BUSINESS

A TYCOON’S LEGACY

THE DEATH OF ROBERT MAXWELL WAS AS DRAMATIC AND MYSTERIOUS AS MOST OF HIS LIFE HAD BEEN

ANDREW PHILLIPS November 18 1991
BUSINESS

A TYCOON’S LEGACY

THE DEATH OF ROBERT MAXWELL WAS AS DRAMATIC AND MYSTERIOUS AS MOST OF HIS LIFE HAD BEEN

ANDREW PHILLIPS November 18 1991

A TYCOON’S LEGACY

THE DEATH OF ROBERT MAXWELL WAS AS DRAMATIC AND MYSTERIOUS AS MOST OF HIS LIFE HAD BEEN

BUSINESS

In the last week of July, 1940, a British troopship carrying Allied soldiers fleeing Nazi-occupied Europe docked in the port of Liverpool. Among those aboard was Jan Ludwig Hoch, a skinny Czech private who had turned 17 just six weeks earlier. He spoke no English and owned only his rifle and army uniform. He was not even using his own name, but had adopted the pseudonym Ivan du Maurier from the brand of cigarettes he smoked. When he died in mysterious circumstances last week at 68, the obscure soldier had become famous under yet another adopted name: Robert Maxwell. And the manner of his death was as dramatic as much of his life. Maxwell apparently suffered a heart attack and fell overboard from his 180-foot luxury yacht, the Lady Ghislaine, the most visible symbol of his $2-billion empire and the flamboyant way he used it.

Maxwell’s death shocked the communications world and shook his global business empire, a complex web of interests that includes publishing houses, printers and newspapers in countries around the world, including Canada. Even before his death, investors had expressed concern that Maxwell’s companies were weighed down by the enormous debt load that they had taken on to acquire such properties as the American publishing giant Macmillan Inc. Two of his three sons, Kevin, 32, and Ian, 35, immediately took over as chairmen of their family’s two main companies, the flagship Maxwell Communication Corp. (MCC) and Britain’s Mirror Group Newspapers, respectively, and moved to reassure the markets. Said Kevin

Maxwell, described by analysts as the shrewdest of the brothers: “We are getting on with business as usual.”

Still, Robert Maxwell’s highly personal, driven style of management almost guaranteed that his empire would suffer a crisis when he was no longer in charge. He involved himself in nearly every aspect of his companies, often dictating changes in newspaper editorials or firing employees on the spot for failing to meet his exacting standards. Legends about Maxwell abounded, fed by his talent for self-dramatization and his eccentric personal style. He was physically huge—about 290 lb.—but was so compulsively active that one of his nicknames was “the bouncing Czech.” At his office in central London, secretaries and helicopter pilots were kept on 24-hour standby in case Maxwell wanted to dictate a letter or fly off to a meeting in the middle of the night. When his helicopter touched down on the landing pad on top of his headquarters, Maxwell House, a common expression among his employees was “The ego has landed.”

One of the most obvious symbols of Maxwell’s ego—his critics called it megalomania— was the yacht from which he disappeared last week about 30 miles south of the Canary Islands. The 430-ton Lady Ghislaine, which Maxwell named after the youngest of his four daughters, is a $24-million combination refuge and floating office, complete with satellite links that enabled its owner to conduct his worldwide business from its well-upholstered quarters. At 11 a.m. on Nov. 5, the captain of the ship’s 13-member crew discovered that Maxwell, the only passenger, was missing and he alerted Spanish rescue workers.

Eight hours later, the tycoon’s naked body was recovered from the Atlantic Ocean. Early speculation that Maxwell might have committed suicide because of business pressures was dampened when Spanish Judge Luis Gutierrez Sanjuan, who is handling the investigation of the death, said that initial autopsy results indicated that Maxwell had suffered a heart attack and died before falling into the sea. The family planned to bury Maxwell's body, which was embalmed following the coroner’s report, in Jerusalem.

Even wilder speculation centred on the pos-

sibility that Maxwell might have been murdered. Late last month, U.S. author Seymour Hersh claimed in his new book, The Samson Option, that Maxwell had close ties to the Israeli spy agency Mossad, and had arranged arms deals for Israel (page 81). Maxwell flatly denied the allegations and sued Hersh for libel.

Maxwell’s biographers traced his boundless appetite for money and power to his origins in the extreme poverty of Eastern Europe. He was bom into a Hasidic Jewish family in a village in eastern Czechoslovakia that was later incorporated into the Soviet Union. Most of his immediate family, including his mother, died in Nazi concentration camps. But in 1939, at 16, Maxwell left his village and made his way west, where he joined a Czech volunteer force and later escaped on the troopship to England.

After the Second World War, Maxwell used a chance meeting with the German publisher Ferdinand Springer to build Pergamon Press into a successful scientific publishing company

by obtaining the rights to the works of German scientists. But he always hungered for fame and power as well as money. He served as a Labour member of Parliament from 1964 to 1970, but failed in several bids to buy a major British newspaper. He finally succeeded in 1984, when he acquired the Mirror Group, publishers of the tabloid Daily Mirror and several other titles. Last year, he launched The European, a weekly specializing in European affairs, and last March, he bought the New York City Daily News just three days before its owners, Tribune Co., had planned to shut the tabloid down because of a five-month-old strike.

In Canada, Maxwell’s holdings are managed by MGN Investments Canada, a subsidiary of the Mirror Group, which has a 49-per-cent stake in Mircor Inc. Mircor in turn owns 54 per cent of Donohue Inc., a Quebec City pulp-and-

paper company. Maxwell’s partner in Mircor, Quebecor Inc. president Pierre Péladeau, said last week that he, for one, would like to have more partners like the British tycoon. “He was such a straightforward man,” said Péladeau, who with Maxwell in 1988 started the Montreal Daily News, which folded two years later. “With him, a deal was done then and there.”

Maxwell’s deal-making built up MCC’s debt load to crushing levels, but in recent weeks the company had sold off several properties and reduced its debt to $2.8 billion. Analysts said that investor jitters over how MCC will deal with that burden were responsible for last week’s plunge in the value of its shares, to $1.38 at week’s end from $2.81. In contrast, shares in Mirror Group shot up to $2.23 from $1.56, reflecting the company’s smaller debt load as well as the end of what analysts called the “Max factor,” the unpredictable influence of Maxwell himself. “Investors were wary of Maxwell’s very interventionist style,” said William Grantham, editorial director of European Media Business & Finance, an industry newsletter. “Now, they will look more closely at the fundamentals of the company, which are strong.” While Robert Maxwell was alive, his sons worked in the shadow of their powerful father. But analysts who watch the Maxwell companies closely said last week that the publisher had been conscious

of the need to assure a smooth succession and had groomed both Kevin and Ian Maxwell in the intricacies of his business dealings. (A third son, Phillip, 40, is a physicist.) Said Grantham: “They are both highly regarded in the industry.” Last week, Kevin and Ian Maxwell were busy assuring their bankers and investors that they could keep their father’s far-flung empire alive. And they made it clear that they will bring a markedly different approach to running the businesses. Ian Maxwell noted that the first thing he did when he took over Macmillan on behalf of his father was to sell the company helicopter. Without Robert Maxwell at the helm, the empire will clearly have to depend on substance, not style.

ANDREW PHILLIPS in London with DEIRDRE McMURDY in Toronto

DEIRDRE McMURDY