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The Maxwell Trial: Day 15; Former chairman learned of pension deficit days after tycoon's death locked to grid strap Book locked top grid

Peter Laister, former deputy chairman of Maxwell Communications Corporation, told an Old Bailey fraud trial yesterday of his "shock and horror" at learning about the pension-fund shortfall days after Robert Maxwell's death.

The tycoon's son Kevin told him that there could be a pounds 60m deficit. But within a few days of the tycoon being found dead in the Atlantic the estimate of the shortfall had risen to pounds 400m.

Asked if Kevin had ever given an explanation of how that shortfall had arisen, Mr Laister replied: "No, none whatsoever."

On day 15 of the Old Bailey trial, Mr Laister took the jury through the days after Robert Maxwell's death and the unfolding financial crisis which enveloped the tycoon's business empire.

In the dock were Kevin Maxwell, his brother, Ian, and two former Maxwell aides, the financial adviser Larry Trachtenberg and the former finance director Robert Bunn. All deny conspiracy to defraud.

Giving evidence to the SFO's counsel, Richard Lissack, Mr Laister said he also felt shock and horror at learning on 12 November 1991 - a week after Robert Maxwell's death - that cash from a $157m sale of shares in Que, a Maxwell subsidiary, might be "diverted" instead of paid back into the group.

Mr Laister said that Kevin expressed surprise about the whole matter and told him it must be a "complete misunderstanding. It was a mistake". Mr Laister said he treated the situation over the shares' sale seriously and had wanted an investigation.

He said that in his view there was nothing wrong with inter-company transactions between MCC and the private side of the business, Robert Maxwell Group, but in this case company funds were being diverted. Mr Laister said he was "fairly sharp" with Kevin. "Kevin implied at the time that it must have been an arrangement made by his father," Mr Laister said.

Mr Laister, who became deputy chairman after Maxwell's death, told of a meeting seven days later when Kevin was present. He and other directors were handed a bundle of old minutes of board meetings between 9 May 1990 and 7 November1991 and asked to sign them as a correct account.

"We refused," Mr Laister said.

Two weeks after Robert Maxwell's death Mr Laister had a meeting with Ian and Kevin Maxwell. An Israeli lawyer, unknown to him, was also present. By that time it was being estimated that the pension fund shortfall could be pounds 400m.

Kevin spoke of processes to get the money repaid, Mr Laister added. By 25 November 1991, Mr Laister confronted Kevin in his office at the Mirror building and told him he felt he ought to resign as chairman of MCC. Kevin refused to do so.

"Kevin said that they were putting in hand actions which would return funding missing for both pension funds and for MCC and that none of this would happen if he resigned."

Kevin spoke of a third party in Israel who was willing to invest pounds 400m in new funds into the private Maxwell companies. These funds never emerged. Kevin and Ian Maxwell resigned eight days later.

The trial continues today.