NatWest 'knew loan involved pension money'

The Maxwell Trial; Day 47
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The Independent Online
National Westminster Bank agreed to lend Robert Maxwell's media empire pounds 200 million even though it knew pension-fund money was embroiled in the transaction, the Old Bailey fraud trial was told yesterday.

Mr John Melbourn, NatWest's deputy group chief executive, said that at Robert Maxwell's request the deal was channeled through a newly formed company called Cordmead, which became a subsidiary of the pension-fund company Bishopsgate Investment Management.

All the money was repaid, but during the 1988 transaction, the pension fund was at risk, Mr Melbourn agreed during questioning on day 47 of the trial of the late tycoon's sons Ian and Kevin Maxwell.

Mr Melbourn, who was not personally involved in lending the money, said: "My opinion is, sitting here six or seven years later, that I don't fully understand it. I would be hard put, if I was faced with a replica transaction today, to agree to it."

He accepted that another loan deal, on 8 November 1991, bore a striking resemblance to the earlier transaction.

It was three days after Robert Maxwell's death at sea, and he was approached by Kevin Maxwell to advance $27.3m needed to make urgent payments in the wake of the death.

He sanctioned the loan but was unaware that shares put up by the Maxwell company as security in fact belonged to the pension fund.

He said NatWest was later pilloried by the media over the use of shares in a company called Teva. It eventually released them to the pension fund's liquidator in June 1992 when it was satisfied about ownership.

Mr Melbourn strongly denied the suggestion by Mr Alun Jones QC, defending Kevin Maxwell, that the bank released the shares only after adverse media attention and because it felt it was in its best interest to appear magnanimous.

Kevin and Ian Maxwell and a former Maxwell aide, Larry Trachtenberg, all deny conspiracy to defraud.