Robert Maxwell's use of pension fund investments was so lucrative that a trustee once said: "If a horse keeps winning you don't break its leg", the Old Bailey was told yesterday.
The alleged statement was reported to the fraud trial, at which it was claimed yesterday that acountants at KPMG Peat Marwick had known about Mr Maxwell's pension fund dealings. The court was told that the firm was aware for years before the media tycoon's death that he used company pension assets to finance major business transactions, but never objected.
Alun Jones, QC, defending Mr Maxwell's youngest son, Kevin Maxwell, who faces fraud charges along with his brother, Ian, raised the point while cross-examining Ian Huntington, a partner at KPMG.
Mr Jones presented an internal memo written in 1988 in which KPMG said Maxwell pension-fund assets were being used to finance acquisitions in a way that would have drawn disapproval from government authorities had they known.
The memo said Robert Maxwell discouraged staff from opening their own personal pension plans because he liked to have a large pool of pension assets at his disposal.
KPMG was not Maxwell's main accountancy firm, but was asked in 1988 by one Maxwell company to review its pension department. The memo said pension trustees apparently approved of Robert Maxwell's control over and investment of pension funds because he made a lot of money for the funds.
It said one pension trustee told KPMG "the trustees were happy to go along with this situation because the returns which have been achieved have been very good". The memo said the trustee told one KPMG partner: "If the horse keeps winning, you don't break its leg".
The partner, who was not named, was told that Robert Maxwell liked to have control of the pension funds in takeover activity. The KPMG partner said in the memo that he told an outside banker that British authorities would not approve of pension funds being used to assist company takeover activities.
Mr Huntington, a KPMG expert in corporate fraud, said he was aware neither of the memo nor the issues raised in it, even though he spent one and a half years at the Serious Fraud Office investigating missing pension money after Robert Maxwell died in November 1991. The trial was adjourned until tomorrow.