View from City Road: Field's committee treads a legal tightrope

After yesterday's drubbing by the ascetic Frank Field and his brethren on the Commons' social security committee, insolvency practitioners must be feeling as if it is they rather than the late tycoon Robert Maxwell who pillaged the pension funds to the tune of pounds 440m.

They are feeling wretched and unloved. But pounds 50m now and another pounds 50m to look forward to must ease the pain somewhat.

Bashing the liquidators does not, however, solve the central problem of the Maxwell saga, which is this: What is the cheapest and quickest way to recompense the Maxwell pensioners?

MPs yesterday poured scorn on the dapper figure of Neil Cooper, the Robson Rhodes liquidator who has the key role of tracing the pounds 440m missing from the Common Investment Fund, the pot into which the late tycoon poured pension contributions only to siphon them out again for his own purposes. The committee wanted to know why Mr Cooper had not launched legal actions against three financial institutions to retrieve a total of pounds 170m of disputed pension fund assets that they hold.

But hang on a moment. If Mr Cooper does launch court actions against the three institutions, the legal costs incurred so far will be chicken feed in comparison with what is to come.

There may be method in the MPs' madness, however. The problem is how to winkle out money from the institutions to give to the pensioners. Sir John Cuckney's Maxwell trust fund was set up by the Government in order to allow such institutions a way to compensate the pensioners without publicly admitting guilt.

The big banks that hold the disputed assets have given Sir John's fund a wide berth so far, arguing variously that they received the assets in good faith or that any contribution whatsoever would constitute a legal admission of guilt.

But by publicly criticising the liquidators for lack of action, the MPs may persuade the banks that a costly and extremely damaging legal case in terms of their public image is in the offing. In this case perhaps it would be better to settle up quietly with Sir John's fund.

If this is the result of yesterday's report, all well and good. But if Mr Cooper is stung into suing the institutions, the MPs will probably publish another report in a year or two's time castigating him for plunging the Maxwell pensioners into a quagmire of lengthy and expensive litigation.

The committee also called for an insolvency ombudsman to keep an eye on liquidators' fees. This was also recommended by the father of British insolvency law, Sir Kenneth Cork, in his ground-breaking report back in 1981. The Government ignored his suggestion, but subsequently an EC directive called for just such an ombudsman. Strangely this directive has lain dormant for half a dozen years. Perhaps the committee member David Shaw MP, arch Euro-sceptic, should make sure it is now implemented.