MEDIA tycoon Robert Maxwell was barely dead when his sons and two
senior executives devised a plot to rescue the family business empire by
fraudulently dealing in employee pension fund shares valued at #22m, it
was claimed at the Old Bailey yesterday.
It was a desperate bid to save the Maxwell empire from collapse.
Kevin and Ian Maxwell, together with the two key executives, are
accused of conspiring to defraud pensioners following the death at sea
of the newspaper publisher who owned the Daily Mirror, Daily Record, and
Sunday Mail.
However, the employee pension funds had been swindled on an even
larger scale shortly before Maxwell's death, the jury was told.
The publisher, together with his youngest son Kevin, had already
conspired illegally to use pension fund assets worth #100m in an attempt
to stave off debtors, it was alleged.
The jury was told that Robert Maxwell was the driving and dominant
force in the group and over his company's pension schemes.
Mr Alan Suckling, QC, described the parlous state of companies run by
Maxwell in the second half of 1991.
A jury of seven women and five men heard that the companies controlled
by Maxwell were in debt and in increasing financial difficulties,
finding it harder and harder to pay their bills.
It was in these circumstances that pension fund shares were used
illegally as collateral as a means of raising loans to save the media
empire, the jury was told.
Mr Kevin Maxwell, 36, denies conspiring with his father to defraud the
trustees and beneficiaries of pension schemes by dishonestly putting at
risk 5,400,000 shares in the Israeli Scitex company. These shares, the
jury was told, were valued at #100m.
He, his brother Ian, 38, Mr Robert Bunn, 47, and Mr Larry
Trachtenberg, 42, are also accused of conspiring to defraud the pension
schemes by dishonestly putting at risk 25,196,228 shares in Teva
Pharmaceuticals, another Israeli company. These shares were valued at
#22m. All four plead not guilty to this charge.
Mr Suckling told the jury that Robert Maxwell and his son Kevin had
agreed to use the Scitex shares to help out companies owned directly or
indirectly by Maxwell interests.
''To that end, the Maxwells used the Scitex shares to meet the debts
of the privately-owned companies without paying the pension funds for
them,'' he said.
''This was dishonest and a fraud on the pensioners.''
In November 1991, after Maxwell's death, the position of the
publishing empire was desperate. All four defendants tried to keep the
companies from collapse by using Teva shares to raise funds from the
National Westminster Bank, prosecuting counsel told the jury. This too
was a fraud against pensioners.
Mr Ian Maxwell's wife was in court as the trial got under way. Mr
Kevin Maxwell's wife was not.
Mrs Maxwell heard Mr Suckling declare that while Mr Kevin Maxwell
worked under the dominant control of his father, he was nevertheless
closely involved in the financial affairs of the group. ''In the second
half of 1991, he dealt on a daily basis with the banks who lent to the
group,'' counsel said.
''Of the four defendants, he was the one most responsible for the
misuse of pension fund assets.''
Chartered accountant Robert Bunn, deputy managing director of finance
of the Robert Maxwell Group, although subservient to the Maxwell
brothers, was closely involved in the group's affairs.
Financial adviser Larry Trachtenberg, originally responsible for fund
management, later worked closely with Kevin Maxwell in an attempt to
deal with the group's financial setback.
Mr Ian Maxwell dealt mainly with publishing, marketing, and sales but
he attended crucial company meetings in the summer of 1991 and became
closely involved in coping with the crisis after his father's death.
The judge, Mr Justice Phillips, had begun proceedings by telling the
jury that there had been objectionable and unfair publicity surrounding
the case.
In particular, it had been suggested that the defendants should not be
receiving legal aid. The costs of the case would be very heavy but that
was not the fault of the defendants, he said.
Legal aid was not handed out to anyone who asked for it.
Mr Kevin Maxwell had been rendered bankrupt and both he and his
brother had demonstrated to the authorities they were unable to meet the
costs of their defence.
''In England, we do not have trial by media, we have trial by judge
and jury,'' the judge added.
The trial, which is expected to last six months, continues today.
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