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MAXWELL PENSION FRAUD TRIAL NOW ENTERING LAST STAGE

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LONDON-The judge hearing the Maxwell pension fraud trial says that the alleged actions of the three defendants accused of using pension fund assets to shore up other companies must be seen against a corporate "culture" of massive inter-company lending.

Summing up the evidence for the jury after a two-week break in the 116-day-long trial, Lord Justice Phillips last week also said that the defendants, all of who were trustees of fund manager Bishopsgate Investment Management Ltd., each had a duty to keep the assets of the funds safe.

On trial in London's Central Criminal Court, or "Old Bailey," are Kevin Maxwell, who faces two fraud charges; and his brother Ian Maxwell and Larry Trachtenberg, a former adviser to their father, who each face one charge of fraud.

Kevin Maxwell is accused of conspiring with his now-deceased father, Robert Maxwell, who drowned in late 1992, to dishonestly put at risk 100 million ($155 million) worth of shares in an Israeli company, Scitex Corp. Ltd., that were owned by the pension funds (BI, Dec. 4, 1995).

The second charge alleges that Kevin Maxwell conspired with Ian Maxwell and Mr. Trachtenberg to defraud the pension funds of 22 million ($34.1 million) worth of shares in another Israeli company, Teva Pharmaceutical Industries Ltd. A fourth defendant, Henry Bunn, a former Maxwell finance director, was discharged from the trial after suffering a heart attack.

Each charge carries a maximum sentence of 10 years in prison.

Lord Justice Phillips, who is expected to finish summing up the case for the jury this week, emphasized to the 12 jurors that to find the defendants guilty as charged they must be convinced of the prosecutor's claims that they had acted dishonestly and against the best interests of the pension funds in using proceeds from the sales of the Scitex and Teva shares to prop up Robert Maxwell Group P.L.C., which held the private interests of the Maxwell family.

He pointed out that while no one denies there were financial difficulties facing Maxwell Group at the time of the share transactions in late 1992, the loans made to it have to be seen against the "culture" of massive inter-company lending. Kevin Maxwell had testified during the trial that his father viewed the pension fund assets as just another part of company assets that could be lent to other affiliates. The jury will have to decide if this lending of the shares was dishonest, said Lord Justice Phillips.

He also told jurors that they would have to determine from the evidence whether there was a conspiracy by any of the accused to defraud the pension funds. The "foundation stone" to the entire conspiracy accusation, he added, lay with Kevin Maxwell.

The jury had to decide first if he had conspired with his father over use of the Scitex shares, and then if he had involved the others in a conspiracy regarding the Teva shares, said Lord Justice Phillips. If the jury does not find Kevin Maxwell guilty on the Scitex-related charge, then it will have to find the defendants innocent on the Teva-related charge, too, the judge said.

He also pointed out to the jury that all of the defendants were of previous good character, and that Kevin Maxwell, despite admitting having lied at one stage to a banker for his father's companies, had acquitted himself well during 21 days in the witness box.

The jury is expected to give its verdict in about a week.