Maxwell's son 'in plot over firing of ex-minister'

The Maxwell Trial; Day 79
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The Independent Online
Kevin Maxwell revealed in court yesterday that the former Tory Cabinet minister, Peter Walker, was about to succeed his father as chairman of Maxwell Communications Corporation (MCC) when the late tycoon sacked him on a whim, forcing Kevin to concoct a cover story.

Kevin asked Mr Walker, now Lord Walker, to help him hatch a plot to fool the outside world into believing that he had resigned, rather than been sacked by Robert Maxwell, because of concerns over the way it would be viewed in the City, the jury at the Old Bailey was told.

Lord Walker left MCC in September 1991 after six months' work as non- executive director with a pounds 150,000 pay-off and a Mercedes car.

Kevin, Robert Maxwell's youngest son, revealed in his second day of giving evidence in the 19-week-old trial that his father was "an investment manager of one".

The media magnate bought and sold shares and moved assets between his public and private companies and pension funds without reference to anyone else, the court heard.

But fellow directors, trustees and auditors did not object to this because he was so successful in pulling off deals which were of financial benefit to the funds and other companies.

Kevin said the appointment of Lord Walker came about when plans to float Mirror Group Newspapers were raised.

A stockbroker, Sir Michael Richardson, then chairman of stockbrokers Smith New Court, advised Robert Maxwell it would be better if the City and the public saw him concentrating on his newspaper interests.

A new chairman would be needed for MCC and Lord Walker was appointed a non-executive director in April 1991 with a view to taking the chairman's seat shortly.

Kevin said: "My father called me to his office and said he quite simply had changed his mind and was not going to continue with the appointment of Peter Walker.

"He said he had reflected on his decision, that he had been rash and that he had not properly considered. He said he was damned if he handed over the stewardship of the company to an outsider who had not contributed to its growth and had no publishing background.

"I realised that this would have a substantial impact on the public impression of MCC."

He described how he sought Sir Michael's advice on how to deal with his father's change of mind. The stockbroker told Kevin there would have to be a peg for public consumption of the move so it was not seen as a "mercurial decision by my father".

The Maxwells met Lord Walker and agreed that he would resign his non- executive directorship and announce that he was no longer to become chairman because he regarded MCC as a largely American company.

Lord Walker wrote a letter to Kevin in which he stated that he believed that as 90 per cent of MCC's profits were generated in America by companies such as publishers Macmillan and language book specialist Berlitz, the American side of the operation should be demerged and run from the United States.

Lord Walker wrote that the residue of MCC would be too small to interest him and that he had no intention of living in the US. This was the reason he did not wish to become chairman of MCC, the court heard.

Kevin told the court: "The letter provided the peg, but the letter does not reflect the reality that he was basically fired."

Alun Jones QC, Kevin's counsel, asked him what view the Maxwell pension fund trustees took of the tycoon's handling of pension assets.

One pension fund trustee indicated to an auditor they were aware the publisher was using fund assets for his own businesses, but added: "If a horse is winning, you don't break its leg."

Kevin said his father's practice of taking decisions on his own was "seen as normal".

Mr Jones asked him: "Did anybody, whether solicitors, auditors, compliance officers or non-executive directors, ever suggest to you that you had a conflict of interest between your duties as a director of public companies, pension funds and private side companies?"

Kevin replied: "No."

Kevin denies conspiring with his father to defraud using 5.4 million shares in the Scitex Corporation, an Israeli company. Kevin, his brother Ian and a former Maxwell executive, Larry Trachtenberg, all deny conspiracy to defraud using 25 million shares in another Israeli company, Teva Pharmaceuticals.

The trial continues today.