Lamont takes regulators to task

THE CHANCELLOR, Norman Lamont, yesterday launched a strong attack on the performance of the City's self-regulatory system in the wake of the theft of pounds 450m from the pension funds of companies formerly controlled by Robert Maxwell.

Mr Lamont highlighted 'serious shortcomings' in the regulation of two Maxwell-controlled fund-management groups. These failures were not only by the Investment Management Regulatory Organisation, the relevant self-regulatory body, but also by the Securities and Investments Board, which oversees the whole system of financial self-regulation.

In a parliamentary answer to a written quesion, Mr Lamont said he had instructed Andrew Large, who took over as chairman of the SIB last month, to conduct a review of its shortcomings.

However, the Treasury is stopping short of addressing the fundamental question of whether self-regulation is right for Britain's financial services. Mr Lamont added: 'The Government is determined that all the lessons of the Maxwell affair, in its many aspects, must be learned and implemented.'

His statement brought a sharp response from both the Labour Party and the Maxwell pensioners. Michael Meacher, opposition spokesman for social security, said 'the Government's myth that it has no responsibility for the Maxwell pensions theft' had been exploded. 'The Government must now accept that it has a responsibility to make up the Maxwell pensions losses in full.'

Mike Kirkham, of the Maxwell pensioners' action group, said it was calling on the Government to 'come up with full compensation for all the victims'.

Mr Lamont's statement came as the SIB revealed that it considered removing Imro's authorisation after receiving a strongly self-critical report by the regulator, which the board decided did not go far enough. The report, into Imro's regulation of Maxwell's companies Bishopsgate Investment Management and London & Bishopsgate International, will not be published because the SIB does not wish to prejudice criminal proceedings against Kevin and Ian Maxwell and their business associate, Larry Trachtenberg.

It is the first time that the SIB has considered removing authorisation from one of the self-regulators. The revelation that the SIB considered such dramatic action shocked Imro, which knew nothing of the board's deliberations.

In addition, the SIB is putting pressure on John Morgan, Imro's chief executive, to leave before he retires in September next year. Imro, whose chairman, George Nissen, resigned earlier this month, advertised for a replacement five weeks ago, and had envisaged that the 'chief executive- designate' would work alongside Mr Morgan before assuming office.

Mr Large said yesterday that Mr Morgan 'will leave as soon as somebody has been identified and employed. It could be before September 1993'. Imro is understood to be dismayed by Mr Large's comments on Mr Morgan.

Senior City figures should appear before the Commons Social Security Committee to answer questions about the millions missing from the Maxwell pension funds, Frank Field, the comittee's chairman, said yesterday, writes Nicholas Timmins, Political Corresponent.

Mr Field said he would be recommending to the committee that it call Lord Spens, the former merchant banker prosecuted in the Guinness affair, Philip Morganstern, a senior partner in the law firm Nicholson Graham & Jones, who advised the Maxwell pension funds, as well as a former finance director to the Maxwell group of private companies.

In addition he wants the committee to examine officials from Goldman Sachs, the US merchant bank that had dealings with Maxwell.

Mr Field said one of the key aims of the committee's inquiry had been to trace where the pension assets went and where possible, to retrieve those assets.

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