Allegations made by Anglo/Dutch consumer products giant Unilever against the managers of its pension fund were called into question yesterday as Alistair Lennard, the fund manager branded a “wild card” by Unilever’s lawyers, defended his risk-taking actions in London’s High Court.

A draft contract between Unilever and Lennard’s bosses, Mercury Asset Management (now Merrill Lynch Investment Managers), was presented to the court, revealing that the young fund manager actually had scope to take even greater risks. Its existence casts doubt on Unilever’s £130m (US$180m) damages claim, which alleges that Lennard was ignoring the company’s requests for a low-risk portfolio for its Unilever Superannuation Fund, and therefore is responsible for the poor performance of its £1.1bn fund during 1997 and into early 1998.

Lennard told the presiding judge, Justice Colman, that under this new draft contract, which was signed by Unilever’s chief investment officer, Wendy Mayall, the amount of stock he was able to invest in a single stock was increased from 5% to 8%. Furthermore, he was able to concentrate a £600m UK equity portfolio on fewer stocks, thereby likely exposing the equity portfolio to a greater risk of underperformance.

“Under the new draft, there was a proposal to increase the scope for concentration,” he explained in court: “That was not an issue to me because I had no desire to increase the level of concentration – but the new draft allowed it to take place. Those [new] restrictions looked as though they were relaxing restrictions on concentration.”