Robert Maxwell - Controversy

Controversy

In 1969 Saul Steinberg, head of "Leasco Data Processing Corporation", was interested in a strategic acquisition of Pergamon. Steinberg claimed that during negotiations Maxwell had falsely stated that a subsidiary responsible for publishing encyclopedias was extremely profitable. This led to an inquiry by the Department of Trade and Industry (DTI) under the Takeover Code of the time; at the same time the U.S. Congress was investigating Leasco's takeover practices. The DTI inquiry reported: "We regret having to conclude that, notwithstanding Mr Maxwell's acknowledged abilities and energy, he is not in our opinion a person who can be relied on to exercise proper stewardship of a publicly quoted company." It was found that Maxwell had contrived to maximise Pergamon's share price through transactions between his private family companies. This caused Maxwell to lose control of Pergamon in the United Kingdom—but not in the United States, where Steinberg purchased Pergamon. Justice Forbes in September 1971 was critical of the inquiry, "They had moved from an inquisitorial role to accusatory one and virtually committed the business murder of Mr. Maxwell." He further continued that the trial judge would probably find that the "inspectors had acted contrary to the rules of national justice." The company performed poorly under Steinberg; Maxwell resumed control of Pergamon, returned it to profitability, and eventually sold the company to Reed Elsevier in 1991.

Maxwell was known to be litigious against those who would speak or write against him. The satirical magazine Private Eye lampooned him as "Cap'n Bob" and the "bouncing Czech", the latter nickname having originally been devised by Prime Minister Harold Wilson (under whom Maxwell was an MP). Maxwell took out several libel actions against Private Eye, one resulting in the magazine losing an estimated £225,000 and Maxwell using his commercial power to hit back with a one-off spoof magazine Not Private Eye.

In 1988, Maxwell purchased Macmillan, Inc., the American publishing firm, for $2.6 billion, which by some estimates was over three times its value. In the same year he launched an ambitious new project, a transnational newspaper called The European. However, in the following year he was forced to sell his successful Pergamon Press and Maxwell Directories to Elsevier for £440 million to cover his massive debts, but he used some of this money to buy the ailing New York Daily News. At the time, he was hailed in New York City as the man who "saved the Daily News."