Supplementary memorandum from the Parliamentary Commissioner for Standards

  Complaints against Mr Geoffrey Robinson

At their meeting on 7 July the Committee decided to defer consideration of these complaints to allow further inquiries to be made on two aspects concerning Central and Sheerwood and Hollis Industries/Pergamon AGB respectively.

CENTRAL AND SHEERWOOD

The Committee were anxious to have a fuller understanding of the circumstances which led to the Board's decision to make a one-off payment to Mr Robinson in 1991.

I sought a further explanation from Mr Robinson in my letter of 7 July attached. His reply should be available for the Committee's meeting on 14 July.

HOLLIS INDUSTRIES/PERGAMON AGB

In his letter to the Chairman of 7 July Mr Robinson said that he proposed to commission a detailed examination of the Pergamon records in an attempt to clarify the significance of the invoice and handwritten notes located in the Hollis records by Arthur Andersen. He said that the apparent inter-company transaction involving Pergamon AGB (of which he was also a director) was unknown to him and he repeated his unequivocal assurance that the alleged remuneration of £200,000 had not been paid.

Following the meeting Mr Robinson told me that, in all the circumstances, he would prefer any detailed examination to be commissioned by the Committee or by me, so that its independence could not be challenged, although he was prepared to meet the cost.

I have discussed the scope of such an examination with Arthur Andersen. They point out that this would be a vastly more complicated exercise than that carried out on Hollis Industries since Pergamon was a major part of the Maxwell empire. The first step would be to identify the relevant boxes of records in the archives—perhaps 300 out of a possible 1000, compared with 22 for Hollis. These had been removed by the SFO and only returned after some years; they may not be complete. A rough estimate is that the exercise could be undertaken at a cost of £15,000-£20,000 and would take up to a month to complete. Arthur Andersen may be able to finish more quickly than this but were reluctant to guarantee it. If the Committee wished to pursue this course, they would need to consider whether it was reasonable that the cost should lie with Mr Robinson.

There are arguments for and against such an exercise.

FOR

(i)  Within the Maxwell empire it was not, I understand, unusual for one company to meet the liabilities of another with subsequent adjustment through inter-company accounts

(ii)  thus the invoice and handwritten notes might refer to £200,000 paid by Pergamon and subsequently invoiced to Hollis

(iii)  there is an item in the Pergamon accounts to 30 June 1990 that the highest paid director's emoluments included £200,000 compensation for loss of office. Mr Robinson resigned on 2 March 1990—but see (vii) below

(iv)  if there are reasonable doubts, they should be tested as far as practicable.

AGAINST

(i)  there is little doubt that, despite the published accounts, the payment was not made by Hollis (Arthur Andersen's letter of 7 July has now added to the weight of evidence).

(ii)  Mr Robinson has repeatedly given unequivocal assurances to the Committee that the payment was not received from Hollis or any other source. He has also said that his directorships of Hollis and Pergamon were wholly unremunerated.

(iii)  Mr Robinson's accountants, Wilder Coe, have said

(a)  that Mr Robinson's directorships of Hollis and Pergamon were unremunerated— the analysis at Annex C of my Memorandum of 22 June¹[20]

(b)  that his bank statements do not indicate receipt, directly or indirectly, from Hollis— their letter of 7 July²[21]

(iv)  the doubt cast by the invoice and handwritten notes arose from Arthur Andersen's audit, commissioned by Mr Robinson in an attempt to prove a negative. This does not suggest an attempt to conceal.

(v)  If the handwritten notes represent the quality of record-keeping, it is difficult to place much weight on them.

(vi)  There is no indication in the relevant Pergamon accounts of any director receiving remuneration of £200,000.

(vii)  Mr Robinson has informed me that the "For" item (iii) above did not refer to him and Pergamon's auditors, Coopers and Lybrand, have been asked to confirm.

CONCLUSION

The relevant accounts of Hollis Industries are, I believe, discredited.

The invoice and handwritten notes are a slender lead and cannot, in themselves, be said to establish a prima facie case that payment was made. Thus, on the available evidence, I remain of the view that the allegation could not be upheld. The Committee will now wish to judge whether there is a reasonable prospect that further investigation would yield the level of proof they would require to uphold the complaint. A full audit of Pergamon by Arthur Andersen could be undertaken at an estimated cost of £15,000-£20,000 and would take up to a month to complete. If the Committee chose that course, they would need to consider whether they should accept Mr Robinson's offer of payment. They would also wish to consider making an Interim Report.

9 July 1998

^{2 21}  Appendix 8, Annex A. Back