John Richards, the former head of a “select” team of top fund managers at Mercury Asset Management, told London’s High Court yesterday [Tuesday] that there were no formal risk controls in place during the period that the £1bn (US$1.42bn) pension fund portfolio of Anglo/Dutch consumer products giant Unilever started to under-perform.

On his second day of cross-examination by Unilever’s QC, Jonathan Sumption, Richards admitted that the only controls were other team members “who might prevent a fund manager, through discussion of an idea, from doing something”.

Richards denied however that a draft of an interview between him and Mercury’s internal audit team was wholly accurate. During the interview, which was read in court, Richards is quoted as revealing that Mercury’s fund managers were “left very much to their own devices”, but that “if a fund manager makes a poor decision, and the fund under-performs, this will be noted and the fund manager will be asked to explain and may be asked to leave!”

The Unilever Superannuation Fund is seeking £130m in damages from Merrill Lynch Investment Managers (as Mercury has been renamed) for alleged negligence in its management of the fund. In particular, the USF alleges that the “wild card” fund manager, a young and relatively inexperienced Alistair Lennard, was not subject to sufficient oversight during his time at the helm of the fund, during which it failed to conform to agreed guidelines. Lennard was removed from Unilever’s portfolio in May 1997.