City braced for Maxwell report

Speculation is growing that some of the City of London's most high-profile institutions will be criticised in a new report on the Robert Maxwell scandal.

The report, by the Department of Trade and Industry, is expected to find that the failings of these institutions enabled Maxwell to buy shares in his own company and to rob the pension funds of more than £400m, according to newspaper reports.

The DTI inspectors began the inquiry in June 1992, but it was halted while Kevin Maxwell, his brother Ian and Maxwell group advisor Larry Trachtenberg stood trial on charges brought by the Serious Fraud Office.

It resumed when they were acquitted on all counts and the total cost is said to be close to £10m.

The report looks at the stock market flotation of the Mirror Group, owners of the Mirror newspaper, in 1991. It is thought unlikely that the report will lead to any further prosecutions.

Heavy borrowing

Robert Maxwell had borrowed heavily to finance the expansion of his publishing and media empire, particularly his forays into the US and the purchase of the Macmillan group.

Apart from his public companies, Maxwell had about 400 private companies and he regularly chanelled money from company to company.

His money problems had worsened greatly following the stock market crash in 1987, and under pressure to find the cash to pay the interest on his loans, he agreed to the flotation of the Mirror Group in 1991.

The report is said to look at the role played by then investment bank Samuel Montagu - now owned by HSBC - which organised the float, and accountants Coopers and Lybrand, now part of PricewaterhouseCoopers, as well as Goldman Sachs, which acted as broker to some of his businesses.

PWC has already paid out £67m for shortcomings in auditing the accounts and has been fined a record £3.3m by a British accounting watchdog for "losing the plot".