The Maxwell brothers, Kevin and Ian, were sensationally cleared of all charges to defraud the Maxwell pension funds yesterday. The verdict was widely seen as a shattering blow to the Serious Fraud Office (SFO), the prosecuting authority during an eight-month trial that cost pounds 25m.
Labour immediately called for an urgent review of the way big City frauds are investigated, as the not-guilty verdicts produced tears of joy and relief in the crowded courtroom. More than pounds 400m disappeared from the Maxwell pension funds in 1991. Many observers were asking: "So who is guilty, then?"
Kevin and Ian Maxwell wept in the Old Bailey courtroom after the jury gave its verdict shortly after 2pm yesterday. Only 10 feet away the SFO prosecution team looked stunned. Some predict the trial could herald the end for the SFO, set up in the 1980s to combat large-scale fraud.
The SFO has suffered a series of humiliating failures, including the George Walker and Blue Arrow trials, the abandonment of the second Guinness trial, and the outcry that followed the lenient sentencing of the fraudster Roger Levitt.
"This is clearly another expensive and disastrous fiasco by the SFO," said Quentin Davies, a Conservative member of the influential commons Treasury Select Committee, whose report last year expressed reservations about the SFO's credibility. Matthew Carrington, another Tory member of the committee, said: "Fraud prosecution might be better handled by the City regulators themselves."
The verdict will prompt questions about who can be held accountable for plundering more than pounds 400m from the Maxwell pension funds. The search for the answers will involve City regulators, accountants, solicitors and banks.
The Maxwell jury of seven women and five men spent 11 nights in a hotel, and 48 hours and 17 minutes considering its verdict. At five minutes to two it was announced that a verdict had been reached. Ian and Kevin Maxwell and the third defendant, Larry Trachtenberg, a former financial adviser to the Maxwell empire, returned to the courtroom. Kevin looked pale as the jury filed in. There were gasps in court as the forewoman announced "not guilty" to all the charges.
When the court rose Kevin ran over to shake the hands of all 12 members of the jury. As the defendants embraced, Laura Maxwell burst into the court and embraced her husband, Ian, who burst into tears.
Kevin hugged his brother as he declared that he was "very pleased and relieved". He added: "I gave evidence in this trial over a period of 21 days and in his summing-up the judge said he thought no jury had had a better opportunity of assessing the honesty of the witness than in my case.
"Anyone who wishes to discover my attitude to the events leading to the collapse of my father's group has only to read a transcript of my evidence. I have nothing to add to it."
Eight charges remain outstanding under the original indictment brought by the SFO. The agency asked yesterday for seven days to consider its position on these charges.
George Staple, director of the SFO, issued a statement saying he would not resign. He said: "I'm going to carry on and I hope the SFO will be carrying on. I see no reason why it shouldn't. I was appointed by the Attorney General for 5 years, I've got another 15 months of my appointment to go and I'll carry on."
Mr Staple said he was aware that questions had been tabled in the Commons about the future of his office. "Questions are often asked about us in Parliament." The SFO had been the subject of a wide-ranging, inter-departmental inquiry led by the Cabinet Office 18 months ago, he said. The inquiry recommended that the SFO should continue and its workload be expanded. "That is now happening," he said. "I am satisfied that we do need an organisation which is resourced and skilled in the way this office is. I expect we will continue in the future to tackle these cases."
Earlier in court, Kevin's counsel, Alun Jones QC, said another trial would not make sense following this verdict. Mr Jones said the verdicts showed "the defendants acted honestly in the worst moments of the group's history. It would be oppressive to seek to try him again at public expense."
Outside the courtroom a smiling Ian grasped his brother by the shoulder and said: "I have not spoken since I was arrested in 1992. I am naturally delighted to have been acquitted of the charge that I faced."
Kevin, 36, Ian, 39, and Mr Trachtenberg, 42, denied conspiracy to defraud the pension funds by misusing pounds 22m worth of shares in an Israeli pharmaceutical company, Teva. The shares were used as security for a loan to prop up the crumbling Maxwell empire after the publishing tycoon died in the Atlantic. Kevin, alone, denied a similar charge of conspiring with his father to similarly misuse pounds 100m of shares in another Israeli company, Scitex.Reuse content