Kevin tells of father's share price 'vanity'
The Maxwell Trial; Day 80
Thursday 19 October 1995
The late tycoon came to believe that the share price of Maxwell Communication Corporation (MCC) was being driven down in 1991 by a bear raid, an organised group of speculators.
On his third day of giving evidence Kevin Maxwell told the court his view of the "seeds and origins" of the collapse of the Maxwell business empire in 1991.
Questioned by his counsel Alun Jones QC, Kevin said that his father spent millions during 1991 trying to support the MCC share price, but failed for two reasons: the London Stock Exchange was lenient in making the speculators pay for the stock; and the investment bank Goldman Sachs was in effect selling its own MCC stock, held as collateral for Maxwell loans.
Asked about his father's attitude to MCC's share price, Kevin said: "There is no question that the share price of his publicly quoted companies was a matter of pride ... a part of his vanity ... if the share price was rising he felt better.
"He felt the share price reflected in part public esteem for his business. So it was the first thing he looked for in the morning and the last thing at night. It was a personal fixation."
To counteract this he consulted with his main adviser, Goldman Sachs' Eric Sheinberg, to buy MCC shares through offshore entities. But the price did not improve much.
Kevin said he had seen statements made to the Serious Fraud Office by Mr Sheinberg and told the court that the prosecution "haven't called Eric Sheinberg and they should".
Earlier Kevin had described to the court his father's interest in Israel, which he said had not really started until the late 1980s, although his father had always been interested in and supported the state of Israel.
Robert Maxwell's interest in Israel "was stimulated by what can be described as a return to his roots". His son said he had survived the Holocaust but most of his family, who were Jewish, had perished.
Kevin said he had grown up not realising his father had any relatives but extensive research by his mother had uncovered some 200 relatives in different parts of the world.
Robert Maxwell had financed the massive airlift of Jewish children from Chernobyl after the 1986 nuclear disaster and assisted with their resettlement in Israel.
His substantial investments in the Israeli companies Scitex and Teva were seen in Israel as showing confidence in the country at a time when Israel was seen as risky.
Kevin, his brother Ian and the former Maxwell adviser Larry Trachtenberg deny conspiracy to defraud the pension funds by misusing pounds 22m worth of shares in Teva as security for a loan in a bid to prop up the crumbling Maxwell empire in the days following its founder's death.
Kevin alone denies a similar charge of conspiring with his late father to misuse pounds 100m of Scitex shares to pay private Maxwell company debts. In both cases the prosecution claims the shares were not theirs to use but belonged to the pension fund.
Kevin has told the court that he believed what his father had told him - that the shares had been transferred from the pension fund to the Robert Maxwell Group - and that he acted legally.
Kevin told the jury that, with the benefit of reflection, the death of his father and the loss of his famed negotiating skills was decisive. He admitted: "I did not have his stature, his reputation. I did not have 40 years of business experience when facing the NatWest and the group's other bankers."
Questioned by his counsel about the origins of the group's failure and the degree of responsibility he felt, Kevin replied: "I feel that I share a significant responsibility for the collapse of the business."
He went on to list causes, including disastrous losses of over pounds 300m in share values in the 1987 world stock market crash.
The trial continues today.
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