Macmillan loses dollars 137m Maxwell shares case: Judge rules in favour of Lehman Brothers and Swiss banks in dispute over Berlitz equity

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The Independent Online
MACMILLAN, the US publisher that was formerly part of Robert Maxwell's empire, has lost a legal claim worth dollars 137m against three financial institutions over shares pledged by the late tycoon as collateral for loans.

The claims by Macmillan, which was recently sold by the administrators of Maxwell Communication Corporation to Paramount, were against Lehman Brothers, Credit Suisse and Swiss Volksbank, itself now part of Credit Suisse.

The decision in the case may have considerable implications for the raft of legal actions still to be heard. Another involving Lehman is due to start in January. The Mirror Group Newspapers pension fund trustees have brought an action against it, and against Capel- Cure Myers and Invesco.

In yesterday's hearing, Macmillan was attempting to recover 5.8 million shares in Berlitz International, or 27.83 per cent of its equity, all recently sold by the three institutions for dollars 137m.

Liquidators and investigators unravelling Maxwell's affairs are considering Mr Justice Millett's 638- page judgment delivered yesterday, the first big ruling in the Maxwell saga.

Yesterday's judgment described how Berlitz shares were switched to a private company, Bishopsgate Investment Trust, owned by Robert Maxwell, who then used them as collateral for stock-lending arrangements with the US and Swiss investment banks.

Lehman held 1.9 million shares, Swiss Volksbank 2.4 and Credit Suisse 1.5.

In his written judgment, Mr Justice Millett ruled that the stock- lending agreements were legal.

The first civil litigation in the Maxwell affair, the case began in October 1992 when Macmillan launched a 12-week High Court action to recover its 56 per cent controlling interest in Berlitz.

Lehman Brothers said: 'We are pleased that Mr Justice Millett has ruled completely in our favour. There was a thorough examination of the evidence and facts of the case over many months, and our belief that we acted entirely properly in our dealings with the Maxwell group of companies has been fully justified.

'Mr Justice Millett found Lehman Brothers' witnesses to be completely honest and reliable. We are especially pleased that Mark Haas (formerly head of stock lending at Lehman), whose integrity has been frequently called into question by the media based on allegations by Tim Daily, has been fully vindicated.'

Mr Daily was formerly responsible for stock lending at Invesco MIM, now Invesco, which also did business with the Maxwell empire.

Lehman cited the judge's comment that 'Macmillan has made a sustained attack on the honesty and integrity of Mr Haas. I repudiate it completely'.

Swiss Volksbank also welcomed the judgment, saying Mr Justice Millet had entirely vindicated the bank's behaviour. 'By contrast, many of the submissions put by Macmillan were described by the learned judge as 'absurd'.'

Paul Hofer, regional head, UK, of Credit Suisse, said: 'We are pleased at the outcome. We cannot say more because we are still involved in other legal actions to do with Maxwell. We are studying this judgment very carefully.'

Mr Justice Millett's decision ends more than a year of costly litigation by Macmillan, which was acquired by Paramount Communications for dollars 533m last month.

The proceeds of this sale went to MMC's liquidator, Price Waterhouse, which also helped to bring the court case.

The trial proved to be so lengthy that the court ordered the publishing company to deposit more than pounds 4m with it as security for the defendants' legal costs.

The final legal bill has not yet been added up, but solicitors expect it to be 'substantial'.

Mr Justice Millett criticised the way Macmillan had conducted its case, as well as the original need to carry out a 'speedy trial'.

The judge said he would have preferred three pre-trial reviews, since the case really consisted of three quite separate and extremely complicated cases.

As it was, 'there was a huge amount of duplication and unnecessary elaboration', he said.

(Photograph omitted)