Robert Maxwell accused boardroom colleagues of forming a "cabal" against him when they questioned hundreds of millions of pounds in unauthorised loans to his private business empire, an Old Bailey jury heard yesterday.
In August 1991 the Maxwell Communications Corporation (MCC) was owed pounds 300m as money went from the public listed company into private concerns in unsecured lending. Peter Laister, a former MCC director and former head of Thorn EMI, told how a furious Maxwell accused independent executives of plotting against his family by questioning the borrowing and insisting rules were tightened governing granting of such "inter-company" loans.
Mr Laister told how the "non-family" directors threatened to resign over the issue and how son Kevin Maxwell assured them the debt would soon be reduced to zero, warning: "A house divided is a house destroyed." Kevin told the directors the debt would be repaid "within weeks, not months".
Mr Laister was MCC chairman briefly after Maxwell's death and Kevin's resignation. Cross-examined by prosecutor Richard Lissack, he said matters came to a head in August 1991 when loans from MCC to the private Robert Maxwell Group (RMG) had risen sharply. A big concern was that there had been no proper information or proper approval for the movement of money and that there could be a conflict of interest in Kevin Maxwell, MCC's chief executive, authorising the loans without an independent director being involved.
In a letter to Robert Maxwell, Mr Laister set out the worries of the board: the issue was the scale of inter-company loans and foreign-exchange deals: pounds 100m in foreign-exchange deals were outstanding at one point, said Mr Laister. He admitted independent directors had sought legal advice outside the Maxwell Group. He had approached London solicitors Macfarlanes over potential problems with the inter-company loans.
The letter resulted in a meeting with Robert Maxwell. "He was extremely angry and again went over this business of a cabal. He was very concerned, he said, about using outside lawyers because they would possibly be insecure and if the information got out it could do untold damage to the share value and therefore to shareholders.'' Mr Laister said the tycoon did agree to the setting up of a committee to monitor the situation.
Kevin Maxwell then told board members that the debt would be reduced and future transactions properly documented. However, Mr Laister said he was later told the debt was never reduced below pounds 65m. Mr Laister alleged that a month earlier he was told pounds 80m of the then debt would be repaid by sale of Scitex shares. The Serious Fraud Office alleges that assets owned by Maxwell pension funds were used to raise cash to prop up the ailing empire.
Kevin Maxwell, 36, of Moulsford Manor, Pangbourne, Berkshire, denies conspiring with his father to defraud using 5.4m shares in Scitex Corp. Kevin, brother Ian, 38, of Belgravia, and two Maxwell former directors, Larry Trachtenberg, 42, of West Hampstead, and Robert Bunn, 47, Northchurch, Hertfordshire, all deny conspiracy to defraud using 25 million shares in Teva Pharmaceuticals.
The trial continues next week.Reuse content