Final fall of disgraced pension fund chief

NEARLY ten years after one of Britain's largest pension funds was rocked by a £4.5 million scandal involving accusations of fraud and bribery, an out-of-court settlement has finally closed the door on the affair.

The £20 billion Universities Superannuation Scheme, which provides pensions for university dons, won its lengthy battle for compensation from insurer Royal & SunAlliance after claiming it was defrauded by the scheme's former investment manager, Jack Spink.

Spink, once a director at investment bank SG Warburg and a City high-flier, was sacked by USS in October 1991 for gross misconduct. He admitted taking unauthorised consultancy fees from the firm of Jeffrey S. Levitt, which traded in antique toys.

The company became the centre of a £12 million fraud case after its collapse in June 1991. Spink invested more than £4.5 million of USS money in the company after becoming friendly with its owner, Jeffrey Levitt. Levitt was later described as a Walter Mitty character who admitted using fake invoices to raise money from banks.

Spink, who earned £150,000 a year for managing USS investments, enjoyed a lucrative financial relationship with Levitt, who paid him £2,500 a time in cash, as 'consultancy fees'. In all, Levitt gave him more than £105,000. In return, Levitt received £1.6 million from USS for a 30% stake in his business.

Under Spink, USS later paid another £500,000 for a further 7.5% of Levitt's firm, and gave it a separate loan of £500,000. And just before the company collapsed, USS lent it a further £1.9 million, bringing its total exposure to £4.5 million.

It was in good company - NatWest, Midland bank and former Mayor of London Sir Anthony Joliffe were also left millions of pounds out of pocket. Levitt served two years in prison for fraud and a further 12 months for handling stolen goods.

USS, Britain's fourth-largest pension fund, keen to recoup some of its losses, put a claim in to its insurers, Royal Insurance Co, now Royal & SunAlliance, for the missing funds.

Royal refused to pay, claiming that USS's losses were due to the collapse of Jeffrey S. Levitt Ltd and its subsidiary, Mint & Boxed.

But USS argued that its loss was due to Spink's dishonesty, citing payments and inducements Spink received for its investments and loans to Levitt, and took the case to the High Court.

The case has finally been heard - more than a decade after Spink was sacked. And after three days in court, the insurer decided to settle. Royal & SunAlliance agreed to pay £2,825,000 - considerably less than the loss of £4.5 million between 1987 and 1991. USS said it was satisfied with the outcome.

David Chynoweth, chief executive of USS, told Financial Mail: 'All litigation poses a risk to both sides. The case may well have gone to appeal.'

Spink was also in court, representing himself, and claimed he had not worked for ten years. While he had previously admitted taking money from Levitt, he denied breach of trust. Under the out-of-court agreement, he paid undisclosed compensation to USS.

Spink had been working for the company for 10 years when he was sacked on a salary of £150,000.

Chynoweth said: 'Royal have paid a substantial sum and we have settled with Spink. We're very happy with the outcome. I'm glad to see the back of the whole thing.'