Fall
Page 30
Could he assure investors in MCC that their money was safe?
‘Absolutely.’
But this did nothing to allay suspicions that there was something terribly wrong at the heart of Maxwell’s empire. The shares continued to plummet – three days later they’d gone down to 36p.
Meanwhile, photographs of Maxwell’s body, lifted from a video taken during the second autopsy, had been published in Paris Match magazine. The magazine sought to justify its actions by claiming that it was performing a public service by proving that Maxwell really was dead. One of the experts consulted by Paris Match, Professor Loïc Le Ribault, a former French police forensic specialist, claimed that ‘It is highly probable that the victim was struck by a violent blow to the back of the head, no doubt with the aid of a blunt instrument.’
Thirty-six hours after Stott had received his late-night phone call, the Guardian reported that at least £350,000,000 appeared to be missing from the funds. ‘A multi-million-pound gap in pension funds linked to the empire of the late Robert Maxwell is understood to have been uncovered by accountants investigating the private business network of the publishing tycoon who died four weeks ago.’
Trading in MCC and MGN shares had been suspended – ‘pending clarification of the position of the Maxwell family companies’. That night Stott was back in his office staring gloomily at his word processor. He’d already decided on the following day’s front-page headline: ‘MILLIONS MISSING FROM MIRROR’. Now he wrote a suitably breast-beating editorial to go with it:
‘At the moment nobody, not the board, not the bankers, not the staff, can tell you where this will take the Daily Mirror. However, we promise you that we will bring you the truth on this matter – as on all matters – as and when we know it, warts and all if necessary.’
The next day – Wednesday, 5 December – the Fraud Squad arrived at the offices of Mirror Group Newspapers. That evening, Richard Stott once again faced the grim task of choosing the following day’s headline. This time he aimed squarely for the largest wart of all: ‘MAXWELL: £526m IS MISSING FROM HIS FIRMS’. Despite that, some vestige of sympathy remained. Maxwell’s actions, he wrote, had been ‘the increasingly desperate actions of a desperate man’.
By now, there was no longer any doubt about what was going to happen; it was just a matter of when. Even so, the end, when it came, took almost everyone by surprise. The headline in the following afternoon’s Evening Standard said simply, ‘MAXWELL EMPIRE COLLAPSES’. Earlier that morning, Kevin and Ian Maxwell had applied to have administrators appointed to their family holding companies.
As the Maxwell family’s official spokesman, Charlie Wilson found himself having to perform a very public version of a manoeuvre popularly known on Fleet Street as a ‘reverse ferret’. This consists of making a complete about-turn from a previously entrenched position, ideally without betraying any flicker of embarrassment. ‘Four weeks earlier I had spent several days going from TV station to TV station telling everyone what a great man Maxwell had been,’ Wilson recalls. ‘Now I had to do the whole tour all over again saying what a swine and a disgrace he was.’
Every trace of sympathy now gone, Richard Stott went to see ‘a clearly shell-shocked’ Lawrie Guest. ‘I had known him for a long time, he was a decent man and he knew he was in the firing line. I had obtained the documents showing his row with [Michael] Stoney and the damning notes of his meeting with Maxwell in which he had written: “I am convinced that MGN resources have been used to support other parts of the group” – and asked him about them . . . I think it was a relief for Lawrie to get it all off his chest.’
‘THE LIE’, read the headline in the next day’s Mirror: ‘Robert Maxwell was dramatically challenged about the missing Mirror millions just before his death – and responded with a terrible LIE. The Mirror’s finance director Lawrence Guest confronted the tycoon in Maxwell’s ninth floor office high above Holborn Circus . . .’
Joe Haines was equally stunned. In his column, he wrote that it had been ‘an awful week, the worst I can remember. Bob Maxwell, a man who once genuinely saved the Mirror, has through his manipulations of the pensions money now delivered us into the hands of those whom he hated, the pinstripes of the City of London.’
All the time the warts kept proliferating. Maxwell the Liar soon turned into ‘Maxwell the Bugger’ when it emerged that he had bugged his own offices: ‘A voice-activated wire tap was found yesterday in a telephone of finance director Lawrence Guest. Wires led to a tape-recorder in an office where the Maxwell empire’s security chiefs are based. The tape recorder was Maxwell’s own machine which he once used to record his own business conversations. The wires – still active – were uncovered in Mr Guest’s suite on the 9th floor of Mirror Group’s headquarters at London’s Holborn Circus . . . Security boss Mr [John] Pole last night refused to comment on the discovery of the bug.’
While the Mirror was decking itself out in sackcloth, Rupert Murdoch’s Sun remained in a state of ecstatic excitement. ‘MIRROR, MIRROR, WHO IS THE BIGGEST CROOK OF ALL?’ ran one headline. The paper also invited readers to ‘send in your cracks on the Big Max’ and set up a special fax line – the Faxwell – so they could do so.
After Maxwell the Fraudster, Maxwell the Liar and Maxwell the Bugger came ‘Maxwell the Shagger’, when his former mistress Wendy Leigh spilled the beans to Rupert Murdoch’s News of the World about their affair. However casual it may have been, the affair had gone on for seven years and Leigh clearly cherished fond memories. When they first met, ‘I was 25 and primed for adventure,’ she wrote. ‘He was 57 and susceptible to romance.’ Their first night together, Leigh claimed, ‘had been the most romantic night of my life’. Maxwell had made her feel like ‘the most glittering prize in the firmament’.
But in Maxwell’s former paper, the Sunday Mirror, Vincenza Astone, who’d once worked for him as a secretary, told a different story. ‘I don’t know why I slept with him – it just happened,’ said a rueful Astone. ‘He started fooling around and we ended up in bed. Immediately afterwards I regretted it. I went home and didn’t tell anyone. He promised to give me a car and a flat but days after seducing me he made me go home to Oxford on the bus. Days later he sacked me.’
By now the full scale of Maxwell’s deceit had become apparent; it was far worse than anyone had anticipated. In all, £763,000,000 was missing, including £350,000,000 from Mirror pension funds and £79,000,000 from other Maxwell company pension funds. The debt was so large, according to one commentator, that it qualified for the Guinness Book of Records.
And then of course, there was the human cost. As the manager of one of Maxwell’s companies put it, ‘Throughout the length and breadth of the land, there are people going to bed at night wondering if they will wake up to any future at all.’ When he was asked what he and his fellow Mirror pensioners would like to do to Maxwell, the man took a few moments to compose himself before saying, ‘We feel like digging him up and hanging him.’
On 11 December the New York Daily News filed for Chapter 11 bankruptcy. The next day the European closed. Six months later, Macmillan would follow the New York Daily News into bankruptcy. As casualties continued to pile up on both sides of the Atlantic, Newsweek magazine was in no doubt about the scale of Maxwell’s villainy. He had been, it declared starkly on its cover, ‘THE CROOK OF THE CENTURY’.
39.
Everything Must Go
Conrad Black was sitting at home leafing through an auction catalogue on 14 February 1992 when the phone rang. It was Rupert Murdoch. ‘It wasn’t unprecedented for Rupert to call me, but it certainly wasn’t a very frequent occurrence.’
When Murdoch asked what he was doing, Black told him about the catalogue he’d been sent. Later that day there was to be an auction at Sotheby’s of ‘The Complete Contents of the Chairman’s Apartment at Maxwell House – to be sold at short notice without reserve’. The contents included ‘Mr Maxwell’s double bed’ (estimate £1500–£2500); ‘Mr Maxwell’s office desk
(£300–£400); ‘Mr Maxwell’s Office Armchair’ (£100–£200); ‘A wooden model of a helicopter, with gold metal blades’ (£80–£100), as well as four separate lots comprising ‘a quantity of white towelling’ (£40–£150).
As he looked through the auction catalogue, Black had an unexpected sense of melancholy. ‘I said to Rupert, “I feel badly about him being found dead, floating in the water. He was an appalling character in some ways, but I still feel bad.”’ Murdoch, however, didn’t see it the same way. ‘He said, “Oh, you’re a more kind-hearted person than I am, but then you didn’t have to put up with him for as long as I did. For decades I’ve had to listen to these comparisons between our companies and his. He was a terrible man, an absolute fraud and a charlatan.”’
Eleven months after the first Sotheby’s sale – on 14 January 1993 – there was another auction – this time of the contents of Headington Hill Hall. A ‘Court-appointed Receiver’ had been put in charge of the dispersal of Maxwell’s estate, with half the proceeds from the sale going to Betty and half towards making a tiny hole in the vast mountain of debt he had left behind.
In the autumn of 1992, Harry Dalmeny from Sotheby’s had gone down to Oxford to see Betty Maxwell and value the various items. ‘It must have been terribly difficult for Betty – the house was literally being taken apart in front of her eyes. Yet she wasn’t emotional about it; I think she’d taken the view that it was a ghastly business and she just had to get through as best she could. I remember her telling me that her husband’s death must have been an accident. “I know he would never have left me to deal with this,” she said. “He was not that kind of man.”’
Betty had been given until the end of the year to vacate Headington Hill Hall. As the staff had all been dismissed, she asked two friends to help her clear out what little furniture was left and ensure the house was clean. ‘It was a filthy job, but pride compelled me to leave everything impeccable.’
When they had finished, they sat down in the kitchen for their last meal – the three of them shared two eggs, one tomato and a tin of sardines. ‘We had a laugh when we remembered all the splendid meals of the past served from that very kitchen.’ Although the house may have been emptied, Betty felt that something was left behind, however indefinable. ‘In spite of its emptiness, the house remains a home, still infused with the love I lavished on it, and it will remain so until I and my soul leave it.’
Elsewhere, though, it was as if every trace of Maxwell was being swept away. A year after his death, the Mirror offices in Holborn Circus were demolished. So too was the building next door – Maxwell House.
Among the lots at the second Sotheby’s sale was ‘a coloured photograph of President George Bush with Robert Maxwell, inscribed by the President to “Sir Robert Maxwell”’ (£60–£80); a black lacquer and mother-of-pearl inlaid desk sign reading, “Robert Maxwell. Chairman”’ (£40–£60); a collection of commemorative clips, brooches and buttons, including a ‘Ronald Reagan’ tie clip (£60–£80); ‘a collection of hats comprising three baseball caps one inscribed MCC, another GUVNOR together with three Trilby hats, a tweed hat and a small quantity of wooden coathangers’ (£10–£20), and a Panasonic ‘cinemavision’ TV (£500–£800).
And there too, jumbled together with various other medals and awards, was Maxwell’s Military Cross (£1500–£2000), along with ‘a framed black and white photograph of Maxwell being decorated with his MC by Field-Marshal Montgomery, signed at the bottom “Montgomery. Field-Marshal”’ (£150–£200). Betty tried to buy back Maxwell’s Military Cross but the receiver refused to allow it.
Soon after the sale began, there was an interruption. The Investor’s Chronicle reported that ‘A pretty blond woman brandishing a cigarette forced her way to the front barking, “Let me through! I knew the man. You did not.”’
After people had reluctantly moved aside to allow her through, the sale resumed. Who was this mysterious late arrival? It turned out to be Eleanor Berry, come to pay her respects to a man that she, almost alone now, steadfastly continued to idolize.
Shortly after 7.30 a.m. on 18 June 1992, two officers from the Metropolitan Police walked up to the front door of Kevin Maxwell’s house in Chelsea. Having been tipped off in advance, television crews were waiting outside to record the scene. There followed an exchange which caused great hilarity when it was shown on the evening news.
One of the police officers rang the door bell. After a while a window on the first floor was yanked open. Pandora Maxwell – Kevin’s wife – appeared, clearly incensed.
‘Piss off. We don’t get up until half past eight,’ she announced, before slamming the window shut.
The policeman rang the doorbell again, for rather longer this time. Once again the window flew open.
‘I’m about to call the police!’ Pandora Maxwell shouted.
‘We are the police,’ said the policeman.
Later that day, Kevin Maxwell and his brother Ian were taken to the City of London magistrates’ court, where they were charged with multiple counts of conspiracy to defraud. Two other former Maxwell executives, Robert Bunn, Finance Director of Maxwell’s private companies, and Larry Trachtenberg, a director of Maxwell’s private Bishopsgate companies, were also arrested and charged.
It would be another three years before what was eagerly billed as the trial of the decade began in Court 22 of the Old Bailey – actually a modern annexe a mile away. By then Kevin Maxwell had been declared bankrupt with debts of £406,000,000, making him the biggest bankrupt in history.
Faced with having to help raise an interim payment to Ian’s creditors of £500,000, Betty Maxwell approached several wealthy family friends on his behalf. She soon had an unpleasant surprise. ‘I had naively believed that we would have no difficulty borrowing such a sum. But I was now to discover a side of man’s nature which Bob had never accustomed me to: meanness and cowardice. People who had been proud to be seen with me now argued that it would prejudice them commercially or socially if it became known they had lent me money.’
To begin with, the public gallery had been crammed with onlookers. But within a few days almost all of them had melted away. For week after week proceedings dragged on. Two months after the trial started, one of the defendants, Robert Bunn, suffered a heart attack and was discharged. The jurors gazed enviously at his empty chair.
Another two and a half months went by before Kevin Maxwell took the stand. He conceded that his father would ‘stretch the law as far as it would go to achieve his business ends . . . He was capable of being extremely charming to people,’ Kevin went on, ‘To be winning – but he was also capable of verbal brutality, public dressing-downs, not only of his children but senior managers.’ After eighteen days in the witness box, he made a further admission: ‘I was probably one of the most arrogant people you will ever meet. I could not imagine failure. With hindsight, bloody arrogant.’ This public display of contrition was received in stony silence. As one commentator noted tartly, there wasn’t a moist eye in the house.
On Monday, 8 January 1996 – the thirty-second week of the trial – the judge finally sent the jury off to start their deliberations. Before doing so, he gave them a clear instruction. Over the last few years, there had been a number of high-profile fraud cases in which the defendants had been found guilty, only for the verdict to be overturned on appeal.
To try to ensure the same thing didn’t happen again, the judge told the jury that they had to reach a unanimous verdict. The only problem with this was that it’s almost unheard of to get a unanimous verdict in a fraud trial. Not only do jurors find it hard enough to understand the evidence, but defence lawyers have a vested interest in ensuring they remain as confused as possible.
For the next eleven nights the jury remained cloistered in a hotel while they continued their deliberations. Then, on 19 January, the forewoman announced that they had finally reached a verdict.
Was it unanimous, the judge asked.
It was, she assured him.
But far from diminishing the contempt with which Robert Maxwell was viewed, the verdict seemed only to intensify it. By now he had become fixed in the public imagination as the embodiment of corporate villainy; the man who had callously deprived thousands of his employees of their pensions.
It wasn’t until 2002, more than ten years after Maxwell’s death, that the Department of Trade and Industry finally published its report into Mirror Group Newspapers plc. This concluded that Maxwell ‘dominated the management’ of all his companies. None the less, Kevin Maxwell had given ‘very substantial assistance’ to his father. He had known of a number of instances where pension funds were used for the benefit of MCC, and also that this information had not been disclosed to trustees. ‘In our view,’ the report concluded, ‘Kevin Maxwell’s conduct was inexcusable.’
But other members of Robert Maxwell’s management team had also known what was going on. So too had Goldman Sachs, who bore ‘a substantial responsibility’ for allowing Maxwell to manipulate the stock market. Goldman Sachs subsequently issued a statement claiming to have been as much in the dark as anyone else: ‘We, and doubtless many other firms in the City and elsewhere, were intentionally and successfully deceived. We deeply regret this and, with the benefit of hindsight and with the information now available to us, would have acted differently.’ Once again, there wasn’t a moist eye in the house.
The DTI report gave Lawrence Guest what amounted to a light tap on the wrist: ‘Although Mr Guest became concerned in June 1991 about the payment to the private side and the payments that had been made without documentation being provided to the finance department, and took the steps we have described in circumstances where he was in a difficult position, he should have reported the payments to the board or the non-executive directors as soon as he became aware of them.’