For the inhabitants of Slatinske Doly, a small Ruthenian village on what was then the border between Czechoslovakia and Romania, smuggling was an honoured and necessary trade. This is where Ludvik Hoch, or Robert Maxwell as he was later to rename himself, was born and brought up. Tax differences on the slaughter of animals and the sale of meat provided an opportunity for a lucrative and illegal trade in smuggled cattle.
Beneath the full moon, both horses and cattle were taken onto rafts, their hoofs wrapped in sacks and a bag of oats or other food fastened across their mouths. After the beasts had been landed on the other side, the real business began. Horse dealers, like their successors, car salesmen, are notorious for their promises, their exaggerated sales talk and their haggling. Smugglers negotiating in the moonlight would be engaged in even tougher and more ruthless dealings since their customers were well aware that the Czech Jew had little alternative but to sell his beast.
This, according to Tom Bower, is where Maxwell gained his first experience of business methods and ethics. ‘Watching his grandfather ceaselessly looking for business and haggling the two sides at both ends to increase the margin imbued Maxwell with the instinctive sense for dealing which refined businessmen in London and New York came to loathe and fear.’ These moonlit riverbank scenes were Maxwell’s equivalent of a Harvard Business School MBA, Bower believes. No wonder he turned out to be a crook – for him, dishonesty was part of business; it came with the territory.
To Mr Bower’s mind, however, it is questionable whether Maxwell ever consciously intended to be dishonest. ‘In his own terms, Maxwell could probably not distinguish right from wrong, for everything which he did was, by definition, right. When the smoke has passed and the dishonesty is forgotten, he will be remembered in equal measures for his failures and success, but most of all for his success in overcoming failures which would have crushed lesser mortals.’ Well, maybe. But somehow I doubt it. Much more likely Maxwell will be remembered as one of the great financial psychopaths of the 20th century. If there is a drawback to this book, it is that it was rushed out too early.
Maxwell: The Outsider was originally published more than two years ago, when it was met in usual Maxwell fashion by a welter of writs and court-imposed gagging orders. As Mr Bower remarks, ‘Robert Maxwell’s first writ came as no surprise, but no one expected that more would follow. It was Maxwell’s style; don’t rely on a sniper if a howitzer might perform the task.’ Long before the text was ever printed, it was condemned by Maxwell as ‘malicious and defamatory’. When Maxwell was alive, it was indeed a daring unauthorised biography, which, for those of us who read it, kept us on the straight and narrow, and reminded us just how much of a liar and cheat the man always was. Then Mr Maxwell fell off his yacht – or jumped, or was pushed, depending on what you believe. Mr Bower’s publishers rushed to get a new paperback edition out in time for the Christmas market. This, we were promised, would say all the things Mr Bower wanted to say in the first book but was prevented from by Britain’s tough libel laws.
Unfortunately most of the new things he has to say – though, for cognoscenti of Maxwell, fascinating enough – pale into insignificance when set alongside the enormity of the financial scandal which has subsequently emerged. Of this there is of necessity only a taste. The book was written before much of it emerged. Indeed Mr Bower is now paying the price of all pioneers. Though he can claim to have been the first to have written a half-way realistic biography of Maxwell, others will no doubt follow with fuller accounts.
The big question about Maxwell – how on earth someone even with his record of deceit, fraud, pig-headedness and arrogance could have squandered his life’s work in little more than a year – is still essentially unanswered. What appears to have happened is that the financial juggling act which Maxwell performed throughout a lifetime in business, an act which maintained the pretence of great wealth and achievement, got insanely out of hand as recession began to bite on his mountain of debt. The juggling had to get faster and faster, and Maxwell, unable to admit failure, was forced into plundering the assets of his public companies and their pension funds to maintain the whole monstrous façade. That story, however, has yet to be written.
Maxwell was one of seven children. There was no family business, unless it was smuggling, and it was obvious he was going to have to make his own way. His best friend from that time, Alex Pearl, is quoted as saying: ‘He would probably have gone to his uncle in America because we all knew there was no future in the village.’ As it was, he ended up by a circuitous route in Britain. The obfuscation which surrounds this turning-point in his life is somehow typical of the man. Over the years, Maxwell told countless different versions of how he came to Britain, each apparently more exaggerated and unbelievable than the last. The final version, given on BBC Radio’s Desert Island Discs in July 1987, was the most outlandish of the lot. He explained: ‘I led the Czech volunteers out of what was Czechoslovakia across Hungary into Yugoslavia on their way to joining the voluntary Czech Army in France.’ On the way he was tortured, beaten up and sentenced to death as a spy. Thanks to the intervention of the French Ambassador, he escaped and travelled via Yugoslavia, Greece, Bulgaria, Turkey, Syria and Palestine to France, where finally he was united with the Czech Army. It is clear that by 1987, the truth of events had long since ceased to have any significance for Maxwell, if indeed it ever meant anything to him. It had become a pliable commodity to be marketed like soap powder, the more to aggrandise and distinguish himself.
In 1987, Maxwell was probably at the height of his fame and power. He owned one of Britain’s biggest newspaper empires, the Mirror Group, and through Maxwell Communications Corporation had become one of the world’s largest multi-national publishers. Though he was clearly going to fail in his ambition of bettering Rupert Murdoch, his old sparring partner, in establishing a global media empire, he had done pretty well for a young Jewish boy from the ghetto. Or so it seemed at the time.
Even when recession began to strike, from 1990 onwards, Maxwell somehow managed to maintain the pretence. His debts, steadily creeping up to something approaching £3bn, were a mere bagatelle compared to those of Rupert Murdoch. Indeed he was able to make a virtue of his smaller size and the fact that unlike Mr Murdoch, he had never missed a loan repayment. Recession, a bit like a receding tide, eventually exposes the wrecks which during good times lie hidden beneath the rolling waves, and the truth about Mr Maxwell was always bound to out. The astonishing thing is that it took so long.
By the end, even a one-eyed Albanian (an expression Maxwell once used) could have spotted the emerging evidence of serious financial crisis and scandal, and yet leading financial journalists continued to puff him. As late as April 1991 the Sunday Telegraph’s City Editor described him as ‘one of Britain’s most successful businessmen in the past decade’. As with so many of the Eighties’ success stories, Maxwell’s castle proved to be made of sand – only in his case it was even worse. The sand was stolen.
Nor did Maxwell’s death stop the praise. You would have thought that with the threat of a libel suit lifted, the journalists would at last attempt to write what they saw as the truth about Maxwell. Not a bit of it. The obituaries were on the whole so gushing they would have served for royalty.
At the Independent on Sunday, where I am City Editor, we stood out like a sore thumb. Godfrey Hodgson, who helped expose Maxwell’s business practices during the late Sixties for the Sunday Times, wrote a leader which described Maxwell in uncompromising terms as ‘a liar, a cheat and a bully’. I myself wrote a City commentary which started by quoting Board of Trade inspectors from twenty years before. They described Maxwell as a man of great energy, drive and imagination. Unfortunately, they went on, ‘an apparent fixation as to his own abilities causes him to ignore the views of others if these are not compatible.’ Neither his fellow directors, his professional advisers nor his employees were able to sway him and the concept of a board being responsible for policy is alien to him, the inspectors said.
Mr Maxwell regarded his stewardship duties as fulfilled by showing the maximum profit any transaction could be devised to show. In reporting to shareholders and investors, he had a reckless optimism which enabled him on occasion to disregard unpalatable facts and to state what he must have known to be untrue. The inspectors ended with the now familiar damning indictment: ‘Notwithstanding Mr Maxwell’s acknowledged abilities and energy, he is not in our opinion a man who can be relied upon to exercise proper stewardship of a publicly-quoted company.’
It seemed to me that in the twenty years since that Board of Trade report, little could be said to have changed. Maxwell continued to run his companies like a personal fiefdom, and the views of others, even those who worked for him, counted for nothing. He juggled assets between his private and public company interests in a manner which was at best highly questionable and at worst fraudulent. Financial transactions were hidden behind a business structure of Byzantine complexity and obfuscation. Even if you had had the will to try and find out what was really going on, you would not have been able to. Old dogs don’t learn new tricks, I concluded, and I predicted that Maxwell’s two sons, Kevin and Ian, had inherited a legacy which would prove to be of quite devastating awfulness.
The next day I received a series of abusive phone calls from people claiming to represent British Jewry. My commentary and the Independent on Sunday’s leader had appeared on the day of Maxwell’s funeral in Jerusalem. There President Chaim Herzog, no less, had delivered an extraordinary eulogy. ‘He scaled the heights. Kings and barons besieged his doorstep. He was a figure of almost mythical stature. An actor of the world stage, bestriding the globe, as Shakespeare says, like a colossus.’ In the circumstances, how could I have written such a tasteless and misguided piece of commentary? Within three weeks they were being forced to eat their words.
It looks as though I’m beating my own drum, but in fact I take little of the credit for having got it right. I was guided in my judgment by having read this book, Maxwell: The Outsider. It is only a pity more bankers and shareholders don’t appear to have read it also. It might have saved them an awful lot of grief and embarrassment. From the moment The Outsider first appeared Maxwell did his best to discredit it. As far as the City was concerned, he largely succeeded. Certainly, among a majority of bankers, the book was regarded as pretty much of an irrelevance, a biography which dwelt unduly on Maxwell’s past mistakes and excesses while giving little credit to his many business achievements – a typically slanted, nasty little piece of journalism. Indeed the terrible truth is that for some of those in the City who read this book, it might even have appeared to add to Maxwell’s glory. I once heard a senior banker advance the question: ‘What successful entrepreneur hasn’t been guilty of a little sharp practice at some stage in his business career?’ Then the opinion: ‘Nobody got rich quick by sticking by the rules.’ There’s no doubt of the truth of that. In Maxwell’s case, however, we were never talking about merely sailing close to the wind. In the end, it is not really a question of people like Maxwell corrupting the system: it is the corruption of the system which allows people like Maxwell to flourish.
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