Son tells of his shame over lying to bankers

The Maxwell Trial; Day 84

JOHN WILLCOCK

Financial Correspondent

Kevin Maxwell told an Old Bailey court yesterday of his "feelings of embarrassment and even shame" about lying to bankers but said he only did so reluctantly, on his father's angry instructions. He agreed to lie to the Bank of Nova Scotia after a meeting with his father, Robert, in which the latter banged the table with his fist.

"My feelings of embarrassment and even shame about that conduct [lying to the banks] are no different today in this public courtroom than I felt at the time. I do feel very bad about misleading at best and lying at worst to the bank."

In the days after his father's death at sea in November 1991, Kevin flew to Toronto for a personal meeting with Ced Ritchie, Bank of Nova Scotia's chief executive. He did so "because I knew we needed the support of our major relationship banks. The Bank of Nova Scotia could be one of the most single important banks that could change things dramatically for the group if they were willing to support us in a time of difficulty".

He said: "I apologised to Ced Ritchie personally for my conduct in the summer and failing to be open and frank, for having misled the bank, because I said I needed his help and his support and couldn't come and ask him for his support with this conduct hanging over my head."

Kevin Maxwell, in his seventh day in the witness box, said he lied to the bank after the Maxwell Group committed a "technical default" on the conditions of its loan agreements. He said he phoned his father about it, adding: "My father's reaction was extremely short and sharp, he told me to get real. He said to have such a conversation on an open satellite line was disastrous, that I was breaking every rule of confidentiality."

Robert Maxwell told him that if the default was discovered he was to blame it on the group's investment bankers, Goldman Sachs. Kevin said he felt uncomfortable about this but obeyed his father's instructions to mislead the bank. "It's not a matter I am at all proud of," he said. "He was angry that I was wasting his time on it." Earlier, he had accused the National Westminster Bank of "swiping" $65m from Maxwell assets and claimed a senior executive had threatened him.

Kevin said that after his father's death he received a personal letter of condolence from John Melbourn, a senior executive with NatWest. But within days of this exchange of letters Mr Melbourn had refused to return shares in the Israeli company Teva which the bank held as a security until the proceeds of the sale of an American company Que arrived. Soon afterwards Mr Melbourn threatened to withdraw banking support for the Maxwell Group.

Kevin said: "I realised the bank held all the cards, they held all the shares as well as the money. I was at the mercy of John Melbourn at that point and a week later at another meeting he threatened me".

Kevin Maxwell, his brother Ian and the former Maxwell financial adviser Larry Trachtenberg deny conspiracy to de- fraud the pension funds by misusing pounds 22m of Teva shares. Kevin Maxwell alone denies a similar charge of conspiring with his father to similarly misuse pounds 100m worth of shares in another Israeli company, Scitex.

The trial continues today.