by Tom Bower
During the days before the EGM, the national newspapers, radio and television overflowed with pronouncements by commentators. None would have a more profound effect than the first part of the Sunday Times's 'intimate profile' published four days before the EGM, analysing the 'astonishing businessman' whose record 'shows an uncanny capacity for rising from the ashes'. Maxwell fought hard to prevent the article appearing.
Harold Evans had promised Maxwell in June that he could read and comment on the profile before publication. The draft of part one had been delivered at the end of August. Maxwell was appalled, since it confirmed his original fears that the Sunday Times, having interviewed disgruntled ex-employees, was going so far as to suggest that he was not an honest businessman. The journalists had been unwilling to accept his word and were, he believed, unenlightened about normal practices in the world of commerce. Evans believed that both he and his staff were trying to be fair while Maxwell was, to say the least, being disingenuous. On 11 September, Evans wrote to Maxwell regarding a series of 'corrections' the publisher had provided about the Book Center in New York, the 'special exchange rate' in post-war Germany and Simpkin Marshall. After exhaustively re-researching their facts, Evans wrote, none of Maxwell's 'corrections' had been substantiated: 'I am certainly still very willing to consider carefully any comments you make, but on this experience I am also somewhat discouraged from taking assertions as fact.' Maxwell's reply was the delivery of a writ, the second since June, seeking to prohibit publication. The tension increased.
Maxwell had heard that denunciatory affidavits from many of his enemies had been obtained by the Sunday Times. Documents which they supplied had been forensically tested, and they were deliberately telephoning him to tape conversations. Frantically, he cross-checked from country to country to unearth what was being said. In one instance, he heard that Paul Hovel of Springer had been tracked down to his holiday hotel in the Black Forest by the intrepid Anthony Terry in the hope that he would reveal some skullduggery about Maxwell's original 1947 deal. Hovel insisted that their agreement had been perfectly legal but Maxwell was convinced that the German had said the contrary. Yet remarkably, amid all the chasing and the checking, Page and Hodgson still visited Maxwell at Fitzroy Square to obtain material for the profile, albeit in fraught circumstances, while Maxwell and Evans regularly discussed the content on the telephone - on one occasion, nine times in a single day. 'It was an exhausting psychological battle,' recalls Hodgson.
On 1 October, after Maxwell had read a newly revised version of the profile, he issued a fourth writ against the Sunday Times for defamation and, late at night, telephoned Evans at home. 'This is worse, much worse than the first [draft],' he complained. 'Let's meet.' They met, but Evans insisted on publication, despite the objections, on 5 October.
The profile began by stressing 'the boldness of his courage and the poverty of his beginnings' and traced the foundations of Maxwell's fortunes as a turbulent and controversial entrepreneur whose business ethics were questionable. Few subjects on the eve of a fateful public meeting would have enjoyed a profile which, after mentioning the award of the Military Cross, concluded, 'The boy from Slatinske Doly had definitely arrived,' or, concerning his optimism about his recovery after the Simpkins crash, alluded to his nickname as 'the bouncing Czech'. But for once Maxwell was practically defenceless, and the topicality guaranteed a very wide readership. His only riposte was a long circular sent to all Pergamon shareholders denouncing the paper's allegations and its violation of Evans's original undertaking. Later he condemned the Sunday Times journalists to their face as 'the forces of evil'.
The opposition to Maxwell, undoubtedly influenced by the article, solidified over that last weekend. The institutions, on the advice of their newly appointed merchant bankers, Schroeder Wagg, decided unanimously on Maxwell's removal. Maxwell tried, on Tuesday 7 October, to win a reprieve during a heated meeting with Schroeders' representatives. But he failed, and news began to trickle out during the next day of an unforeseen twist in his tactics.
Small batches of Pergamon shares were being issued to over one hundred Pergamon employees, which would enable them to attend and vote at the EGM. Leasco's lawyers scrambled to scrutinise Pergamon's rules and saw that on a mere show of hands Maxwell would have sufficient support to adjourn the meeting, delay his removal and remain in control of the company. Suspecting the worst, Leasco attempted to transfer some of its shares to one hundred supporters but, late in the afternoon on 9 October, their request was refused by the company secretary.
The only solution, said Peter Curry, Leasco's lawyer in England, was an injunction from the High Court to prevent Maxwell adjourning the meeting. Three Rolls-Royces filled with bankers, lawyers and their clients from New York roared from the City towards the Strand. Impatiently they waited outside a courtroom for a judge to become available. At five o'clock, as the building closed, they were told that they had come to the wrong court. The bankers and the businessmen were struck with horror. 'Don't worry,' said Curry, 'I know a judge who will help.' In the early evening, the retinue crammed into the small chambers of the much needed friend, Mr Justice Shaw. 'Hello, Peter, how's your wife?' asked the judge, who then warned, 'I've got a train to catch and you've got a few minutes to convince me. It won't be easy.' Speaking in very blunt terms, the lawyers described Maxwell's alleged sins. The judge raised his eyebrows and Curry wrote on lined paper in longhand the required order. Mr Justice Shaw signed, and there was a collective sigh. The injunction was formally served on Maxwell at ten o'clock the following morning, two hours before the meeting was due to start.
The Connaught Rooms had few happy memories for Maxwell but they were nevertheless the venue for the EGM. Dressed as usual in his bright blue suit, he arrived with Betty, understandably tense. There had been no respite over the past weeks from the unrelenting pincer movement which would so unjustly destroy his own creation. ‘I and my family have been through hell,' he would later reveal to the meeting. Some chairs on the podium were noticeably empty. Briggs and Payne from Chalmers Impey had refused to sit alongside their client. The remainder were occupied by Pergamon's directors shifting uneasily in anticipation of the embarrassments to come. A few had urged Maxwell to make the meeting as short as possible but they knew that their advice had been ignored. Earlier that morning, Maxwell had overridden their wishes by instructing Kerman to appeal for the injunctions to be set aside. He would fight to the last even if the outcome was a foregone conclusion. Just as Sir William Carr had packed the hall nine months earlier with his employees, now among the five hundred who had crowded into the hall were many Pergamon employees and sympathetic small shareholders who had cheered him when he entered. In the back stood Steinberg, relaxed and smiling, obviously enjoying life in London. The American had arrived arm-in-arm with two glamorous young women, both dressed in white, wearing large Ascot-type hats. Strangely, Maxwell felt no hostility towards his estranged partner and respected his business acumen. Overwhelmingly, his venom was directed at Jacob Rothschild.
The meeting began at noon. Maxwell spoke first into the microphone: 'My Lord, ladies and gentlemen, at ten o'clock this morning I was served with an injunction by Messrs Rothschild, without any notice,' and a tirade against the bankers ensued. 'This arrogant and stupid action by Rothschild is but the final chapter in the sorry way in which they have conducted the affairs of Leasco in this long-drawn-out battle.' Maxwell thereupon did exactly what he was forbidden to do and adjourned the meeting, 'because of this incredible and unbelievable behaviour of Rothschild's', claiming that he wanted to await the outcome of his own appeal against the injunction.
Uproar and bedlam followed his words. Amid shouts of 'Sit down!', 'Stand up!', 'This meeting is commenced and should proceed!', and 'Shut up!', the directors slowly filed down from the platform. Curry made a dash for the microphone and had just began to speak when Maxwell's hand snatched it from him: 'This is a meeting of Pergamon representatives, not Leasco. Would you mind leaving this floor.' C
urry grabbed the microphone back, began speaking and was suddenly mute. The power had been switched off and his voice was drowned by slow handclapping. Maxwell beamed and after reconnecting the microphone announced that the meeting was not adjourned but 'delayed' and would remain so. The chaos rose to a new crescendo as dozens of soberly suited men stood waving their arms in the air, sat down in frustration, only to rise again, their crouched bodies suspended in the air, their faces contorted in fury, their shouts inaudible.
Maxwell returned to the microphone and, pointing at Curry and Jacob Rothschild, said, 'These men are obviously proposing to wreck this meeting. Maybe they are providing good entertainment ... I propose to withdraw from the meeting and I invite you to deal with these gentlemen as you deem fit.' Again there was uproar and again the microphone was switched off after Maxwell had threatened to call guards to remove those who gave 'stupid advice' to their clients.
Inside the hall, Lord Aldington, formerly Toby Low, a Conservative Member of Parliament, watched in discomfort. His bank, William Brandt, had agreed to represent Pergamon, and he now feared that his reputation might suffer by association with the turmoil he was witnessing. During a five-minute discussion with his client he insisted that the meeting must continue and be 'conducted according to the Queensberry Rules'. Maxwell agreed and returned to the podium holding the microphone. 'Ladies and gentlemen,' he said, 'let us forget all about that, shall we? I hope none of us will get unruly and disorderly. Particularly that is directed towards Rothschild lawyers.' The meeting started.
Uninterrupted, Maxwell now launched a bid to reconvert the converted, namely the institutions: 'Who are the brains that will run this business . . .? a leading educational institution . . . cannot be run by experts only in financial affairs.' After twenty minutes, he stopped and then started again. No one doubted that he was delaying the inevitable. Perhaps he was waiting for a divine spirit miraculously to sweep away the hostile faces before him and deliver Pergamon firmly back into his control. There were more attacks on Rothschilds - ‘I received many impertinent letters from Rothschild' - followed by several mournful appeals to Rothschilds to 'withdraw their hostile, harmful and most damaging resolution to the company'. Jacob Rothschild rose to give his reply. Perhaps Maxwell hoped against hope that this was the deliverance. ‘I propose', announced the tall banker, 'that Mr E.J. Buckley be and he is hereby removed as a director of the Pergamon Press Limited.' There was a cry of 'Shame!' and it was nearly all over. Each vote would take ten embarrassing minutes as Maxwell sought to prevaricate and appeal to the institutions to reconsider. When Rothschild stood to propose Maxwell's own removal, the chairman uttered what seemed like his last words before the executioner's axe fell: 'My record in peace or war is open and published in spite of the slander and innuendo in the story by the Sunday Times.' But despite being deposed, Maxwell remained firmly in the chair to continue the proceedings.
Once the board had been dismissed, Maxwell momentarily relaxed and even cracked a joke. But as the elections for the new board progressed - and on Maxwell's recommendation Steinberg and Hodes would be elected unopposed - the deposed chairman once again began imploring the institutions to reconsider. When his pleas were answered by stony stares, his anger returned: 'It is well known in the Square Mile of the City that the arrogance of Rothschild knows no bounds.'
After four hours, Leasco was declared the victor with 61 per cent of the vote. No one claimed to emerge from the bear garden with any credit, although Maxwell delivered one final surprise. Ever anxious to retain the initiative, he announced that, with the Take-over Panel's agreement, he would make a cash offer of 25s for all non-Leasco shares. Everyone, including his own bankers, was stunned but too exhausted to ask where Maxwell could hope to raise £5 million. Maxwell refused to be drawn, although he believed that Leasco had only won a Pyrrhic victory. 'I wish to thank you all for coming and God speed to you on your way out.' After a burst of applause, it was all over. Standing alone in the emptying hall, humiliated and defeated, he admitted, 'You can't expect me to be other than very, very sad.' The men from Leasco looked at their tormentor. 'Somehow,' recalls Stevens, 'Bob looked a lot more lovable in defeat.'
The new managers of Pergamon did not open any champagne bottles when they met later that night at Rothschilds for a board meeting to consider their strategy. No one was sufficiently tactless to speculate about just why they found themselves managing a company which employed over 2,500 people, which had just lost its key personnel, and whose financial status was in dispute, although it definitely had no money in the bank. As Hodes silently mused, 'We've been through the engagement and the divorce. Now it's the marriage.' Briskly, they agreed that their priority was to establish exactly what they had purchased for £9 million and to invite Buckley, Gilbert Richards, who managed Pergamon's journals, and Anthony Wheaton, who managed a printing company, to rejoin the board. Then Steinberg, Hodes and Schwartz formally resigned from the Pergamon board to which they had been elected just two hours earlier. For the moment they were replaced by just one new director and chairman, Sir Henry d'Avigdor-Goldsmid. The need for an independent chairman had surprised Leasco but it was the price which the institutions exacted in return for their support. 'The institutions were terribly stuffy,' recalls one of the bankers, 'and decided that they wouldn't trust the Americans.'
Finding a suitable nominee had not been easy. After two other men had refused, Sir Henry, a Conservative Member of Parliament, a banker and a leader of British Jewry, was approached. When Rothschild rang, Sir Henry was out hunting, which at least provided reassurance that the candidate was still active. Lady d'Avigdor-Goldsmid had answered and Rothschild explained why Sir Henry was needed. 'He should accept', implored the banker, 'for England.' It was an appeal which Sir Henry eventually could not resist. Stevens wished later that his reluctance had been backed by stronger will-power: 'He was so senile that he couldn't negotiate his way out of a paper bag.'
The following day, Stevens drove with d'Avigdor-Goldsmid to Oxford. The politician's joints were stiff and heavily bandaged following falls from his horse. Stevens's concern about Sir Henry's capabilities had been placated by the bankers. 'You'll really like him,' he had been assured. 'He'll never come to meetings.' During the journey, Stevens started to discuss his objectives and tactics they might adopt when they arrived at Headington Hall. D'Avigdor-Goldsmid hearteningly replied that he too had priorities. Thereupon, to Stevens's dismay, he produced a list of recommended restaurants in the Oxford area. As Stevens swallowed his reaction, d'Avigdor-Goldsmid turned knowingly and said, 'I've been appointed to make sure that neither side fouls the pavement.'
Their entry into Pergamon's offices was an anticlimax. Sir Henry asked the secretary who welcomed them for 'the papers'. When she queried, 'From which file?', he replied, 'No, no, the newspapers.' Stevens was dumbfounded: ‘I gawked and said nothing.' Over a three-hour lunch, d'Avigdor-Goldsmid expounded his view: 'I'm not allowing you to dig a tunnel into the company.' As he spoke, the American was reassessing his plans. Leasco had no choice but to withdraw from any direct management and rely on the long-serving employees. Approaches were already under way to three of the deposed directors. Within four weeks, with Maxwell's encouragement, they would return to the company.
But the hands-off strategy was fraught with difficulty: Pergamon's editorial offices were built in the same grounds, approximately fifty yards distant from the house where the Maxwell family lived. Although the Hall was owned by Pergamon, it had been leased to Maxwell and he curtly refused even to consider leaving his low-rent 'council house', which also served as the offices of his private companies. His constant physical presence, he told inquirers, was 'my guarantee that I know the status of my shareholding'. The extent of his supervision quickly became apparent.
Soon after the American take-over, Maxwell was seen at night prowling through the editorial offices. D'Avigdor-Goldsmid ordered guards to be posted around the building but, considering the enormous loyalty which so many Pergamo
n employees felt towards Maxwell, especially after the reappointment of the three directors, the guards were token symbols. The tension between the two sides - they were divided by a finely manicured lawn - broke into open warfare, often manifested in childish spite. The two buildings shared light and heating. Whenever their disputes intensified, Maxwell turned off their common boiler. In retaliation, d'Avigdor-Goldsmid ordered the Hall's electricity to be disconnected. 'We froze and they sat in darkness,' recalls Stevens. That the hiatus would continue was predictable, but no one had anticipated that the crisis would arise so quickly.
Leasco was intent on quickly establishing control over the Pergamon subsidiary in America, Pergamon Press Inc. (PPI), since 50 per cent of Pergamon's sales were exported to America and all the American journals were supervised from PPI's premises. PPI was the generator of Pergamon's future profits and growth. Pergamon in Britain owned 70 per cent of PPI, which was a public company. The remaining 30 per cent was owned by the American public. Under American law, Maxwell was president and chairman of PPI's board of directors. Prominent among those directors were his old freinds - Laszlo Straka, Sigmund Wahrsager and Ladislaus 'Martini' Majthenyi. Two days after removing Maxwell in London, Leasco's lawyers wrote to the secretary of PPI in New York requesting a special shareholders' meeting. They intended to remove Maxwell and his friends and appoint a new board of directors. Simultaneously, d'Avigdor-Goldsmid wrote to Maxwell asking for his resignation. Maxwell's rejection was carried by hand across the lawn. After criticising d'Avigdor-Goldsmid's 'crude attempt to go behind my back', Maxwell 'deplored' the new chairman's lack of 'courtesy and consideration' because 'good manners cost nothing'. The crux was that he refused to resign and 'as the second-largest shareholder' defiantly insisted that he could not be ignored. By 20 October, Pergamon's new management realised just how smartly they had been outwitted by Maxwell. Stevens admits his amazement: 'We hadn't focused on the subsidiary and our own vulnerability until after Max had covered his arse.' In fact, Maxwell had protected his position during the same week in June that he was in New York negotiating the original sale with Steinberg.
