Maxwell, The Outsider

by Tom Bower

  Maxwell was too vulnerable to withstand the onslaught. On 1 October he resigned despite the workforce's resolution that 'We wish to put on record that our co-operative has benefited from Maxwell's consultation and his administration to further our project,' and despite their overwhelming vote, 248 to 18, urging him to stay. He blamed Page for pursuing a vendetta and issued writs for defamation. The workforce was similarly outraged.

  Kenneth Grant, a union official in Albion Street, protested to Page about his description of Maxwell: 'Like everyone else he has his blemishes. Yet even his antagonists must concede that he is a courageous and brilliant entrepreneur. He can be aggressive but he can also be wounded to the moist-eyed stage by unmerited calumny . . . His unorthodoxy can be very upsetting to the conventional mentality. And his few aberrations appear to be his impulsive generosity and his desire to publish another newspaper.' The Workers' Council also protested to Harold Evans that the allegations about the paper were 'unfounded, cruel and irresponsible' and that he had endangered five hundred jobs. Evans printed their complaint but the News perished by the end of the month, precisely as Maxwell had predicted.

  The wilderness neither intimidated nor frightened Maxwell. It was the natural habitat for someone who in the 1960s had confessed to being 'a jungle man'. The Teflon coating upon those who had passed through the school of Slatinske Doly and survived frontline warfare could easily shrug off the brickbats aimed by men who were deemed to be vindictive and prejudiced. Maxwell retreated to his family, his reservoir of strength and support which few who have spent so much time away from home can possess. His relationship with Betty and his seven children galvanised his single-minded search for yet another opportunity to stage a recovery. At that moment the only testament to his record and ambitions were a series of huge, leather-bound scrapbooks which Betty had meticulously collated. Every newspaper article and every significant piece of memorabilia had been diligently stuck on to the thick pages awaiting the needs of the future biographer. But first he needed to climb out of the bunker after 1975 and it was more than ever made difficult by his past. Only money could liberate him. The sole available source was Pergamon. Maxwell devoted his entire energies to rebuilding its fortunes.

  Sir Walter Coutts had relinquished his chairmanship in 1974 when Maxwell had bought all the outstanding Pergamon shares. Three years later, under Maxwell's tight control, Pergamon's traditional business had been rebuilt. In 1977, the company employed a record three thousand personnel and was publishing 360 scientific journals and one thousand books a year. Its sales had increased from £7 million to £20 million and its net annual profits zoomed from £27,000 to £3.3 million. Organising Pergamon's recovery required Maxwell to travel repeatedly to Moscow to rebuild interrupted contacts. He discovered two important changes. In 1973, the Soviet government had signed the International Copyright Convention and established VAAP, an agency which represented the commercial rights of Soviet writers, which was closely connected to the KGB. Money, said Yuri Gradov with whom Maxwell had written his first agreement in 1955, was now important. Pergamon, said Gradov, would have to pay commercial rates for the rights to publish Soviet journals and books in the west.

  The second change was the disappearance of Pergamon's monopoly. Plenum, an American publisher, had become the Soviet's favoured customer. Using charm and guile Maxwell sought to undermine his new competitor. Gradov resisted the pressure quite easily. Pergamon, the Russians had discovered, had not paid even the pittance due under the original agreement. 'I've got authors at my throat demanding their money,' Gradov told Maxwell who delivered a shocked response: It's my accounting department's fault. I always tell them to pay. I'll get on to them immediately.' Fifteen years later Gradov lamented, 'We received so little from Maxwell and he earned so much from us.' Neither the payment problem nor Maxwell's failure to account properly for the number of journals which had been printed damaged his favoured status. On the contrary, Gradov's tough stance was undermined by orders from above: 'We were told to give him all the book rights and some journals.' The orders, Gradov believed, came from the Kremlin, but that is only part of the truth.

  When Maxwell returned to Moscow in 1974, he naturally concealed from the Soviet publishers that he was discredited and politically impotent in Britain. The KGB were naturally aware of his circumstances. Maxwell's publishing contacts were resumed and his privileged status was both restored and augmented. With the help of many officials, including Boris Pankin, then a junior functionary at VAAP but later to become the foreign minister, Maxwell resumed his contacts with an enormous range of Russians. VAAP officials like Vladimir Tverdovsky, who worked with Maxwell, recognised that, 'he had enormous political power' in Russia. Tverdovsky, like others, complained that Maxwell received many contracts to publish books but the books either failed to materialise or Maxwell did not remit the royalties he earned. In either case, Tverdovsky voiced a common complaint that Maxwell was not a profitable trading partner. Yet by 1977, Maxwell's commercial relationship with the Russian publishing agencies had become was quite curious.

  In that year, Maxwell arrived in Moscow with a new assistant, Richard Newnham, who had formerly worked for the British Council. Newnham was delighted to reintroduce Maxwell to a friend, a VAAP official. Amid their mutually warm greetings, Newnham discovered that the friend had known Maxwell in Berlin after the war. 'It looked as if they were old friends. It was a very warm reunion,' recalls Newnham.

  But behind the great bonhomie which Maxwell exchanged with all the Russians, Newnham observed the 'fear among the Russians when they negotiated with him because, knowing his connections, they didn't dare talk hard commercial language.' The reason, Newnham discovered, was an inexplicable contradiction about the nature of Maxwell's commercial operations in Moscow which ran counter to all his other publishing deals.

  While Gradov, Tverdovsky and others complained that Maxwell was not reimbursing them, which Newnham found very embarrassing, everyone concerned realised that Maxwell was actually losing money on the sale of the Russian scientists' books in the west. 'The books were an albatross,' recalls Newnham, 'because, after paying for the translations and printing, we couldn't sell them.' The losses provoked Pergamon's division chiefs in Britain to fury. 'They were having to bear losses which counted against them,' says Newnham who protested to Maxwell: 'Face the facts. The books are valueless.'

  Maxwell's reply was short: 'Stop showing me negative reports. Just do it.'

  Newnham's embarrassment in Moscow was therefore not that Pergamon owed the Russians money, but that Maxwell seemed to be actually subsidising Soviet propaganda. If Newnham suspected a hidden agenda, he never discovered any evidence. But according to Viktor Shishkin, who bought Pergamon books for Soyuzkniga, VAAP, the KGB agency, and the Central Committee all paid Maxwell in hard currency. Unknown to Newnham, Maxwell was being reimbursed for his expenditure through indirect payments from Moscow to the Pergamon office in France. (One channel for the money was exposed in 1991 when confidential papers belonging to the Soviet Communist Party were published in Moscow revealing that Pergamon was listed as a 'friendly firm' which was owed 500,000 roubles -about £500,000 at the official exchange rate. A spokesman at the Pergamon headquarters in Britain could not find any record of being paid that sum.)

  Even for an individual of Maxwell's character, his confident approach towards Russia was remarkable. In early 1978, Maxwell heard that Progress Publishers, a Soviet organisation, had compiled Brezhnev's biography. 'Stop everything,' Maxwell shouted at Newnham. 'Forget about going home. Get the book, translate it and publish it within twelve days.' Newnham was surprised that his employer should be so keen to sell 'the worst sort of political clap trap. Junk.' The reason became apparent a few weeks later.

  The two had returned once again to Moscow to meet the Committee for Science and Technology. The meeting was interrupted by a summons for Maxwell. Driven at speed through the city, he was taken to the Kremlin. Newnham sat outside while Maxwell enjoyed a half an hour with
Brezhnev. Maxwell emerged from the meeting beaming, most excited by the sight of the small telephone exchange on Brezhnev's desk. By the flick of any of the thirteen levers, the party chairman was in instant communication with each of the republics' first secretary. The power of communication was a notion which Maxwell admired.

  The substance of Maxwell's conversation with Brezhnev has never been revealed, nor has the reason why he was received, although informed apparatchiks suggest that Yuri Andropov, chairman of the KGB, was influential. A photo of the two men was published in Pravda. Among the visible results of that meeting was the 'state' visit by Maxwell and his wife in September 1978 to his birthplace, situated in a border area which was normally closed to foreigners.

  Every account of that five-day journey, including that of Irina Bodnya, their interpreter, suggests that the Maxwells were treated like royalty. Along the route, every top party functionary was present to pay his respects; ambassadors were summoned from all of the bordering countries to pay homage; the food and accommodation were the finest the Republic could provide; and Bodnya watched Maxwell's emotions as he walked through the streets where he had last seen his parents and family, to be greeted by the specially corralled crowds. Each evening there was a huge candle-lit dinner followed by speeches of welcome. Newnham was waiting when the couple returned to Moscow: 'They were exhausted. Even Maxwell, whose energy was phenomenal, just collapsed in bed.'

  On his return to Britain, Maxwell launched the 'World Leaders' series which were biographies of the communist dictators. In the preface of the 1983 Pergamon biography of Nicolae Ceausescu, subtitled 'Builder of Modern Rumania and International Statesman', Maxwell praised the tyrant for his 'constant, tireless activity for the good of the country'. Maxwell had heaped similar flattery upon Gustav Husak ('this impressive man') and Todor Zhivkov, who in 1983 awarded Maxwell the Order of Stara Planina, first class, the communists' highest honour, was credited by Maxwell for building a 'prosperous and happy nation'.

  The financial arrangements for that series remains unclear. Konstantin Dolgov, a past chairman of VAAP, believes, like many others, that Maxwell never fulfilled his promise to the leaders to publish and sell at least 10,000 of each volume. But Dolgov is certain that the communists were grateful that Maxwell courageously published the books when the communists were unpopular. Yegor Yakovlev, now the head of Soviet broadcasting, claims that the communists paid Maxwell through the Novosti news agency for printing 50,000 copies of the book but doubts whether even a fraction were produced. Others claim that embassy officials in London reported that the books were never seen to be on sale and therefore the communists lost the money they had invested in Maxwell.

  Out of the public glare, the legal ownership had been transferred to Pergamon Holding Corporation, registered in the United States. The move was consistent with Maxwell's policy of minimising his liability for taxes and cloaking his activities in as much secrecy as legally possible.

  But since Pergamon was a private company and Maxwell was for most a forgotten and discredited figure, the recovery passed unnoticed by those whose profession involves an interest in corporate affairs. There were no City reports that for three consecutive years Pergamon had paid its single shareholder, Maxwell and the family trusts in New York, £1.3 million as a dividend. Even in January 1978, when fire destroyed most of head office in Oxford, the dividend was maintained.

  By 1979, Pergamon had hit the same suffocating plateau which ten years earlier had provoked Maxwell's bid for the News of the World and the deal with Leasco. The sale of Pergamon journals was static and the printing subsidiaries were losing money. Once again Maxwell was frustrated and anxious to find new horizons. Over the previous five years the company had paid off its debts and amassed more than £5 million in its reserves. But since Maxwell could not expect financial support in the City, he needed more cash if he was to launch a bid. In 1979, Maxwell sought a new and potentially major source of income - dealings in shares. In the previous two years, he had speculated annually about £2 million in gilts in London and bonds in New York. The profits had been modest. In 1979, his speculation spiralled to £60 million but went sour in New York. He lost £1.5 million in that year's deals, which halved Pergamon's annual profits.

  In 1980, his fifty-seventh year, an age when most men think about their retirement, Maxwell was sure that he had found an escape from oblivion. In preparation, the figures on Pergamon's balance sheet dramatically increased. The turnover in share deals expanded to £79.9 million and produced profits of £1 million. Pergamon's subscription income doubled, pouring no less than £11 million into the company. On paper, Pergamon's assets had increased fourfold in five years to £24 million. His personal fortune in the same period, from accumulated dividend payments and profits from the sale in the USA of scientific journals, can be conservatively estimated at a further £10 million. Maxwell was flush with money at the moment of his nemesis.

  During 1980, Maxwell quietly began buying shares in the British Printing Corporation. By July, he had accumulated a stake just below the limit where he would be required to reveal his interest. There was at least £15 million of his own money to finance a gamble which he hoped would transform him from an outcast into a welcome visitor at places which were previously out of bounds.

  Jonathan 'Johnny' Bevan is a big man in stature, ambition and lifestyle - a prototype Yuppie long before any slick observer had imagined that those making money in the City could enjoy the glamour and power normally associated with a Hollywood studio boss. In Bevan's life, a 'dawn raid' could be a breakneck race down the Cresta Run or the highly publicised seduction of a society belle. But Bevan has rarely been as thrilled as when he dispatched his dealers to the centre of the Stock Exchange floor at precisely 9.30 a.m. on Friday 18 July 1980, to hold up their arms and offer to buy eleven and a half million shares of British Printing Corporation for 25p each, 7p more than their market price. Ten minutes later, as the waves of excitement still reverberated around the hall, Bevan was certain that his first dawn raid would earn a mention in history. His client had paid £2.9 million for 29.5 per cent of his estranged, erstwhile partner. By any yardstick - timing, price and strategy - it was an innovative coup which, on Maxwell's part, reflected the accumulation of thirty-five aggravated years of experience. That day, the Maxwell presented to the world was unbellicose, mellow and thoughtful. His public comments were unusually guarded; he suggested that BPC's management had nothing to fear from their new 'constructive shareholder'. The opposite, of course, was the truth. For Maxwell, his dawn raid was akin to the Normandy landings in June 1944: a bridgehead had been established and the ultimate goal was Berlin - to take the City by storm. After the smoke had cleared and the initial euphoria had waned, the real battle commenced.

  No one was more surprised by the raid than Peter Robinson, BPC's chairman and managing director. As in a Hollywood 'B' movie, the news had been delivered melodramatically, by Maxwell himself. A 9.30 in the morning, as Bevan's dealers stood on the floor of the Stock Exchange, Robinson's secretary had announced that Maxwell was on the telephone. The chief executive of Europe's largest printers assumed that it was just another of the regular business calls which he was compelled to take from a man for whom no one in BPC had any affection. Relations with Maxwell had been strained ever since the collapse of ILSC, and their conversations were never amicable. But, on this occasion, the announcement by the voice on the telephone that he had just become a major shareholder foretold disaster.

  ‘I want a meeting,' said Maxwell.

  'I'm busy,' replied Robinson, who feared that Maxwell would demand a seat on the board. 'What about over the weekend?' 'I'll be in Sevenoaks.' ‘I’ll come down.'

  'Sorry, it will have to wait until Monday.'

  When he replaced the receiver, Robinson was disturbed and furious. The call was totally unexpected. Maxwell's timing had been impeccable. BPC, despite annual sales of £200 million, was losing a lot of money; its board of management was in disarray, grappling
to steer their company away from bankruptcy. If Maxwell was set on realising his ambition to control BPC, Robinson would fight back, not just for the company, but also on his own behalf. For a decade he had worked so hard to rescue the monster, and he was not about to open the door to the likes of Maxwell.

  Robinson's promotion to manage BPC in 1970 had represented an acknowledgement that his technical abilities in the packaging division might heal the wounds which had bedevilled the company since its creation four years earlier. BPC had never fully recovered from the revelation that its megalomaniac founder, Wilfred Harvey, had perpetuated a succession of costly frauds. In the wake of his resignation, the new management had grappled with a disparate collection of printing companies and a legacy of massive debts which were augmented by the £5 million losses from ILSC and the publication of unsaleable encyclopaedias. BPC's debts had accumulated just as a succession of new disasters hit its core activity, printing.