Kevin Maxwell tells of personal shame over business crash

Corporate ethic was 'to stretch law to its limits'; The Maxwell Trial Day 93
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Financial Correspondent

Kevin Maxwell told yesterday of his "personal sense of shame" at the suffering of pensioners caught up in the collapse of his father's business empire.

Kevin, who has been giving evidence in his own defence for 12 days at the Old Bailey fraud trial, said: "I feel a personal sense of shame at the failure and my share in that failure and the consequences of it."

He spoke of the company's creditors, bankers and workers, who had all been adversely affected by the crash. "Also for the pensioners who for a time suffered. I don't know anyone involved in the management of the business who does not feel immense regret for the consequences of the collapse."

The court was told that he had also suffered and had been made personally bankrupt for pounds 400m. The order was automatically discharged in September because he co-operated with his trustees in bankruptcy.

The jury has heard that Robert Maxwell dominated everyone who worked for him. Kevin said that his father's overbearing administration had blighted his business education. "I regret that. The business was conducted in a culture where professional advisers, lawyers, advised my father how to stretch the law to its limits. A culture where professionals were servants and not advisers and teachers."

He said this attitude damaged the business and ultimately contributed to its collapse. "I regret the absence of board colleagues who would stand up to my father. I don't know anybody who stood up to him in the 10 years I was part of the business."

Questioned by his defence counsel, Alun Jones QC, Kevin denied he set out to defraud pensioners. "Our motivation was not, to put it crudely, to sit down and defraud pensioners with my father or with others. It was to save the group.

"It was to maintain the value of the assets and to meet all of the obligations. I suppose my greatest regret was that in the end we failed."

The investor who offered to save the Maxwell group just days before its collapse in late 1991 with pounds 400m of new capital was Roger Tamraz, a Middle Eastern industrialist who represented a syndicate of powerful investors, including, so Kevin was told, the Sheikh of Abu Dhabi. The crash came when the banks withdrew their support even though Mr Tamraz was actively arranging a three-year support plan.

Mr Jones asked if there had been a time when he thought he could or should get out of it all and leave the group. Kevin said it was a very difficult question and he had thought about it frequently in the years since 1991. "No sane person would want to be at the Central Criminal Court on trial for conspiracy to defraud pensioners. I don't know anybody who would want to be in this situation in front of this court today."

He said there must have been a time when he could and should have "abandoned the ship". But he added: "If I am being honest, I don't think I had the ability to leave him."

He had been brought up to believe that "the creed of loyalty is extremely important".

He dated the group's problems to October1990, when the seeds of the collapse were sown by his father's decision to use Maxwell group assets to support the US side of the business, MCC, which was having financial difficulties. Kevin believed MCC should sort out its own problems and "I regret I did not have the stature or experience or ability to persuade him" to change his mind.

Questioned about whether he had made any money out of the losses of the company or taken anything for himself, he said "no". He also denied destroying documents or warning witnesses not to talk to investigators.

The trial continues today.