Mandelson did not drop Maxwell case

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PETER MANDELSON'S former permanent secretary has revealed that the former secretary of state did not stand aside from the Department of Trade and Industry case against Kevin Maxwell, in spite of his loan from Geoffrey Robinson, a former close business associate of the Maxwells.

Kevin Maxwell, the son of the late Robert Maxwell, is being taken to the High Court next week by the DTI to force him to co-operate with the inspectors' inquiry into an alleged fraud behind the flotation of the Mirror Group.

Sir Michael Scholar, Permanent Secretary to the Department of Trade and Industry, under Mr Mandelson's successor, Stephen Byers, disclosed in a DTI note to John Redwood, the Tory spokesman, that Mr Mandelson "did not consider it appropriate to stand aside from consideration of this issue." There is no suggestion Mr Mandelson has broken any rules but Mr Redwood, a past DTI minister, said he was "unwise" not to rule himself out of consideration of the case after borrowing pounds 373,000 for his house from Mr Robinson, which led to his departure from the Cabinet. "I am astonished Mr Mandelson did not stand aside on all of the Maxwell issues, given his close relationship with Mr Robinson and given the connections between the Maxwell empire and one of Mr Robinson's trading companies. Mr Mandelson would have had to read a lot of papers and files before the DTI proposal to intervene in the court case and he wouldn't know before embarking on that reading how far it might go. I think he was very ill-advised to agree to do that.

"He was leaving himself open to reading a lot of material that could have placed him in an embarrassing position. I don't know that it did, but it could have done."

The former paymaster-general worked closely with Kevin Maxwell in the family's engineering companies before Robert Maxwell's death in 1991 led to the discovery of the raids on the Mirror Group pension fund to shore up the Maxwells' Mirror empire. Mr Robinson had nothing to do with the pension fund. Kevin Maxwell was cleared of criminal deception in a civil case but is being pressed to assist in the DTI inquiry.

A DTI note, sent to Mr Redwood by Sir Michael, said: "As far as the inspection into Mirror Group newspapers is concerned, this is being carried out by independent inspectors appointed by the department in 1992; action currently rests with them. The inspectors have recently certified to the court Mr Kevin Maxwell's failure to co-operate; and the department has been joined as a party to this action at its request. Mr Mandelson did not consider it appropriate to stand aside from consideration of this issue."

Mr Redwood said: "At the very least he made a misjudgment, because the Maxwell case goes so wide and includes so many characters there was always the danger that in the paperwork he would have to read before committing the department he would have discovered things he should not have been involved in. The Permanent Secretary is implying this because he is saying Mr Mandelson did step aside from all the things to do with Mr Robinson. My judgment is that he should stood aside from the Kevin Maxwell case as well."

Mr Mandelson was not available for comment last night.