Pressure on Invesco: Writ alleges senior staff were aware of doubts about shift of MGN pension shares

SENIOR staff at Invesco MIM were allegedly fully aware of doubts within the City fund management group about a deal in which more than pounds 20m of shares owned on behalf of the Mirror Group pension fund passed out of Invesco MIM's control.

The shares were transferred to London & Bishopsgate International, a private Maxwell family company, in October 1990. They were ostensibly to be used for a short-term stock- lending programme that initially was to last 30 days. In fact, the portfolio was not finally returned to Invesco MIM until December 1991. Meanwhile, many of the shares had apparently been used as collateral for raising loans for Maxwell private companies.

The allegations are contained in a writ in which Mirror Group pensioners are suing Invesco MIM for more than pounds 11m. The trustees of the fund are also suing Capel-Cure Myers Capital Management, which also handled pension scheme assets, for up to pounds 38.5m.

Last week it emerged that Imro, the investment management regulator, holds internal Invesco MIM tapes detailing conversations between two employees who were apparently aware that the shares were to be used as loan collateral, not for orthodox stock lending.

Ratan Engineer, the company's finance director, has denied that Invesco MIM staff members had expressed any concern to him over the Mirror Group pension fund.

However, the fund trustees allege in their writ that:

Mr Engineer revealed in a telephone conversation with Kevin Maxwell on 19 August 1991 that Christopher Matthews, Invesco MIM's compliance officer, was 'getting jumpy' after the long delay in returning the pensioners' shares to Invesco MIM.

Bob Southgate and James Scrymgeour-Wedderburn, senior Invesco MIM staff members, had asked Maxwell associates several times in mid- 1991 to return the shares.

Invesco MIM held an internal meeting in April 1991 to discuss concerns over the stock lending and, in May, drafted a letter to the Mirror trustees expressing those concerns, though the letter was never sent.

Invesco MIM knew as soon as the arrangements started that the shares were not being used for legitimate stock lending. Those pensioners' shares that were returned to Invesco MIM as early as October 1990 had never been registered in the names of any stock borrower.

In a series of monthly letters to Invesco MIM between December 1990 and June 1991, it was told that the stock-lending deal was being rolled over for an additional month. In June, Invesco MIM was told the arrangement would end in July and the shares would be returned.

According to the writ, it discovered in November that some of the shares had been sold through Credit Suisse, which had lent the Maxwells pounds 50m secured against shares in September 1990. Invesco MIM was told by Maxwell associates that the sale resulted from a misunderstanding and that the shares would be handed back. In December, the shares were finally returned to Invesco MIM.

Invesco MIM, whose outgoing chairman, Lord Stevens, is a long-time business associate of the late Robert Maxwell, is resisting the claims.

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