a fear that payment will be seen as an admission of guilt.

Until now, the appeal has been broadly directed towards the City, industry and private individuals.

Goldman has denied acting illegally in its dealings with Maxwell. Its equities department carried out transactions, using pensioners' money, that proved to be part of the share-support operation for Maxwell Communication Corporation.

Mr Fife said: 'Because we were actively involved in trading shares, we feel more obliged to support those who were harmed even though we don't think we did anything illegal. We have no legal obligation whatsoever to support the fund.'

Mr Fife acknowledged Goldman's embarrassment. He said: 'In retrospect, we wish we had never dealt with Mr Maxwell. I don't think there is anything unique in that. We certainly thought at the time we were dealing with him on a very commercial basis.'

He gave further details of Goldman's dealings with Mr Maxwell in an interview published in the Independent on Sunday yesterday.

Shares bought by supposedly independent Liechtenstein trusts were being paid for by Maxwell companies in London with pension fund money. But securities settlement systems at investment banks are not set up to carry out routine checks on where money is coming from.

Mr Fife said: 'We watch with quadrupled emphasis any money going out, but we don't watch with the same vigour money coming in. If a customer has an obligation and the cheque matches, you don't necessarily question where the money came from.'

Since then, Goldman had added 'strength and depth' to compliance and back-office procedures. However, after an intensive audit, it had concluded the systems were not at fault.

'The mechanics worked,' Mr Fife said, 'but we missed something in the communications. We didn't pick up the signals that this guy was in deep trouble. I don't think the systems are the problem - it is making people think more, not just mechanically react.'

Goldman had 'put everything under the microscope to see what we could do to prevent anything like that happening again, but obviously we feel badly about the whole situation'.

Goldman is adamant that it was never Maxwell's banker.

Mr Fife said: 'We were not Maxwell's intimate or close advisers, telling him what companies to buy and sell or how to structure his stock. What we were doing was making markets in his stock, and in sizeable quantities, and conducting those activities at arm's length.'

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