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• (1) Maxwell's death (1991) triggered a flood of instability with banks. The company
incurred heavy debts. His two sons Kevin and Ian struggled to hold the empire
together, but were unable to prevent its collapse.
• (2) The pension funds were replenished with money from investment banks
Shearson Lehman and Goldman Sachs, as well as the British government. This
replenishment was limited. The rest of the £100 million was waived
• (3) The son of Maxwell, Kevin was declared bankrupt with debts of £400 million. In
1995 Maxwell’s sons Kevin and Ian and two other former directors went on trial
for conspiracy to defraud.
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FR
Flaws In Corporate Governance
(1) Domineering CEO
• Maxwell had a complete control over the companies of his empire.
• Ethical and professional standards be it governance of company or governance of
pension funds were relegated to the background for commercial advantages and empire
building.
(2) Ineffective Board
• The non-executive directors did little in discharging their responsibilities.
• Unrestricted movement of funds across group companies, pledging shares of a company
to raise funds for another company, excessive borrowings took place under the nose of
the board.
• It appeared that the board was helpless in the face of larger than life personality of
Robert Maxwell.
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FR
(3) Lack of Transparency
• Assets of the company and pension assets which belong to the employees were
mixed.
• Creditors, shareholders and even the family members of Maxwell were not fully
aware of the corporate structure of the company
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TIMELINE FR
Year EVENTS
DTI inspectors say Maxwell could not be trusted to exercise ‘proper stewardship’ of a
1973
publicly quoted company
Bids unsuccessfully for US publishers Harcourt Brace Jovanovich; BPCC is renamed Maxwell
1987
Communications Corporation (MCC)
1988 Maxwell buys book and journal publisher MacMillan for $2.6bn
JDS reveals complaints against four Coopers’ partners for their 1990 audit of Maxwell’s
1998
empire
Price Waterhouse, and Coopers and Lybrand merge to create the world’s largest
1998
accountancy firm
Price Waterhouse Coopers receives record fine from JDS for shortcomings in
1999
Coopers’ audit of accounts
1999 Coopers & Lybrand agrees to pay out £67.6m in settlement to Maxwell creditors
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