Fall

by John Preston

  On 28 March Maxwell announced that Pergamon had been sold to the Dutch scientific publishers Elsevier, for £440,000,000. At the same time, he decided to step down as Chairman and Chief Executive of MCC. It was possible, Maxwell conceded, that the ‘Max Factor’ was having an adverse effect on the company’s share price. A former Conservative Cabinet minister called Peter Walker would be taking over as Chairman, while Maxwell’s son Kevin became MCC’s Chief Executive.

  News of the Pergamon sale didn’t simply stun Maxwell’s family; it spread far wider than that. The publisher Anthony Cheetham had worked for Maxwell during the 1980s. One day when Cheetham was in Headington Hill Hall, Maxwell had proudly shown him some of the original scientific papers he’d brought out of Berlin after the War.

  ‘It was like being taken down to Valhalla. They were kept locked up and only he knew the combinations to the locks. Here were the foundation stones of his empire, the original texts that had come down from the mountain. He showed them to me and said, “This is where we make the money that you spend.”’

  For Cheetham, Maxwell’s decision to sell Pergamon could only mean one thing: ‘The moment I heard about it I had no doubt he knew the end was coming.’

  Two weeks later Maxwell came to the Mirror’s Finance Director with a proposal. Lawrence – Lawrie – Guest was a mild, affable man who was a keen sailor and a stalwart of his local golf club. As conscientious as he was self-effacing, he had served the company uncomplainingly for the last twenty years. Although no one would ever have guessed it from his manner, he was possessed of considerable courage: he’d once run into a burning building and saved the lives of two young boys trapped inside.

  Normally Maxwell treated Guest with ill-concealed impatience, but on this occasion he couldn’t have been more friendly. His proposal was very simple: the Mirror Group’s financial year ended in December, but the pension funds’ financial year ended in March. Wouldn’t it make more sense to bring them both into line? Guest considered the proposal and saw no reason for concern. As Maxwell had said, it was purely a tidying-up exercise.

  However, there was one – apparently irrelevant – consequence of this new arrangement: it meant there was no need to audit the pension funds’ accounts for another six months. And since there was no pressing need to audit the accounts, there was no need for anyone to look too closely at the share certificates. If they had, they would have seen that in April alone Maxwell had sold £96,000,000 of the pension funds’ assets. Rather than transferring the money back to the funds once he’d done so, he had used it to prop up other parts of his now-teetering empire.

  The announcement that Maxwell was selling off Pergamon and stepping down as Chairman of MCC galvanized the City. Not only did the company’s shares stop sliding – they did an immediate about-turn. In the first three weeks of April 1991, they rose by 60 per cent. Disaster had been averted – or so it seemed. Yet inevitably there was more to it than that. Once again Maxwell had been buying shares in MCC, frantically trying to drive the price up in a bid to keep the company afloat.

  This involved him churning his money around in ever more hectic circles.

  First Maxwell, or people acting on his behalf, would take funds out of MCC, including the pension funds, and transfer them to one of his private companies. The private company would then pass them on to an offshore trust, which bought up the shares – thereby ensuring the paper trail never led directly back to Maxwell’s door.

  However mad this seemed, it was underpinned by grim logic. Maxwell’s loans now totalled more than £300,000,000. If MCC’s stock market value fell below 145 per cent of the value of these loans, the banks would demand more security. All Maxwell could offer them was another block of MCC shares. But in order to make sure the price of his shares stayed as high as possible, he had to keep on buying them.

  At the beginning of April 1991, Maxwell made another unexpected decision: he was going to float Mirror Group Newspapers on the Stock Exchange. Again not everyone was convinced that buying MGN shares was a wise, or even a sane, move. Among the doubters was the author of the Financial Times’s ‘Lex’ column, who noted that ‘Past experience might suggest that no investor in his sober senses would bother.’ One analyst headlined his piece ‘Can’t Recommend A Purchase’. The acrostic didn’t escape anyone’s notice, least of all Maxwell, who complained it was ‘totally unprofessional and extremely rude’.

  He had hoped to raise £500,000,000 by selling 49 per cent of MGN, but this, he was told, was impossible – he’d be lucky to get half that. None the less, Maxwell insisted on running a huge campaign to launch the flotation. As well as lavish coverage in the Mirror itself, there would be TV advertising, advertising hoardings and a press conference.

  The press conference took place on the morning of 17 April 1991. Wearing an enormous red bow-tie, Maxwell appeared to be in an extravagantly good mood. It didn’t last long. ‘Why would you trust a man who had been condemned by government inspectors more than twenty years earlier?’ he was asked shortly after the press conference had begun.

  Topped by a jet-black widow’s peak, Maxwell’s brow darkened.

  ‘My record since then, as Chairman of many public companies, I hope will satisfy even you, sir,’ he said.

  ‘May I ask another question?’ the reporter asked.

  Maxwell gave a sideways chop of his hand.

  ‘No, you cannot.’

  Meanwhile his life continued at the same frenetic pace. He met the new Prime Minister, John Major – who’d succeeded Mrs Thatcher five months earlier; he had lunch with the German Foreign Minister; he flew back to Sofia, where he dined with the Bulgarian Prime Minister and reiterated his plan to launch a new bank. As an initial deposit, he promised to transfer $20,000,000.

  ‘It will be the beginning of a new era!’ he proclaimed.

  On the rare occasions when Maxwell sat still for long enough, his stockbroker, Sir Michael Richardson, tried to warn him that preparations for the flotation were not going as promisingly as they might. It seemed that hardly any British institutions had expressed interest in buying MGN shares.

  Maxwell ignored him.

  A month after the press conference – on 17 May 1991 – Maxwell arrived at Michael Richardson’s office in the City to watch the Mirror Group being launched on the Stock Exchange. Richardson offered him champagne to celebrate, but unusually for him Maxwell stuck to coffee. The two of them watched the dealers’ screens as the shares were launched at 125p. To begin with, they rose briefly, as if trying to take to the air, but then began to fall back. More people, it seemed, wanted to sell Mirror shares than buy them.

  By the end of the day the share price had gone up by just 0.5 pence. Maxwell wasn’t around to see it: he had stormed off earlier in a huff. ‘He was surprised,’ Richardson recalled. ‘I don’t think he understood the Max Factor; he had the ability to blank that out of his mind.’ Maxwell had also blanked out any idea that he might be responsible for what had happened. Casting around for someone to blame, he settled on Richardson.

  The next evening – 18 May – Maxwell hosted a dinner-dance at Headington Hill Hall that had been arranged several weeks earlier in confident expectation that the flotation would prove to be a triumph. All the traditional trappings were there: the marquees, the dance floor, the magnums of champagne, the huge photographs of Maxwell grinning away . . . But something was different. Although Maxwell’s parties could be peculiarly stiff affairs, now the atmosphere seemed positively joyless.

  Some of the guests also noticed that Michael Richardson wasn’t seated at Maxwell’s table at dinner. Just three years earlier, at Maxwell’s sixty-fifth-birthday celebrations, Richardson had not only sat at top table – he’d proposed the toast. Now he’d been banished to the most distant reaches of the marquee. After dinner Maxwell stood up to give a speech. He proceeded to thank everyone who had helped with the flotation – with one conspicuous exception. When he sat down Kevin Maxwell was seen whispering in his father’s ear.

&nbs
p; Maxwell stood up again.

  ‘Oh, I do apologize,’ he said. ‘I unintentionally omitted my thanks to Sir Michael Richardson for all his help. Thank you, Michael.’

  On 15 July, Peter Walker resigned as the Chairman of MCC. Walker had become increasingly concerned that Maxwell was artificially inflating his profits. In a letter to MCC’s Company Secretary, he wrote, ‘I do wonder what the hell is going on in this company.’

  A few weeks after the Mirror flotation, a friend of Rupert Murdoch’s who also knew Maxwell phoned him to offer some advice. ‘This friend of mine told me, “I thought I should tell you that ‘our acquaintance’ seems to be getting desperate,”’ Murdoch recalls.

  Although Murdoch had nothing to fear from Maxwell, his friend felt it was prudent to warn him that he was now in such a state that he might say, or do, anything. ‘He wasn’t worried about my personal safety or anything like that. It was just that he thought Maxwell was acting completely irrationally. That he was under enormous pressure and drinking very heavily. So it was just, “Watch out, be careful.”’

  30.

  Don’t You Worry About a Thing

  Wherever he was in the world, Maxwell always travelled with at least two fax machines. All through the night they would whir away. A ceaseless churn of deals and transactions; records of money moving from account to account, from country to country, from behind one curtain to another. By morning the floor would be covered in a sea of rustling white fax paper. ‘You’d go into his hotel suite and it would literally be six inches deep,’ remembers his son Ian.

  When he was in London, Maxwell spent most of time alone in his apartment in Maxwell House. Unable to sleep for more than two hours at a time, he would while away the hours by watching old James Bond movies and gorging himself on Chinese takeaways. Before he was dressed, two Filipina maids would come in and tidy up. As well as clearing away the empty takeaway containers, they would have to pick up towels that had been left lying about – towels that Maxwell now sometimes used instead of toilet paper, then tossed on to the floor.

  It’s tempting to regard this as an extreme example of his lack of consideration for others. Yet there are other ways of seeing it too: as a reversion to the helplessness of babyhood; or the behaviour of someone who has abandoned any pretence of being civilized and given in to self-disgust.

  Every weekday morning at seven o’clock sharp, Ian and Kevin Maxwell would go to their father’s office to discuss the day’s programme. And every morning they would brace themselves for what lay ahead.

  ‘Increasingly, he would be in a foul mood, partly because he’d hardly slept,’ Ian recalls. ‘The meetings were always pretty hellish; to be shouted at by him was no fun at all. He had this ability to look straight through you and know exactly what you were thinking. You had to be very well prepared, or he’d just tear into you.’

  Along with his ever-shortening temper, Ian noticed that his father was falling asleep more often, sometimes in the middle of meetings. ‘It was quite obvious to me that something was going to happen to Dad physically sooner or later; I just couldn’t see how he could possibly sustain this lifestyle.’

  Occasionally Maxwell would call up MCC’s former corporate lawyer, Deborah Maxwell, who had now left the company and moved to Paris. ‘He would just phone for a chat from time to time. I could tell from his voice that he was depressed. Actually, he sounded like a completely different person. But at the time I just thought it was because he was on the phone and I wasn’t physically in his presence.’

  Flying into New York for a few days from her home in California in June 1991, Maxwell’s daughter Christine went round to her father’s hotel, the Helmsley Palace. It had been several months since they’d last seen one another and she was looking forward to spending time with him. But when she arrived at the hotel, she received some bad news.

  ‘Apparently he was too busy to see me.’

  It was possible Maxwell might be able to spare some time in a couple of hours, she was told, but no one could make any promises. ‘I was so mad I said, “I’m not going to sit here for two hours under any circumstances. I’m out of here.”’ It would be the last occasion that Christine and her father were in the same building, albeit on different floors. ‘It was the last time I tried to see him, and I couldn’t.’

  By then Christine too had realized how much he had changed. How estranged he had become, from his family and everyone else. ‘Physically, Dad wasn’t in good shape. He only had one lung that worked properly so his brain wasn’t getting enough oxygen. Also there was a lot going on psychologically which was not good. I definitely think he had megalomania at that stage; for him it was a real disease. Nothing was ever enough any more, and at the same time he just couldn’t stop. He’d boxed himself into a corner that he couldn’t get out of.’

  The consequences were to be as drastic as they were inevitable: ‘In the end, he pushed us all away.’

  Of all his children, Maxwell remained closest to his youngest daughter, Ghislaine. Yet even here his devotion was starting to fray. Maxwell’s PA on the New York Daily News was a woman called Carolyn Hinsey whom he insisted on calling ‘Tiny’ – she was six feet tall – and liked referring to as his ‘Cultural Ambassador’. ‘I would say that by this stage he tolerated Ghislaine rather than anything else,’ Hinsey recalls. ‘He used to take her calls, but grudgingly. It also drove him mad when she took his chauffeur-driven car without telling him.’

  In public he continued to behave as if he didn’t have a care in the world. At New York’s annual Israel Day Parade, Maxwell, proudly wearing the white sash of a Grand Marshal, stood alongside the Mayor, David Dinkins, and the Governor of New York State, Mario Cuomo. A few days later he was at another parade – the ticker-tape celebrations to welcome home servicemen and servicewomen from the Gulf War. This time Maxwell stood beside General Colin Powell, Chairman of the Joint Chiefs of Staff.

  To celebrate his sixty-eighth birthday on 10 June, 200 guests were invited to a party held on board a tall ship – the Peking – at the South Street Seaport. But even in New York Maxwell no longer had much to cheer about. The New York Daily News continued to lag far behind its 1.2 million pre-strike circulation – it was now selling fewer than 750,000 copies a day. The projected annual revenue was $100,000,000 less than Maxwell had predicted.

  Having agreed to stay on to ensure the transition from one proprietor to another ran smoothly, the paper’s Publisher, Jim Hoge, decided he’d had enough: ‘My conviction that he had bought a death-knell was stronger than ever.’ Maxwell accepted Hoge’s resignation, but persuaded him to embark on a whirlwind tour of his various publications, then write a report on what sort of shape they were in. Hoge duly set off around the world and two weeks later reported back: ‘Basically, I told him that he had major problems at every one of them.’

  Not surprisingly, this news went down badly. ‘Maxwell got very upset and kept saying, “What do you know?” He was no longer puffed up and full of himself like he’d been before. Instead, it was as if someone had taken the putty of his false personality and just ripped it off.’

  However estranged he had become from his family, Maxwell did fly to Wyoming for the wedding of his son Ian, to a television producer called Laura Plumb. This was the first time Betty had seen her husband in more than two months and she was apprehensive about how he might behave. But Maxwell couldn’t have been more charming. He greeted her warmly and after the wedding service insisted on shaking hands with the pastor, telling him, ‘You are the first priest I have ever heard who has moved me.’

  For Ian, relief that his father was behaving himself was tempered by concern for his appearance. ‘I remember thinking he looked like hell. He was sweating profusely for a start. I also remember that at the reception Dad and Kevin were together a lot talking. I’m assuming they weren’t talking about my wedding; I think they were trying to protect me from what was going on.

  ‘At one point the three of us were standing next to this white paling fence
looking out over the mountains. I said, “Dad, I’m really grateful that you could make it.” And he said, “You have no idea.”’

  That night Ian and his new bride left on their honeymoon and the next day the rest of the family went on a picnic to Yellowstone Park. Maxwell was particularly keen to see the park’s famous geyser, Old Faithful, which promptly erupted as soon as he arrived.

  ‘Look,’ he exclaimed. ‘It’s come to greet me!’

  ‘It was one of my last really happy memories of Bob, joking, relaxed and good company,’ Betty recalled. ‘I had almost forgotten how nice he could be. That day we probably all had our last glimpse of the Bob of old.’

  Back in London, Maxwell asked Lawrie Guest to come and see him. He had decided to shake things up a bit, he said. Although Guest would retain the title of Finance Director of MCC, a man called Michael Stoney, formerly Finance Director at Pergamon, would become Commercial Director. This meant that in future Stoney, not Guest, would be in control of the Mirror Group finances. It would be a mutually beneficial arrangement for the pair of them, Maxwell insisted – ‘I want you both to live in one another’s pockets.’

  Inevitably, he had an ulterior motive: the Mirror was the only part of Maxwell’s empire he hadn’t yet plundered for cash. As diligent as he was diffident, Guest was bound to object if everything wasn’t done by the book. Stoney, a Maxwell loyalist through and through, might be less of a stickler for convention. Shortly afterwards, £38,000,000 was moved out of the Mirror Group’s bank account and into Maxwell’s private company accounts. From there, the money went to pay off his most pressing debts.

  Maxwell had always been a heavy gambler. His son Ian had seen him win £750,000 on one occasion, and lose £400,000 on another. A croupier told Mike Maloney that Maxwell had once won £1,500,000 in a single session. Now he took to spending his nights in London casinos, often playing three roulette wheels simultaneously. But the big win he was clearly hoping for eluded him. The columnist – and fellow gambler – Taki Theodoracopulos saw him at the White Elephant on Curzon Street. ‘The table had a rope round it so that no one else could gamble there. I could see that Maxwell was playing enormous amounts – £20,000 to £30,000 on each spin of the roulette wheel – and completely absorbed. He was obviously trying to recover something.’