DIRECTORS embroiled in the Robert Maxwell scandal will escape disqualification proceedings, trade minister Patricia Hewitt revealed yesterday, closing the door on a decade-long investigation by the Department of Trade and Industry.
The DTI had threatened to instigate proceedings against former heads of several parts of Maxwell’s empire, following the publication of a report by the department in March which severely criticised their conduct.
Those named in the report, including Kevin and Ian Maxwell, could have been prohibited from taking directorships at other companies under the Company Directors Disqualification Act.
But addressing the House of Commons yesterday, Hewitt said: "After careful consideration of advice from leading Counsel, the Department has decided not to institute disqualification proceedings."
She added: "Further recommendations made by the report have been passed for consideration to other departmental bodies and regulators that hold responsibility in these areas."
Hewitt did not reveal the reasons behind the decision, but sources close to the matter said several factors are likely to have influenced the outcome.
In particular, the DTI’s report had already highly condemned the conduct of the directors, to the extent that those judging the proceedings might have considered a disqualification from directorships unnecessary.
In addition, the chances of a successful action against Kevin Maxwell, the most heavily-implicated of those caught up in the imbroglio, were diminished by his eventual bankruptcy and his subsequent three-year automatic disqualification from holding directorships.
The potential cost of the proceedings is also understood to have weighed heavily on the DTI’s mind. The department’s 700-page report into the affair cost the government 8 million alone.
Hewitt moved to address criticism that few corporate governance mechanisms have been put in place to prevent a repeat of the Maxwell scandal.
Those calls have grown recently in the wake of the collapse of energy giant Enron.
She said: "The Company Law Review considered a number of issues suggested by the report, and the government will be announcing its response to these in due course.
She added: "I have also announced an independent review of the role and effectiveness of non-executive directors, and proposed the setting up of a group jointly with the Treasury and other regulators to oversee concerns raised by the collapse of Enron."
The DTI’s involvement in the Maxwell saga stretches back to the tycoon’s disappearance overboard from his yacht in 1991.