Banker denies paying PA £3m to keep affair secret

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Update: In 2004, Joyti De-Laurey was found guilty of four counts of using a false instrument and 16 counts of obtaining a money transfer by deception, after stealing £4.3 million from her bosses. Read the full report of her conviction here.

A star banker who earned more than £50m from Goldman Sachs was forced to admit yesterday he had a clandestine affair while working at the bank but denied his secretary had blackmailed him into paying her more than £3m to hush it up.

Edward Scott Mead, who was one of the best known mergers and acquisitions specialists working in the City, allegedly allowed his personal assistant, Joyti De-Laurey, to siphon off the cash from his personal accounts because he wanted an extra-marital relationship to be concealed from his wife.

The American-born investment banker was also keen to keep the affair quiet because he feared it would hurt his professional reputation, due to possible allegations of conflicts of interest, Southwark Crown Court heard.

The relationship was with a woman employed at a law firm working on the opposite side of the hostile £100bn takeover by Vodafone of Germany's Mannesmann in 2000, one of the most viciously fought corporate actions in recent years.

Jeremy Dein QC, Ms De-Laurey's barrister, accused Mr Mead of allowing Ms De-Laurey to forge his signature and take the money because he feared his "reputation could have collapsed". Mr Mead, 49, said: "Are you suggesting blackmail? I would never have contemplated paying her. I do not respond to threats."

He also said that he did not discover that Ms De-Laurey knew about his "private life" until after her arrest.

Mr Mead accused Ms De-Laurey's QC, of "vindictively cross-examining" and "trying to embarrass" him. The banker, who is thought to have ambitions to become a Republican politician in the United States, possibly even part of a future Bush administration, said he had "begged forgiveness" from his wife, who stayed with him.

Mr Mead added that since retiring from Goldman Sachs in June, he has devoted himself to promoting his charity interests. He is the most high-profile witness to give evidence in Ms De-Laurey's trial, in which she is accused of stealing a total of £4.4m from senior employees of Goldman Sachs.

The once highly prized personal assistant allegedly also took £1.1m from Ron Beller and Jennifer Moses, a married couple who were her bosses before she started to work for Mr Mead.

A litany of expensive purchases at exclusive retailers such as Cartier, as well as a £750,000 villa in Cyprus, have been cited in court as the prizes on which Ms De-Laurey spent her ill-gotten gains.

The 35-year-old, from North Cheam, Surrey, denies 21 charges of obtaining money by deception between June 2000 and April 2002. Her husband, Anthony, a 50-year-old former chauffeur, and her mother, Dr Devi Schahhou, 67, a GP, deny money-laundering charges.

Mr Mead, who said that his son had died of leukaemia, said Ms De-Laurey must have seen him as an "easy target", because she told him she had cancer and needed to take time off for a hysterectomy.

"If someone tells me they are suffering from cancer it cuts me to the quick," Mr Mead said.

The ex-telecoms sector expert was accused by his former underling of pretending to fly to New York on business when he was buying a flat there, and of trying to avoid paying tax by asking for transactions such as tickets for sports events to be carried out in cash.

On hearing the allegations, Mr Mead could barely contain his outrage. He was forced several times by the judge, Mr Justice Elwin, to answer the questions, eventually saying the idea that he allowed Ms De-Laurey to take the money was "absolutely repulsive". Mr Mead, a lawyer by training, said: "I would never take on this kind of defence." He also fought to avoid confirming the wealth that he accumulated while at Goldman Sachs, saying it was "not an appropriate question to ask". However, he was forced to confirm that when Goldman Sachs floated on the Stock Market he received a windfall of about £50m.

He was also rumoured to be paid a £10m bonus for pulling off the Vodafone-Mannesmann deal, though he said that the actual level was "nowhere near" that. The trial was adjourned until today.