Maxwell 'damaged City's name'

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THE MAXWELL pensions scandal has damaged the reputation of the City of London and would not have happened but for 'an abysmally low standard of corporate governance', Sir John Cuckney told MPs yesterday.

Sir John is the unpaid chairman of the government-backed trust that is seeking money on behalf of Maxwell pensioners. He told the House of Commons social security select committee that City firms should contribute to the trust fund because he thought it would help to restore the City's reputation.

Among the reasons that companies give for not contributing is that it would not be an appropriate use of shareholders' money - which Sir John described as 'a pretty lame excuse'. Others believe the plight of the Maxwell pensioners is the responsibility of the Government rather than of the private sector.

Sir John said: 'If there's a disaster of this magnitude, an example of appallingly low standards of corporate governance, it would be in the interests of the private sector to demonstrate a willingness to help and contribute.' He said it was 'certainly relevant' that financial institutions faced a risk of being forced to contribute to fund the Maxwell pension deficit by more onerous regulations.

In the light of Robert Maxwell's reliance on banks and other City firms, Sir John said the City bore a heavier responsibility than industry at large in helping to replenish the missing assets.

The trust has so far raised pounds 6m - making it larger than the disaster funds set up after Lockerbie ( pounds 2m), the Bradford City fire ( pounds 4.5m) and Piper Alpha ( pounds 5m). Sir John said he was 'not disappointed' by this response but that much more was needed.

Some of the 600 companies that the trust has approached have been reluctant to contribute for fear of it being assumed that they had had dealings with Robert Maxwell. Those who had dealt with him are worried about being seen to have admitted liability.

Sir John said contributions to the fund carried no legal or other obligations. He said the trust left it to companies to say whether they had contributed and how much.

Contributions have ranged from pounds 6 to more than pounds 1m. The chairman of one public company made a personal contribution to the fund after his board refused to support a corporate contribution.

Sir John said some companies were reluctant to make payments without a clear target of the amount that has to be raised. 'There's a feeling that they are contributing to a bottomless pit.' He expects to be able to launch a more focused appeal when he has a clearer idea of the deficit - which he expects to have by February or March.

It would also be useful if some indication could be given 'of how the whole affair is going to end,' Sir John said. 'I think there's going to be a growing tiredness of this affair dragging on and on and on. There's a great reluctance to contribute to something which looks absolutely open-ended and could go on for years.'