VANITY, FEAR, AMBITION, IDLENESS

Rodney Leach, an old financial

adversary of Robert Maxwell, rolls back the years

TWENTY-TWO years ago, when I was engaged in public combat with Robert Maxwell, something happened which I had not previously encountered in my career and was never to encounter again. There came to my office a stream of letters, voic- es and visitors telling nightmarish tales of betrayal, fraud and violence. The accents were often Central European, the authors anonymous, the visitors fearful and insis- tent on secrecy. I had no way to check their stories. So far as I knew, fantasy or revenge could have prompted them. But I retained an indelible impression of a murky subworld in which nothing was as it seemed and in which people saw them- selves as Maxwell's victims. Among the vis- itors was a nameless man with illustrious connections who asked me if Pergamon's structure lent itself to the laundering of KGB funds. I felt he knew the answer to his own question.

At the time I was a director of N.M. Rothschild; our client was Leasco, Saul Steinberg's company, and we were charged with completing Leasco's agreed acquisi- tion of Pergamon, a public company run and substantially owned by Maxwell. The acquisition never went through. We pulled out when we found the true state of the Maxwell companies' accounts.

The credit for stopping the bid must be shared. Jacob Rothschild had the surest insight into Maxwell's character; my col- league Ivor Kennington the most tenacious grasp of his irregularities. Leasco's accoun- tants uncovered the detailed evidence of Maxwell's methods. Together we assem- bled the jigsaw. I shall never forget the moment that it dawned on us exactly how he was cooking the books — by creating bogus sales to his own private companies.

Now the great and the good descended on us to offer themselves as brokers of compromise. For them, political mediators by instinct, the affair was negotiable. They came, they failed, they went, baffled by our intransigence — Lord Goodman, Lord Aldington and others.

These famous men were to me an unwelcome surprise. Others did not disap- point. As the drama unfolded we had become adept at reading Maxwell's mind. The unfailing guide to his actions was to assume that every step would be precisely calculated for his own self-preservation, to the exclusion of all other considerations, but would be accompanied by threats and false promises designed to confuse the issue. One day, armed with these assump- tions, which served us like radar in fog, we concluded that Maxwell would adjourn the special Pergamon shareholders' meeting called for his dismissal. We sought an ex parte injunction to prevent him. A peppery judge in chambers, irked at our late arrival, told us we had ten minutes to con- vince him and that he was not minded to be sympathetic to our cause. Abandoning our prepared explanations, we plunged straight in — 'The man's not straight.' We gave some chapter and verse. 'That sort of fellow, is he?' exclaimed the judge. `Injunction granted.'

The Board of Trade Inspectors, Sir Ronald Leach and Owen Stable QC, despite a massive campaign of obstruction and vilification against them, pronounced that Maxwell was unfit for the stewardship of a public company. They painted a com- pelling word-picture of his impermeability to advice, his disregard for the truth and his blustering, domineering methods.

Yet still no prosecution came. Leasco won a victory in the civil courts in Ameri- ca, but the Director of Public Prosecutions in London, who again and again seemed on the brink of preferring charges, stayed immobile. Was there political influence to protect Maxwell? It is a question for an investigative journalist. What is certain is that if Maxwell had been jailed then, his subsequent depredations would have been on a relatively minor scale.

Nevertheless, after all that was revealed in the 1970s, it remains astonishing that within 20 years Maxwell was able to take the banks for over £1 billion, ruin the investors in two public companies and rob his own employees' pension funds of many hundreds of millions. I take it to be unlike- ly that these crimes are all of recent origin,

the 'desperate acts of a desperate man' who had overpaid for Macmillan. On the contrary, they are of a piece with his whole former business life; and his payment, shortly before his death, of £100 million to the pension scheme of a company which he had previously sold, suggests that his dis- covery of the attractions of such funds goes back a while.

Personal venality is a poor explanation of the City's and Wall Street's gullibility. Of course, Maxwell easily seduced left-leaning journalists and directors, but they did little more than form a shield of useful idiots.

No, the real reasons why Maxwell got away with it on such a colossal scale were the age-old-human frailties — vanity, fear, ambition, idleness. The vanity that led bankers to abandon their traditional maxim that character is all-important, in favour of charisma and participation on the fringe of great events; or that led an industrialist like Lord Kearton to say that Maxwell could be controlled by a strong chairman. The fear that silenced those who knew a fragment of the fraud and kept them from piecing it together with others. The corporate ambi- tion that, in stretching for profits, over- looked the risks of paper collateral. The idleness that set superficial impressions and casual enquiry over hard questions and diligent research.

It follows that as the writs swell and the regulators ponder which stable doors to shut, nothing much will be achieved beyond society's desire for revenge. As usual, there will be cruel misfortune and surprising for- tune, in who escapes and who is punished.

Some, close to the epicentre, who closed their eyes or acquiesced in terror, will never be able to explain, save to a few of generous wisdom and compassion, how they came to sign this or that document.

Others, who had nothing to fear but who lent their names to Maxwell, will have to choose between looking like fools or knaves. They will choose foolishness. On both sides of the Atlantic, men who are paid a king's ransom for their business acu- men will plead ignorance and portray themselves as dupes.

Meanwhile over the last two weeks I have started to accumulate a growing file of bankers, investors, businessmen and writers who have written or called to thank me for some warning given long ago, as a result of which they decided never, so long as they lived, to have anything whatsoever to do with Robert Maxwell. It is a pity there are not more of them.