LONDON - Lehman Brothers' recent return of œ27 million ($40 million) in shares to pension funds formerly controlled by the late media tycoon Robert Maxwell makes a total of œ77 million in missing assets recovered to date.
More settlements are expected as trial dates loom. A government-appointed mediator is working quietly to bring about a global settlement and avoid eating up potential pension assets in litigation fees.
But more court actions also are expected. Accounting firm Robson Rhodes, which is liquidator of Bishopsgate Investment Management, both based in London, is expected to file additional writs this week. Also, trustees of the Mirror Group Newspapers pension fund are expected to file additional actions against four or five firms. And the Maxwell Pensioners Action Group is hoping to support an individual claim in the U.S. against Goldman, Sachs & Co., New York, for its role in certain Maxwell-related transactions.
Mr. Maxwell allegedly looted pension funds under his control of œ440 million in assets. In general, he used pension fund-owned securities as collateral to support loans to companies he controlled.
The pension funds basically divide into five groups: the Mirror Group plan, accounting for nearly half of the total assets whose benefits have been guaranteed by the newspaper chain; internal money manager Bishopsgate, which invested pension assets for five of the seven Maxwell pension schemes; two publicly held Maxwell Communications Corp. plans; and private Maxwell companies plans.
New York-based Lehman Brothers' return of œ27 million in securities to Robson Rhodes followed on the heels of a œ25 million payment by the Bank of America to the Mirror Group pension fund (Pensions & Investments, Jan. 10). In June 1992, National Westminster Bank returned œ25 million in shares of Teva Pharmaceutical Industries Ltd. to Robson Rhodes. The shares later were sold for œ59 million.
In addition, the British government may refund œ100 million in state pension contributions to boost the Maxwell plans.
Lehman's return of units in a Lazard Property Unit Trust and shares in the Daily Telegraph PLC partially settled a œ97 million writ issued against the financial institution last September. But Lehman is opposing return of the remaining œ70 million in assets, saying the circumstances in which the latter were acquired were different.
Meanwhile, a separate action brought by the Mirror Group trustees against Lehman, INVESCO MIM, London, and Capel-Cure Myers Capital Management, London, for œ200 million in total is scheduled to go to trial Jan. 25.
The Mirror Group trustees also are pursuing a œ38 million claim against Credit Suisse, Zurich, which they claim is jointly liable with Bank of America. Bank of America was custodian for Mirror pension assets, which were pledged as collateral to back loans issued by Credit Suisse to Maxwell companies. That case is scheduled to go to trial in October. Credit Suisse has denied any wrongdoing.
Robson Rhodes, meanwhile, is pursuing a œ33 million claim against Banque Nationale de Paris with regard to shares held in Euris, a French investment trust.
Colin Cornwall, chairman of the Mirror Group Pension Trustees, London, said the trustees are planning to issue writs against four or five additional firms during the next month or two. He estimated that as many as two dozen financial institutions may be hit by the different fund groups.
Prospects for settlements in the various litigation appear promising. Mr. Cornwall added the global settlement being led by Sir Peter Webster, a former High Court judge, likely will cover part, but not all,of the claims, and there's "a good possibility" of settlements on a bilateral basis.
All the news for pension participants has not been rosy. In December, a British judge ruled Lehman, Credit Suisse and Swiss Volksbank acted properly in accepting as collateral 5.8 million shares in Berlitz International Inc. No pension assets were involved, but the decision may set a precedent for subsequent cases.
The judge ruled the three investment banks did not know the shares were beneficially owned by MacMillan. The shares have been sold for $137 million.
Also, declining interest rates - and subsequently higher-priced annuities - have driven up the cost of covering pension liabilities. For one small Maxwell scheme, a triennial valuation showed liabilities increasing to œ72 million from œ52 million; assets stood at œ25 million.
