Kevin confronted over foreign exchange deal

The Maxwell Trial Day 54
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The Independent Online

Financial Correspondent

Kevin Maxwell was so worried about money problems four months before his father's death that he turned down an invitation to go on a fishing holiday in Norway, an Old Bailey fraud jury heard yesterday.

His decision followed a confrontation with Peter Kluge, a vice president of the Bank of Nova Scotia. Mr Kluge had himself just come back from holiday at the end of July 1991 to be told by colleagues that the Maxwell group had, for the fourth time in a very short period, failed to honour a foreign exchange transaction.

The vice president's immediate decision was to speak to Kevin Maxwell and tell him that the matter had been referred to lawyers. Asked what Kevin's response was to the threat, he replied: "He sounded surprised. He said something like he had never been threatened with legal action before."

He added that Kevin promised to co-operate fully with the bank and indicated that the money to pay the outstanding foreign exchange transaction would be forthcoming quickly. It was about this time that Kevin cancelled the fishing trip invitation, which had been made earlier by the Bank of Nova Scotia. Mr Kluge said that Kevin felt that "it was not a good time to be fishing".

Mr Kluge said he became increasingly concerned about the Maxwell group's position after the failed foreign exchange transactions.

Another of Mr Kluge's colleagues, George Marlatte, a vice president, was also asked about the failed transactions. He said that Kevin apologised to him and pointed out that the transactions had been entered into "in good faith". He said Kevin told him there had been a "snafu in the system". He added that "snafu" was Kevin's word not his.

Kevin explained that the delay was caused by action taken by the Mellon Bank, which had lent money to the Maxwell group.

On 16 July 1991, Mellon had suddenly cancelled its "swing line" facility with the Maxwells and pulled off a "classic sweep offset".

The jury was told this meant that Mellon collected every penny in all the accounts it had with the Maxwell group that were in credit.

The result was to leave the Maxwell group unable to meet the foreign exchange transactions on the due dates.

Kevin has pleaded not guilty to conspiring with his father, Robert Maxwell, to defraud the pension fund by misuse of pounds 100m worth of its investment in Scitex shares. He and his brother, Ian, and a former Maxwell aide, Larry Trachtenberg, all plead not guilty to conspiracy to defraud in respect of misuse of Teva shares, which were also owned by the group's pension funds.

The hearing was adjourned to today.