Select Committee on Standards and Privileges Seventh Report

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:


    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:


      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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