Britain's Melmotte? The Cautionary Tale of Robert Maxwell

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0:54thanks for listening to a long time in finance with jonathan ford and neil collins

1:03so we thought we'd take a look at the final collapse of the empire run by robert maxwell a larger than life figure who what's the word bestrode the world of publishing from the 1950s to his death in 1991 you must remember him quite well did you ever come across i'm afraid i did

1:19Neil Collins: Yes, once or twice. I clashed with Captain Bob. I wasn't really his type. Right. Did he ever slap you with a gagging order? No, no, we managed to avoid that, I'm glad to say. But let us say we were not his greatest cheerleaders. No, well, that was probably a good thing because, of course, Captain Bob ended up going massively bust and leaving the penches of the Daily Mirror, the Labour-supporting tabloid, which he owned, hundreds of millions of pounds out of pocket. So to help us unpick the world of Captain Bob, who better help us than the writer John Preston, whose award-winning biography of Maxwell, The Fall, appeared in 2020.

2:00Welcome, John. Thank you very much. I suppose we should start off by defining what we're looking at. And I think it's the period right at the end of his life from 1988 to November 1991, where he famously falls off his yacht into the Atlantic. But I think we should start before we get there by setting the scene a little bit about who he was and how he built up this business empire because it's a pretty incredible story. It is an incredible story because Maxwell was born into really appalling poverty. One of nine children in a dirt poor village in what was then part of Czechoslovakia. He was Jewish.

2:37There was a large Jewish population in the village. And when Maxwell was 17 or 18, he left to go off and seek his fortune. And when he came back, most of his family had been rounded up and they subsequently died in Auschwitz mainly, and I think another concentration camp as well. however much of an ogre Maxwell was I think you have got to see his life through the prism of his childhood yeah the one thing that made me want to write the book more than anything else was that Maxwell's son Ian told me a story about being in Headington Hall which was the family home in Oxford and coming in one night and some documentary about the concentration camps was on the television.

3:32Maxwell had a kind of early huge television screen mounted on the wall and he had his nose pressed up against the glass and Ian said what are you doing? And Maxwell said I'm looking to see if I can see my family. Whatever one thinks of Maxwell that is a desperately poignant story it is so he has this incredible war record very colorful war record after spending the first three years breaking rocks in wales which but he ends up fighting his way through northwestern europe and where he gets this sort of record for paying lip service at best of the geneva convention yes shooting prisoners and the like yes he certainly did that um but he also won a military cross yep and there's a lot of subdefuge attached to maxwell's early adult life i mean he changed his name four times by the time he was something like 21 or 22 he plainly relished the cloak and dagger aspects of it and along the way he essentially shed his old identity and relaunched himself as this rather kind of plummy voiced englishman having learnt to speak english from listening to records of wilson churchill's speeches which he didn't even understand to begin with but he kind of modeled his cadences on Churchill's but then every so often there would be a sort of terrible malpropism like you can't change toads in midstream and something like that.

5:03Essentially there's this whole cloud of disbelief which hangs over a lot of what he said about his life and you yourself touch on it. How much of what he says about himself do you think was ever true and how much do you think was just a kind of product of his desire to be someone well i think that on the fairly rare occasions when he talked about his childhood that was true yeah but really from the age of kind of 18 onwards he embroidered everything which was one of the reasons why he was a huge asset to british intelligence that and the fact that he was multilingual i mean he could pick up languages just like that yeah he has this incredible harry lime existence exactly like harry lime because he can move from one occupied zone of the city to another and pass himself off as a native in each zone yeah and into czechoslovakia as well of course in those days he could have fitted in the sewers if he had to use them but later on it would have been more challenging as we'll discover so he gets this big business break because up until then he's sort of comes across as a sort of happy-go-lucky.

6:09I don't know what he did in Budapest or wherever it was before the war, but he has this huge break that he manages to get this relationship with Axel Springer, the big German publisher, and he has the imagination to see that there's an opportunity to make a lot of money out of academic publishing. How does a basically penniless refugee soldier end up doing huge business deals in Berlin in 1945? Well, Maxwell had spent some of the war breaking rocks in a quarry in Wales. As he was wielding his pickaxe, he would try and think of a commodity that he might be able to lay his hands on, which would cost him very little or ideally nothing that he could make a lot of money out of.

6:56And when he went to Berlin, one day, entirely fortuitously, the answer landed in his lap which was knowledge. You needed to be a kind of genius to actually recognise this because Springer, Axel Springer, came to him and said Maxwell at this point was running an English language newspaper in Berlin and Springer hadn't been able to publish any of his stuff during the war as a result of which he had a huge warehouse full of manuscripts and he was bemoaning this to Maxwell. My light bulb went off in Maxwell's head and he was funded by British intelligence and he got an entire train load of this stuff was dispatched over to London.

7:45And Maxwell got the money again from British intelligence to get it translated. And that was really what became the cornerstone of his empire of pergamum yeah presage to you know what we'll come to later the relationship with springer which lasts i think for about 10 years until the mid-50s ends with obvious disappointment on the german side yes and the suspicion that they they've been shortchanged by their uk representative but do you think that's Just because he is a bit functionally dishonest. Is he capable of sticking to the deal? No, I don't think so. Right. And I think that he was unencumbered by notions of loyalty.

8:29Yeah. Or indeed partnership. And also, yeah. Apart from the fact that sometimes it was useful. Yeah. He really shafted everybody he worked in conjunction with. Yeah. Let's just go through quickly the 50s. Lots of complicated deals in Europe. barter trades involving cement and pork bellies from Portugal, where he's, this seems to be his Del Trotter period, where he's sort of just literally doing the most ropey looking deals. Unbelievably ropey deals. But the one constant was the academic publishing. And I think that whereas the pork bellies and the cement and all the rest of it, he didn't care about, I think in a peculiar way, Maxwell did care about the academic publishing and saw himself as the saviour of academics who'd been unable to publish their work throughout the war.

9:25And there's some truth in that. Well, you've got to look at the final result, which is he managed to sell Pergamon in 1991 for 440 million quid, which he built from pretty much the ground up. He was the leading academic publisher in the world. But up till now, up till now, we've done a very odd position. we're actually talking about events before Neil's journalistic career started, but we're now kind of arriving with the Pergamon-Liscoe affair to a point where you probably know something about it.

9:52Neil Collins: Well, the accounts on which the battle was fought were largely fiction. And it's sort of understandable in a way that it was, because nobody had any real idea whether this stuff was valuable or not. It was all essentially intellectual property, which is a phrase which probably didn't exist in those days. He parlayed that into something which persuaded people that he had something which was worth backing. In many ways, he was right. Pergamon, the business he'd built up from the 1945 deal with Springer, he's approached by an American businessman called Saul Steinberg, who I think later becomes a kind of corporate raider in the 1980s.

10:36Anyway, Steinberg, who's then quite young, he's got excited about Pergamon, offers to buy it for a high price. And Maxwell, who's been going around, because he's a tremendous showman, saying things like, I've just sold, you know, a million encyclopedias to Cuba or something, and promised that he'll make profits of X is suddenly caught out, because he suddenly can see this£25 million dangling in front of him. I think he lets himself down yet again a bit, doesn't he? I mean, I agree with Neil that he's on the right track. I think he does. He makes up a lot of stuff in his accounts. Yes, I mean, you know, not for the first time.

11:12Galloping hubris proved to be his downfall. Well, he did exactly what he did later on, which is he did the old money-go-round thing. He had a pile of old documents in a cellar in Headington, and he got one of his other companies, basically said, I'll buy these for a million pounds. So he wrote these worthless assets up in his accounts and basically gave himself a huge profit. So he was sort of doing exactly what he would be doing in coming years. But weirdly here, he gets away with it. He loses the company, gets humiliated in 1971. How important is that moment when he loses control of Pergamon and he's also reported to the DTI and ultimately shamed in this famous report where they say, he, and that's Maxwell, is a man of great energy, drive and imagination, but an apparent fixation as to his own abilities causes him to ignore the views of others if these are not compatible.

12:08Notwithstanding Mr Maxwell's acknowledged abilities and energy, he is not, in our opinion, a person who can be relied upon to exercise proper stewardship of a publicly-equated company. Which is pretty damning. Very damning.

12:20Neil Collins: For the time, it was absolutely unprecedented. This was really a torpedo which was going to sink the battleship, but this battleship was rather more resilient than the DTI inspectors thought. Talking about humiliation, public humiliation, Maxwell, who manages to be both a kind of figure out of The Godfather and out of Italian comic opera, had a much, much thinner skin than people tended to realise and felt any suggestion of public humiliation very, very keenly. and it galvanised him I think as well. I think that's right. There's a very nice thing which we haven't touched on his brief career as a politician but when he's at the end which is another moment where he rather lets himself down by taking over the catering committee of the House of Commons and saying he's going to make it turn a profit.

13:12Basically he makes up the numbers again and when he's accused in the House of basically telling a porky pie he goes to the Committee of Privileges to clear his name, doesn't really clear his name at all. But having behaved in this most sort of aggressive and bullying people to all the people who are getting at him, he then kind of declares that he's entirely vindicated and switches overnight from being an aggressive bully to pretending as if nothing has ever happened, which seems to be his modus operandi in general. The last thing we should come to is the relationship with Murdoch, which obviously is a really central thing to him, understanding him.

13:50It's very odd because Murdoch and Maxwell, their fates were entwined in the most bizarre way. I mean, they shared initials. They were obviously in the same business. Only because Maxwell changes. Well, that's true. And when I went to see Murdoch for the book, much to my surprise, he agreed to see me. It was plain that he really loathed Maxwell, who he saw as a kind of Dorian Gray version of himself, this kind of loudmouth vulgarian who just sort of trampled over everything woody nitty whereas murdoch is a man of more finesse and a more fastidious man and i think it was a cause of great agony to murdoch that they were constantly being mentioned in the same breath and they had actually met way back in the i think 1950s in australia where they almost went into business together and then Murdoch found out that Maxwell was trying to get him to pay a million Australian dollars for bankrupt stock from some publishers that had been offloaded onto him for free.

14:58And as far as Murdoch was concerned, that was it. They were never going to kind of see one another again. But in fact, as it turned out, that was only the beginning of their business relationship. Maxwell became increasingly obsessed with going toe-to-toe with Murdoch. That's why Maxwell wanted to buy a newspaper and it's why he bought the American publisher Macmillan in 88 which was essentially what set in train the chain of events that led to his downfall and indeed his death. So was he bidding against Murdoch for Macmillan? Murdoch was a pretty well-established figure in New York by this point because he owned the New York Daily Post and they didn't really know who maxwell was at all yeah and this rankled with um maxwell a lot so he bought the u.s publisher mcmillan for something like 2.6 billion dollars which is something like 2 billion more than the company's own directors thought it was worth and people were imploring him not to do it and so on but he felt that by doing it this would give him the toehold that he needed to take on murdoch and a kind of epic slugfest but then that was the point really where everything started to fall apart

16:20Neil Collins: yeah he didn't have the money essentially he didn't have the money and it seems to one of the themes running through his life is they never seem to bother too much about where the money was going to come from he thought it would just appear somehow from a source which others hadn't thought of or in the case of of course the pension funds that others had thought was sacrosanct and he decided that you could replace a pension fund with a set of IOUs. But it's worth just I mean the 1980s were quite a good time for Maxwell in some respects. Yes and whenever on the rare occasions whenever anyone said to him you know I don't entirely understand your finances Mr Maxwell Maxwell would say well it's all sorted away in Liechtenstein and and they went oh right okay and that was it and no accounts needed no it's around the old problem of having to gussy up the accounts if no one can see them he turns around a printing company called BPC which is actually as far as I can make out quite a successful kind of thing he buys the mirror never quite clear whether the Mirror is a great cash cow or not.

17:33But for a period, it's got that sort of thing where a bit like the Telegraph under Conrad Black, it appears to be a very profitable, the Barclay Brothers, a very profitable enterprise. I want to come back to Macmillan. And your thought is basically that he's so determined. He thinks now is my time. I've had some successes, done BPC, the Mirror. I've got cash in the bank. It's now or never. if I'm going to step up and become a Murdoch, I've got to move on from just owning some assets in the UK to becoming a big publisher in the States. And he just doesn't figure what he's getting into. I think that's true, but I think you've also got to factor in Maxwell's mental state at the time.

18:17Because I think that Maxwell became progressively unhinged. he really behaves in an extremely strange and vindictive way towards his wife a very very long-suffering wife betty he has this affair with this much younger woman who's his pa at mirror group his personal life is falling apart at the same time as his business life and they you know to some extent they mirror one another it's interesting one of the things which does come across from your book is is the way in which even though he is highly acquisitive he's always looking to buy and control things and flaunt them when he has them his rolls royces and his whatever in some ways he's not that interested in personal possessions he's not interested in collecting pictures he doesn't own his own house he's basically not very interested he likes consuming things like wine or food i think he had that classic immigrants thing of being very fearful that it could be taken away from him at any moment, just as everything had been taken away when he lost his parents.

19:27Yeah. I mean, let's come to the pension funds, which I know you have strong views on pension funds, Neil. Who do they really belong to? Maxwell, obviously, you can see he's towards the end of his life, he virtually talks about pension funds nonstop. It's almost like Tourette's. He's got this thing in the back of his mind that he's got a terrible secret. He keeps on blurting on about, my pension funds are fine. And I have a friend who got a job on the European, and he went to see Maxwell. This would have been 1991 or 1990. And Maxwell said to him, you know, you should put your money into my pension funds.

20:04Which I don't think he did, fortunately for him. It's certainly true. There is this legal uncertainty about who ultimately owns the surpluses in pension funds. maybe the assets. But it seems to me that, you know, in the 1980s, you had a lot of companies who used to do something which, thanks to Maxwell, they no longer can do, which is, they stopped making contributions to their pension scheme when they thought it was overfunded. And therefore, they just diverted what they would have put back into their own pockets. But taking assets out of the pension funds seems to me to be, particularly when you're borrowing them, is a much more legally perilous undertaking.

20:45I don't know what you think.

20:46Neil Collins: The thing about pension funds, company pension funds, is there was a sort of assumption of good behaviour by the people who were in control of the company. It was never spelled out that it wasn't their money. It wasn't the company's money. It was a grey area because the company had said, we will meet these liabilities. And by the way, we put these assets to one side in order to do so. There was many occasions when there was a mismatch between the two in both directions. When the stock market was very high, then there was a surplus and companies were actually penalised by tax if they didn't stop making pension contributions.

21:29Neil Collins: And then at the bottom of the market, there were deficits. So they had to set up a series of payments over the coming years to fill the deficit. And I don't think it was ever really spelled out, essentially, the fiduciary duty. Now I think it is much clearer. Probably not a lot better, actually, because most companies did behave as well as they could. And there were only a few rogues like Maxwell who essentially said, well, it's not clear, so it's mine. But I think one thing about the pension fund which is clear is he went to great lengths to disguise what he was doing. So even though, if you're right, that he thought I have a title to this, he certainly didn't want to disclose it, what he was up to.

22:14And I suppose one of the reasons why is that the wider public, if they see someone helping themselves to large loans from the pension fund, start to ask themselves why that individual is unable to get loans on commercial terms from anyone else. And his position is that, of course, he turns to the pension funds, he might well have helped himself to bits and pieces from time to time. But he really, in an industrial scale, turns to the pension funds, when he's maxed out his credit cards in the United States, and all the banks are starting to get very anxious about their exposures. And the weird thing is, he doesn't give the money to pay off any of his debts.

22:52He basically tries to prop up the share price of the company that has bought these large American assets and literally is just pouring tens of millions of dollars into the shares every month in a frantic attempt to keep the share price from dropping, which he thinks correctly will alert the banks that there's something amiss. Maxwell was addicted to subterfuge. So I mean, you know, most people, you know in business one would hope if they offered a choice between transparency yeah and subterfuge will to some extent okay opt for transparency that was absolutely not maxwell's

23:31Neil Collins: way i think it's very key you know if there was a simple way of doing it or a complicated way of doing it he'd go for the complicated way because it would have given him more cover yes and and to some extent i think it gave him something of the old adrenaline rush that he'd had during the war when he was changing his identities every three weeks yes he didn't he didn't turn to that particular he didn't change his name towards the end i suppose that he realized it would be hard to pass himself off as anyone else by that point But let's come to the denouement, because he's finally, in the end, all the schemes start to unravel.

24:13And the creditors, I mean, he really is. It's literally like the end of the way we live now. He's basically, he's essentially being reported to the police for fraud by the Swiss bank corporation. Goldman Sachs and Lehman Brothers are flogging off Maxwell company shares. the wolves are at the door and he's trapped by literally by his own he's completely trapped and he must have known that when Maxwell was on his yacht in November of 1991 correct he was due to come back on I think the 5th of November and he knew that he was going to be interviewed by the police and he must have realized that the overwhelming likelihood was that he was going to end up in jail and that was going to be you know we talked a bit about humiliation earlier i don't think maxwell could have coped in prison unlike conrad black for instance who seemed to kind of rather thrived in prison well he wrote a book yeah indeed um he knew the game was up and so when it comes to the circumstances of maxwell's death which essentially falls into kind of one of three categories did he jump was he pushed or was it an accident lots of people perfectly sane people would tell me when i was doing the book oh well he was definitely pushed by mossad agents and everything like this but there's absolutely no evidence why should they why should they go to the trouble of sending kind of amphibious hitman out into the middle of the atlantic to bump him off when he practically walked around with a target pinned to his forehead because he was so addicted to self-publicity.

25:52So, I mean, that doesn't make sense. The interesting thing is, I think, you know, you can make an equally plausible case for accident and suicide, or possibly somewhere between the two. I mean, if it was an accident, it was an astonishingly fortuitous accident. He decided to reach over the deck to have a look at some barnacle on the side of the boat very closely, and the whole structure had given way beneath him. He was given to peeing over the side of the boat late at night. There was some doubt at one point whether he could actually fit into the lavatory, but I think that's nonsense. But he nonetheless quite liked the idea of peeing over the back of the boat, which was quite easy to fall off.

26:36I mean, there was only kind of thin metal hawser. My feeling in the end was, which may sound horribly mealy-mouthed, which is the line between accident and suicide is much more blurred than people generally assume. I can't believe there wasn't some intention there. I mean, I don't think he went on board the boat for the last time thinking, I'm going to kill myself. But I think that he was in a very peculiar mood the last time he was on the boat. He was very nice to the staff, which is almost unheard of. That's a clue. And of course, one of the fascinating things about Maxwell post-death was how everybody in the immediate aftermath of the announcement of his death queued up to say, this man has been a colossus of our time, and, you know, he's unconventional, but nonetheless enhanced, great life enhancer, and blah, blah, blah, blah, blah.

27:35And then sort of two weeks later, all the pension fund stuff comes out. So the same people then go back to the television studios and say, I always knew it was a wrong one. yes in some ways that's his revenge on the establishment i suppose to make them all look bit silly but in your judgment on him i mean apart from the you know why would he do it if he did it yes probably because he couldn't bear either going to prison where the food is not notoriously good or becoming a figure of fun and and they're having everyone say yes exactly that we always knew he was a wrong one. And yes, we've been proved right.

28:13I found it difficult to decide whether he was, I mean, I started off with this idea that he was Melmolt, the villain of the way we live now, who of course is a deliberate fraudster. He aims from the beginning to steal from people. I mean, although people routinely called Maxwell a crook, I couldn't completely persuade myself that he was an out and out fraudster he was more an unbelievably reckless person towards the end who took insane risks i mean i one of the reasons i wanted to write the book was that it fascinated me that 30 years after maxwell's death he was still regarded as the kind of embodiment of corporate villainy yeah i really wanted to see whether he was as black as he'd been painted by history it did turn out to be a much more nuanced much more tragic story

29:09Neil Collins: than i expected no i don't think he was a villain through and through but i think that certainly in his commercial life he didn't care who he trod on and the whole thing was basically for the aggrandizement of robert maxwell yes but that then begs the question of why did he have this compulsion to big himself up at every opportunity to stick photographs of himself in his own newspaper and my feeling was that you know he never quite believed in himself not surprising since he i mean he changed his name so many times and this was a way of kind of reinforcing his identity to himself i don't think it worked and i certainly don't think he would necessarily have been aware of it but i think that possibly lay behind many of his more absurd self-advertising activities activities yeah well that brings to mind the uh the little anecdote of basham brian basham oh yes a slightly interesting pr man who got a christmas card from maxwell which had maxwell standing in front of a sort of firework display which said happy birthday bob and so he phoned Maxwell up and said, what do you mean by this?

30:26This is supposed to be a Christmas card. And Maxwell said, what's the problem? He said, Bob, it's Jesus's birthday.

30:38Neil Collins: That was Long Time in Finance with Jonathan Ford and Neil Collins. Production and editing by Nick Hilton. Please rate and review it on your podcast app.

30:52you