The Documentation relating to the Alleged
Payment of £200,000 to Mr Robinson
32. Over the course of the Committee's previous
inquiry, the enquiries made by Mr Robinson's solicitors on his
behalf and my current investigation a considerable amount of documentation
relevant to the alleged payment of £200,000 to Mr Robinson
has been assembled. Their relevant contents are summarised in
chronological order in the following paragraphs, though it should
be noted that their interpretation is disputed in some cases.
a) What was the origin of the alleged payment;
what was it intended to be in return for; and what sum was agreed
for that purpose?
33. 4 April 1990: Mr Robinson wrote to
Mr Kevin Maxwell a letter (Annex G) headed "Subject: A M
Lock",[25]
in which he spoke of the need "to find a solution that will
give... GR a reasonable reward for the difficult job to be done".
The letter continued by identifying a requirement "in addition
to the continuing commitment from GR as Executive Chairman"
[for] "further management support to AML". The letter
added: "GR proposes therefore a management contract between
AML and Transtec".[26]
20 April 1990: Mr Stoney
wrote to Mr Kevin Maxwell "in connection with Transtec's
proposals for a management contract" [in relation to Lock
International]. The letter (Annex H (i)) said:
"As I understand it, Transtec is intending
to provide substantial management support to the business, including:
a) Geoffrey as Executive Chairman
b) Engineering
c) Marketing
d) Management of AM Lock inc. (the US subsidiary)."
Mr Stoney's letter went on:
"I would recommend that we agree with [Transtec]
a management contract of, say, £150,000 to £360,000
per annum".
3 May 1990: Mr Robinson
wrote to Mr Kevin Maxwell (Annex H(ii)) enclosing an outline management
agreement between Transfer Technology Ltd and Lock; this document
contained the following paragraph:
"TransTec will supply GR as Chairman and
Chief Executive. This is currently taking about 3 days per week
but should drop to 2."
15 May 1990:Mr Stoney
wrote to Mr Kevin Maxwell (Annex I) proposing that Transfer Technology
Ltd should receive "a flat fee of, say, £150K per annum".
23 May 1990: Mr Stoney
wrote again to Mr Kevin Maxwell (Annex J) reporting a conversation
with Mr Robinson the previous day during which Mr Robinson had
indicated that he would prefer to be remunerated for the management
contract through a share of the profits of Lock International,
rather than, as proposed by Mr Stoney, by "a flat fee of
an amount to be agreed (between £150K and £200K)".
23 May 1990: Mr Stoney
put to Mr Robinson (Annex K) the proposal for the payment of a
flat fee of "say £150K per annum" to Transfer Technology
Ltd, rising to £250,000 "if Lock were to achieve profits
of £1m in year 2".
26 May 1990: Mr Robinson
wrote to Mr Kevin Maxwell (Annex L) suggesting a figure of £200,000
plus a "profit-related element".
29 May 1990: Mr Robinson
wrote to Mr Stoney (Annex M) to say "I think on reflection
you would agree that the £200,000 per annum figure is fair".
29 June 1990: Mr Stoney
wrote to Mr Robinson (Annex N) accepting the proposed basic fee
of £200,000, but suggesting a re-casting of the profit-related
element.
b) What action did Mr Robinson take to claim
payment of the management fee and subsequently to pursue the matter;
and what steps were taken to facilitate the payment?
34. 24 October 1990: Mr Robinson sent
an invoice (Annex O) from his Orchards address to Hollis Industries
plc requesting payment of a "Fee for management service [sic]
provided to Hollis Industries plc as agreed", in the sum
of £200,000. He asked for the cheque to be made payable to
Transfer Technology Limited.
25 October 1990: Mr Stoney
wrote "Approved" on the invoice.
The invoice also carried a further note[27]
saying "Paid by PAGB:[28]
Recharge H Industries".[29]
16 November 1990: Mr Stoney
wrote (Annex P) to Hollis Industries plc, instructing them to
make provision in the company's accounts up to 30 June 1990 "for
£200K for management fees for Geoffrey Robinson".
[This instruction was subsequently reflected in the
management accounts of Hollis Industries plc for October 1990
(Annex Q)].[30]
26 November 1990: Mr Stoney
wrote (Annex R) to Mr Kevin Maxwell saying:
"I understand from Geoffrey Robinson that
at a recent meeting with him you agreed that Hollis Industries
would pay Geoffrey a fee for management services of £200K.
I enclose herewith a copy of this invoice and would
be grateful if you would approve this.
Geoffrey has chased me a couple of times on this
matter".
Underneath the memorandum, Mr Kevin Maxwell wrote:
"B/F (bring forward) RM (Robert Maxwell) for
approval".
Early December 1990: Mrs
Caddock (Mr Stoney's personal secretary) attached a 'post-it'
sticker to the invoice recording a telephone call from Mr Robinson
as follows:
"Geoffrey is not registered for VAT. Proposes
make cheque payable to him personally" (Annex O).
7 December 1990: Mr Robinson's
notebook (Annex S) shows that he telephoned the National Westminster
Bank at Colmore Row, Birmingham, to obtain an account number for
Transfer Technology Ltd. The notebook entry contains the words
"One down, one to go".[31]
c) What happened next in relation to the alleged
payment?
35. 7 December 1990 (approximately): Cheque
No. 001751, in the sum of £200,000, was drawn on the account
of Pergamon AGB.[32]
According to Mr Stoney the cheque was probably drawn in London
and, given the sum involved, would have had to be signed either
by Mr Robert Maxwell alone, or by two of the authorised signatories,
which included Mr Stoney and Mr Kevin Maxwell.
7 December 1990:[33]
Cheque No. 001751 was paid in at the Tavistock Square, London,
branch of National Westminster Bank[34];
a credit for £200,000 was remitted by the Tavistock Square
branch on the same day to the National Westminster Bank's Birmingham
City office at Colmore Row, Birmingham, where Transfer Technology
Ltd and its subsidiaries held 4 accounts. (The credit was a hand-written
counter credit, suggesting that whoever paid the cheque in at
the Tavistock Square branch knew the number of the account into
which it was paid.)
10 December 1990 : Transfer
Technology Ltd recorded a receipt of £200,000 in their books,
though the source of the payment was not specified (Annex V).
(This receipt was subsequently recorded in the Transfer Technology
Ltd nominal ledger on 30 December 1950 as "cash pd").[35]
11 December 1990: Pergamon
AGB's bank statement (Annex W) recorded a debit of £200,000
through cheque No. 001751.[36]
(This payment was recorded in Pergamon's computerised cashbook
on 31 December 1990 as "Mngmt Chg Hollis Ind.")[37]
11 December 1990 (or possibly 10 December 1990):
A credit for £200,000 was received in the Colmore Row, Birmingham
branch of the National Westminster Bank.[38]
30 December 1990: The
Transfer Technology Ltd nominal ledger (Annex X) recorded a credit
of £200,000 as "cash PD"[39],
but no source was identified for the payment.
31 December 1990: Pergamon's
computerised cashbook (Annex Y) recorded an outgoing payment of
£200,000 for "Mngmt Chg Hollis Ind" by cheque No.
001751.
31 January 1991: Pergamon
AGB invoiced Hollis Industries (invoice no. 340) for "Management
Charges" in the sum of £200,000 (Annex Z). In the Pergamon
accounting records (Annex AA) a handwritten note by Mr Stoney,
under the heading "Management Fees" stated:
"£200,000 paid to G. Robinson (re-charged
by Pergamon AGB)" and
"These amounts[40]
were therefore transferred to their proper homes".
A separate handwritten note read:
"Re-charge G Robinson's costs £200,000"
(Annex AA(i))
A Hollis Industries plc Interim Statement (Annex
BB) subsequently listed the invoice for "prompt" clearance.
6 February 1991: The Hollis
Daybook Listing (Annex BB(i)) was input as follows:
"24.10.90 Management Charge S/ORC Orchards—£20,000"[41]
31 December 1991: A Pergamon
AGB cashbook voucher, number 6933 (Annex CC), recorded a payment
in the following terms:
"Payments
Payable to: Orchards
Amount Payable: £200,000
Reasons: — ".[42]
d) What else was happening in relation to
Mr Robinson's business interests during the same period?
36. August 1990: Proposals were being
drawn up for the sale of Transfer Technology Ltd to Central &
Sheerwood, a publicly quoted company, of which approximately 20%
was owned by the Maxwell interests. Mr Robinson was also a main
board director of Central & Sheerwood. The proposal included
the acquisition of the two main operating companies of Hollis
Industries (a subsidiary of Pergamon Group plc), Lock & PSS
Group. Mr Stoney set out these proposals in an internal memo dated
5 December 1990 prior to a board meeting of Central & Sheerwood
scheduled for 7 December 1990, called to discuss, amongst
other things the company restructuring.
37. November 1990: In preparation for
the proposed acquisitions, Coopers & Lybrand were engaged
by Central & Sheerwood to produce a "long form"
report[43]
on Transfer Technology Ltd. and its subsidiaries. The report stated
that at the end of November 1990 Mr Robinson owned approximately
99% of the group. The report did not, however, mention any debt
owed by Hollis Industries for management services provided by
Transfer Technology to Lock.[44]
38. 7 December 1990:[45]
The scheduled board meeting of Central and Sheerwood was held
in London to discuss the sale to it of Transfer Technology Ltd.
Mr Robinson's solicitors, in the course of the DTI investigation
into Hollis Industries, were unable to find a board minute for
that date. As part of my own inquiry, however, I have been able
to obtain confirmation from Arthur Andersen (Annex DD) that the
minutes show that Mr Robinson, Mr Stoney and Mr Kevin Maxwell
were all present.
39. December 1990: An excerpt from Transfer
Technology Limited's accounts contained in the long form report
(Annex EE) showed that Roll Centre (a USA-based company owned
by Mr Robinson) owed the former just over £500,000—consisting
in part of payment outstanding for machinery purchased from Transfer
Technology Ltd and the remainder representing a loan. The Coopers
and Lybrand long form report on Transfer Technology Ltd[46]
had reviewed the company's debtors and concluded:
"Debtors
There is uncertainty surrounding the recoverability
of £503,000 due from Roll Centre Inc, a company wholly owned
by Mr Robinson . Mr Robinson has indicated that he is prepared
to offer a personal guarantee as to the recoverability of these
amounts, and is currently making arrangements to pay £200,000
into The Group (Annex YY)."
On 10 December 1990, according to the audit files
of Transfer Technology Ltd (Annex FF), £200,000 of the Roll
Centre debt to Transfer Technology Ltd was paid off, which had
the effect of improving the latter's balance sheet. Transfer Technology
Ltd was sold to Central and Sheerwood in May 1991. On 11 February
1991, Mr Robinson wrote to Transfer Technology Ltd (Annex GG)
undertaking to secure and guarantee the repayment of all outstanding
amounts due to Transfer Technology Ltd from Roll Centre (some
to £303,038). The letter refers to an amount of £200,000
"repaid in December 1990".
25 A subsidiary
of Hollis Industries plc (See also paragraph 8 and footnote). Back
26 The names Transtec
and TransTec are frequently used in the various documents to refer
to Transfer Technology Ltd. Back
27 Probably not
written on the same date as "approved". Back
28 Pergamon AGB. Back
29 Hollis Industries. Back
30 The £200,000
fee also accrued in the Hollis Industries accounts to 30 June
1990 as "management charge". This was supported by
a handwritten note "Management fees G Robinson" (Annex
AA(i)). Back
31 The number written
in Mr Robinson's notebook is 781 073 34; National Westminster
Bank plc has confirmed that this was the current account number
for Transfer Technology Ltd in 1990 (Annex ZZ). Back
32 Account no 04203607. Back
33 This date (a
Friday) has been established by the National Westminster Bank
as being the likely date on which the cheque was paid in, based
on the fact that it was debited to Pergamon AGB's account on 11
December 1990 (a Tuesday) and in the light of standard processing
times for cheques (3 working days). Back
34 The National
Westminster bank has stated that it now has no way of identifying
the account into which the cheque was paid. It adds that the
Pergamon AGB account was a 'voucher account', meaning that paid
cheques should have been returned to the account-holder with the
relevant statement. A search has confirmed that the bank does
not still hold the cheque in question. See letters from
National Westminster Bank plc dated 31 March 1999 (to Mr M Fishman
of Arthur Andersen) and 6 October 1999 to Mr Bernard O'Sullivan
(Annexes T and U). Back
35 See item
referring to that date in this chronology of events. Back
36 Assuming that
both this transaction and the previous one (ie the crediting to
Transfer Technology's account of a similar sum) related to the
same payment, a possible explanation for the fact that the payment
appeared as a credit in Transfer Technology Ltd's accounts before
it showed as a debit in Pergamon's accounts is that the person
who paid the cheque in at Tavistock Square had informed Transfer
Technology Ltd that a credit of £200,000 was about to arrive
in its bank account. Back
37 See item
referring to that date in this chronology of events. Back
38 The Bank has
stated that it is now unable to trace the identity of the receiving
account and adds that it "cannot unequivocally link"
cheque No. 001751 and the credit of £200,000 remitted to
its Birmingham City Office. The Bank further states that, whilst
it would normally have expected a cheque paid into an account
on 7 December 1990 to have been received in the payee's account
on Tuesday 11 December, "it is possible that events outside
the normal course of business could result in the credit being
applied to the account on a different date" (See Annex U). Back
39 Paid. Back
40 The note dealt
with two separate items. Back
41 Although the
figure printed in the document was £20,000, rather
than £200,000, this must be presumed to be an error, as there
was no other payment to "Orchards" at this time. Back
42 I am advised
that, although this voucher was attached to copies of Mr Robinson's
invoice and the memorandum on which Mr Kevin Maxwell wrote a note
agreeing to the payment, it may, in view of the date of 31 December
1991, have been written up after the event by the Receivers. Back
43 A report commissioned
by the prospective purchaser (in this case Central and Sheerwood)
into the state of the proposed acquisition (Transfer Technology
Ltd) as part of the due diligence process. Back
44 See paragraph
34. Back
45 Date confirmed
by an entry in Mr Robinson's diary. Back
46 See paragraph
37. Back
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