Maxwell leaves a legacy of scandal ... faithfully reported His own papers now allege theft

December 22, 1991|By Richard O'Mara | Richard O'Mara,London Bureau of The Sun

LONDON -- The day after Robert Maxwell was found dead in the waters off the Canary Islands in early November, his newspaper, the Daily Mirror, surrendered all pretense of journalistic dispassion and turned itself over to eulogizing its departed owner.

What the Mirror's efforts lacked in sincerity was made up in volume. Nearly every article -- and there were many -- sang the praises of the ruddy and rotund press lord. He was, according to the front page headline, "The Man Who Saved The Daily Mirror" by buying it some years earlier when it was on the brink of collapse.

The preferred phrasing all had to do with his size: He was larger than life, a jolly giant, a big charmer.

Today, the favored expression still alludes to his immense girth: It is "rogue elephant," though, as Brian MacMahon wrote, that does "great injustice to elephants."

It is not likely that, given the chance to do it all over again and knowing what they know now, the staff at the Daily Mirror would be so effusive about old "Capt'n Bob," as he was referred to affectionately by those few who felt affection for him -- and sarcastically by all the rest.

He looted their pension funds. He used about $1.3 billion of it as collateral for bank loans for his private companies. Sometimes he secured more than one loan on the same collateral.

About $800 million of the misappropriated funds, in stocks and cash and other financial instruments, has been found by government-appointed accountants; whether it can be retrieved from the banks that have it is an open question.

The other $500 million has disappeared, possibly lost for good in a scheme hatched this year, and only now being brought to light, to prop up one of his companies, Maxwell Communication Corp. PLC.

Britain's Serious Fraud Office is investigating this, as it is investigating virtually all of the dead tycoon's affairs.

According to the government, Mr. Maxwell apparently took the money from the pension funds and funneled it to companies he was connected with outside of Britain. They in turn bought MCC stock, with the aim of driving its value up.

It worked for a while, but now MCC stock has no value. MCC has filed for bankruptcy protection.

There have been few financial scandals in Britain in recent years as extensive, complex and apparently dirty as that precipitated by the death of Robert Maxwell, who fell off his yacht near Tenerife Nov. 5 under unexplained circumstances.

Four British banks are facing losses of about $1 billion on loans they made to him. Banks outside Britain are believed to have lent him possibly three times that amount.

Investigators and members of Parliament have expressed suspicion that one of his sons, Kevin, might have played a part in the removal of the pension fund money.

The Daily Mirror says that his daughter, Ghislaine, 29, ordered the shredding of her father's private documents aboard his yacht soon after he went overboard.

Kevin and his brother, Ian, who took over their father's empire immediately after his death, discovered there was more debt than substance in it, and they have since been trying to reorganize and stave off creditors.

They have had little success.

The Maxwell affair has inspired palpable panic in the banking and financial community here, and some of the venerable institutions are scrambling in a most undignified manner to salvage what they can from the disintegrating empire, or defend what they already have been able to secure.

vTC National Westminster Bank, for instance, one of the four more liberal lenders to Mr. Maxwell, holds nearly $30 million in stock in an Israeli drug company, Teva Pharmaceutical, obtained from Mr. Maxwell to secure a loan made in November.

But the stock belongs to the Mirror Group Newspaper pension fund, and MGN has demanded its return. The bank refuses.

The consequence is certain to be a long court battle.

Nor are things much better in that other world where Mr. Maxwell played so recklessly -- journalism. The staffs of three major newspapers face uncertain futures owing to their dead owner's financial manipulations: the New York Daily News, the Daily Mirror and the European.

The district attorney's office in Manhattan is reportedly investigating the Daily News pension funds, guided by a suspicion that there may be irregularities.

There is apprehension in the newsroom of the Daily Mirror, the largest of the Maxwell papers, owing to the deficit in its pension fund.

And there is more immediate concern among the European's employees -- or former employees, since all of them have been laid off.

Launched 1 1/2 years ago as the tribune for European integration, the European was one of Maxwell's pet projects.

But it was a project never truely realized. Its under-250,000 circulation was not considered much in a market of more than 320 million people -- that is, all of Europe.

The firing of the European's staff precipitates another probable court clash, this one between the Mirror Group Newspapers company and Britain's National Union of Journalists.

The conflict revolves around the assertion by at least half the laid-off staff of the European that, since they have contracts with MGN, they deserve jobs on the Mirror.

Last week, 70 of the employees of the European marched around the corner to the offices of the Daily Mirror to demand those jobs.

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