Sat, 18 September, 2021


Maxwell – the fallout

Posted: March 16th, 2021

“Tony Boram was devastated that he had failed to prevent Maxwell’s wholesale looting of the pension funds”

  • Maxwell stole £800m and no one went to prison – he committed “the perfect crime”
  • “Maxwell did more than any other individual to pervert the British law of libel”
  • “Maxwell used the pension fund before he even set foot in Holborn Circus”

Robert Maxwell’s death was a huge international news story. The Mirror’s reaction changed from syrupy adoration of “the Man who Saved the Mirror” to condemnation once his massive frauds were discovered. While Ian Maxwell and his brother Kevin resigned from MGN and MCC, the fight began to save the pension fund their father had plundered. But many questions remained unanswered, the biggest of which was: “How was it possible for Maxwell to steal £426 million from the fund without anyone noticing?”

By Peter Thompson, former editor of the Sunday Mirror. © Peter Thompson 2021. Extracted from Cudlipp’s Circus by Peter Thompson, Kindle Edition

THE news that Robert Maxwell was missing reached Holborn Circus at 1.30 on the afternoon of 5 November, 1991. It was greeted on the editorial floor with cheers and shouts of joy from the beleaguered anti-Maxwell workforce. At 2.58 p.m. shares of MGN and MCC, both of which were in freefall, were suspended on the Stock Exchange. That evening Maxwell’s body was found in the Atlantic, floating face up, eyes wide open, 28 miles off Gran Canaria and 100 miles east of Tenerife. It was winched aboard a Super Puma helicopter and taken to the airport at Gran Canaria for a post-mortem examination.

Editorial director Charlie Wilson arranged a press conference at which a visibly shaken Kevin Maxwell uttered the first words about his father. “Love him or hate him,” he said, “he touched the lives of many millions of people.”

Indeed he had – and none more so than the staffs of his newspapers. A brief audit showed that under Maxwell’s stewardship the Daily Mirror’s circulation had fallen from 3.54 million to 2.87 million and its reputation as a trustworthy, crusading newspaper had been trashed. Overall, Mirror Group’s three main titles were down 2.4 million copies on their average monthly sales.

Maxwell had changed the editors of his three main titles no fewer than 16 times in seven years, thrashing around for some non-existent circulation-boosting formula and, with one exception, allowing no one time to settle into the job before replacing them. But this was no time for inconvenient truths. Richard Stott, the one exception, donned his tartan scarf (a gift from Rod Stewart) and filled sixteen pages of the Daily Mirror lauding the genius of his controversial proprietor.

There were tribute pieces by Anne Robinson (“He enriched many lives and mine was one”) and Joe Haines (“His death removes a colossus from the scene”). No fewer than 19 pictures showed Maxwell the multi-millionaire, Maxwell the football tycoon, Maxwell the soldier. According to the headlines, he was THE MAN WHO SAVED THE MIRROR; A GREAT BIG EXTRAORDINARY MAN; THE GIANT WITH A VISION; THE GREAT CHARMER. Maxwell would have loved it – it was his last ego trip.

The Maxwell Brothers would not have been happy had they been privy to Stott’s true feelings. “I felt no regret; indeed, my first reaction was an overwhelming sense of relief,” he wrote in his memoirs, Dogs and Lampposts. “I had beaten him, I had outlasted him… I never expected that.”

While the banks’ auditors and accountants checked the books, it was left to the Independent on Sunday to brand Maxwell “a liar, a cheat and a bully”. “His untruthfulness was not a matter of occasional slips,” the paper editorialised, “it was an instinct, a habit, and above all, a weapon.” Maxwell loved to claim he was a victim of Establishment snobbery, but his closest chums came from that same Establishment while the country’s biggest banks loaned him £billions. He supported totalitarian regimes and democratic ones, depending on his interests. Those who criticised him were plagued with lawsuits.

“Maxwell, above all, was a super-bully,” the paper continued. “And this carries the most important lesson for British public life. He did more than any other individual to pervert the British law of libel, which was evolved to defend innocent reputations, into a ruthless instrument of censorship, usable only by the very rich. He suppressed legitimately critical reporting with libel writs and injunctions against newspapers and unauthorised biographers.”

One of those biographies was Maxwell: A Portrait of Power  (above) which I’d written with Tony Delano and which was published in February 1988. Maxwell issued 32 writs for libel against us but didn’t challenge this damning paragraph: “The Reed board had enemies within. A copy of the still-secret prospectus for the flotation of Mirror Group Holdings plc in 1984 was slipped to one of Maxwell’s advisers. Maxwell was only allowed to read it in the intermediary’s presence, but that was long enough for him to find out about the 15 per cent share limit and an even more crucial piece of information: the magnitude of the MGN pension fund. The fund was so flush with contributions and profits that Maxwell immediately saw that the leverage it could give him justified a much higher offer for the group.” Maxwell was using the MGN pension fund even before he had set foot in Holborn Circus.

Ironically, Maxwell’s lawyers had said of Portrait of Power: “The book was wholly destructive of Mr Maxwell’s character and reputation. In addition, the imputations made against Mr Maxwell’s integrity as a businessman will inevitably have led readers to suppose that the Plaintiff companies (MCC and MGN) conducted their business in a dishonest and disreputable manner.” Maxwell brought out the worst in everybody. Exposing him as a crook in Maxwell: A Portrait of Power was an act of contrition on my part for having worked for him, but it was also a warning to MGN about his dishonesty.

On 4 December the Mirror revealed that Maxwell had stolen millions from MGN’s treasuries. The following day the figure was put at £526 million, including £426 million from the pension funds of MGN, MCC and the market research group AGB. The extra £100 million had been filched from the MGN accounts. Ian Maxwell resigned as chairman of MGN and Kevin Maxwell quit as chairman and chief executive of MCC. Ernie Burrington, who took over from Ian Maxwell as chairman, described the frauds as “the increasingly desperate actions of a desperate man”.

Richard Stott performed a spectacular volte-face about the man he had praised so lavishly just four weeks earlier. In a signed editorial he wrote: “Whatever demons drove him to these acts in the last two months of his life will no doubt eventually emerge. But whatever they were, the final, brutal truth is that far from going down as the man who saved this great national institution he will be remembered, I’m afraid, as the man who nearly destroyed it. A liar and a thief.”

Rupert Murdoch had no doubts that Maxwell’s death was suicide. “He must have been terrified of going to prison – as he would have done,” he said. After twenty years of close observation of the man and his methods, he concluded that Maxwell was dishonest and totally unreliable. “I’m only surprised by the fact that it’s possible to steal so much money.”

Bob Edwards and Mike Molloy reached the same “suicide” conclusion and for the same reason: the net was closing and Maxwell knew he was going to face ruin, ridicule and prosecution on criminal charges. The one thing Maxwell couldn’t stand was ridicule.

Those who claimed that suicide wasn’t in his nature ignored the fact that he had recently discovered he was chronically ill with liver and lung disease. They overlooked the effects of his alienation from his wife and children; the loss of the young woman with whom he wanted to spend the rest of his life; the sale of his beloved Pergamon Press to the “wallpaper committee” of Reed Elsevier; and the reduction of his empire into a debt-laden husk.

Dr Iain West, head of forensic medicine at Guy’s Hospital, who attended an autopsy on Maxwell’s body in Jerusalem shortly before his burial, said the evidence suggested that he had killed himself. Finally, Anthony Whitaker, the lawyer who had fought off Maxwell on behalf of The Sunday Times, likened him to “Captain Hook and the crocodile rolled into one, with the alarm clock ticking away inside until, years later, he walked his own plank into the ocean”.

The line from the MGN board that Maxwell’s frauds had taken place in the last few months of his life was patently untrue – he had started using the pension fund to finance his Family Interests as early as 1985. The DTI inspectors would eventually report that during 1986 and 1987 he borrowed millions from the pension scheme without providing any form of security, while the last 15 months of his life were devoted to what one biographer called “dedicated criminality”.

Maxwell’s old opponent, DTI Inspector Rodney Leach, found it astonishing that within 20 years of his judgment that Maxwell was unfit to run a public company he was able to take the banks for more than £1 billion and deprive the investors in two public companies and their pension funds of hundreds of millions. “I take it to be unlikely that these crimes are all of recent origin, the ‘desperate acts of a desperate man’ who had overpaid for Macmillan [the publishing house for which he paid an exorbitant $2.6 billion],” he said. “On the contrary, they are of a piece with his whole former business life.”

Mike Molloy, who had left MGN well before the meltdown, admitted in the Independent on Sunday in 1992 that in trusting Maxwell he had made “the biggest mistake of my career”. Paul Foot had no difficulty putting his hands up. “We behaved like wimps,” he confessed.

Maxwell had issued his final writ on 22 October 1991, two weeks before his death, demanding damages for “very serious injury to his feelings and reputation” over an article in Private Eye that alleged he had been tampering with the Mirror Group Pension Scheme. Sir David Eady, a High Court judge specialising in libel cases, estimated there were about a hundred “gagging writs” outstanding at the time of Maxwell’s death. “It would no doubt be unfair to suggest,” he wrote, “that another factor [for the failure to detect Maxwell’s crimes] was drowsiness on the part of the ‘watchdogs’ or a reluctance to focus their attention too close to home by cleansing their own Augean kennels.”

Joe Haines, one of MGN’s four non-executive directors, went on the record to say that neither he nor his colleagues suspected anything illegal was afoot. “If I had had the faintest idea Maxwell was a crook,” he said, “I would have stood at the highest peak and shouted it.” There were those among the Mirror staff who remembered him shouting that very fact at an NUJ chapel meeting before Maxwell’s takeover in 1984.

Sir Robert Clark, another of the non-executive directors, had been a Maxwell crony since 1968 and was well aware of his sharp practices. He assured shareholders: “None of the directors would have taken on the job if we had thought Maxwell was a crook.” No banker was closer to Maxwell than Eric Sheinberg of Goldman Sachs but he was also oblivious to his client’s criminality: “I can’t help it, I didn’t know.” Sir Michael Richardson of N M Rothschild and Smith New Court, seemed mystified: “Bob was squeaky clean to me.”

Tony Boram was devastated that he had failed to prevent Maxwell’s wholesale looting of the pension funds. His colleagues, including former Mirror journalist Barbara Castle, recommended him to Downing Street for an honour but none was forthcoming; to grant one would have inferred official endorsement of the criticisms hurled at the Maxwells. No. 10 was more concerned about rescuing the “names” who had lost their money through speculative investments at high interest rates in Lloyd’s of London.

The investigation into Robert Maxwell’s misdeeds became a mini-industry. By September, 1992 nine major firms of accountants, 22 law firms, five investment bankers and a firm of brokers were involved. The Serious Fraud Office had more than 40 people working on the case. Up to £60 million was paid in fees to lawyers and accountants. “This is the biggest thing since Lloyd’s,” one of the solicitors involved in the case told me. “We’ve made so much money that we’ve voted Robert Maxwell ‘Businessman of the Year’.”

The Government set up the Maxwell Pensioners Trust Fund to retrieve money from financial institutions who had taken pension fund assets as collateral and wished to avoid court action. Sir John Cuckney, the government-appointed arbiter, recovered most of the missing £440 million – £276 million in out-of-court settlements and the government finally agreed a payout of £100 million – but the negotiations took three years and some of Maxwell’s non-MGN employees died without receiving a penny of their pensions. The ultimate insult to the pensioners was the appointment of two of Maxwell’s non-executive directors, Clark and Clements, as chairman and deputy chairman of MGN. Clark was 73 before he finally departed; Clements a little younger.

The last time I saw Maxwell in person was in the well of Court 11 at the Royal Courts of Justice in 1986. The jury had just awarded exemplary damages in a libel action against Private Eye and he was holding an impromptu press conference in the crowded courtroom. Lord Elwyn-Jones had told the jury: “What has struck me about him is his moral and physical courage.” As I moved closer to hear what Maxwell was saying, he lifted his head above the huddle and saw me. Smiling broadly, he gave me a big wink. It meant: “You see? I’ve got away with it again.”

Dr Robert Hare, Professor of Psychology at the University of British Columbia, describes a typical corporate psychopath as a “social predator who charms, manipulates and ruthlessly ploughs his way through life, leaving a broad trail of broken hearts, shattered expectations and empty wallets. He selfishly takes what he wants and does as he pleases without the slightest sense of guilt or regret”. That was Maxwell. In late 1984 he said to me one night after a few drinks (scotch for Maxwell; vodka for me): “I came into this world with nothing and I will leave it with nothing.” He was the ultimate gambler who kept playing with other people’s money until he had lost it all.

Maxwell’s story is a classic example of how ruthless energy and a singularity of purpose can attain power and how that power can be used to corrupt others while, at the same time, destroying the power broker. Given the political and financial forces at work behind the scenes, there was never any chance of Maxwell’s victims getting anything like justice. The swindles were just too massive, and too many City luminaries were implicated. The bottom line was that Robert Maxwell stole £800 million and no one went to prison. You could say he committed the perfect crime.

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