Maxwell Empire Shaken by Pension Fund Probe

The Maxwell publishing empire appeared on the verge of collapse Wednesday as Scotland Yard’s Serious Fraud Squad began investigating reports that the late Robert Maxwell had plundered his papers’ pension funds.

Many employees of Mirror Group Newspapers arrived for work Wednesday not knowing whether their future pensions were secure.

Charles Wilson, editorial director of Mirror Group Newspapers, said the company had asked the police detective unit to investigate the whereabouts of assets in the pension funds.

Wilson declared that such an investigation would end the “suffering and anxiety of innocent people” with money in the funds. Moreover, Mirror Group pension fund trustees are going to court to ask for receivers to be brought in to liquidate other Maxwell interests to ensure the safety of the pensions.

The Mirror Group publishes four moneymaking journals in London--the Daily Mirror, the Sunday Mirror, the Sunday People and Sporting Life--along with the Scottish Daily Record and Sunday Mail in Scotland.

Widespread reports by bankers and the Mirror itself Wednesday morning indicated that, after buying the Mirror Group in 1984, Maxwell used the assets of the papers’ pension fund to finance purchases of other companies.

A company statement admitted that “irregular transactions” had been discovered. The losses to the pension fund might run as high as $500 million, according to sources at the paper and in banking.

Wilson said Wednesday that it was “impossible to say how much or where the money went.”

Don Weed, head of the Mirror employee pensioners, called the crisis “a major scandal.”

A day earlier, Ian and Kevin Maxwell--the sons of the publisher who died at sea Nov. 5--had stepped down from their positions with the Maxwell organizations because their presence might create a “conflict of interest” with the bankers and accountants trying to sort out the empire’s balance sheet.

Trading in shares of the Maxwell companies was suspended Monday pending clarification of the firms’ financial position.

Bankers were scheduled to meet Friday to determine the net worth of the companies, whose stock has plummeted since Maxwell’s death. On paper at least, millions of dollars of holdings have been wiped out amid the rumors of financial irregularities.

The firms’ bankers--owed close to $2 billion by the Maxwell companies--are expected to play a decisive role in determining whether the properties will be liquidated or kept afloat.

Maxwell’s holdings generally fall into three groups: Mirror Group, which makes money; Maxwell Communications Co., whose publicly traded stock price has dropped by more than three-fourths in the past few months, and the private Maxwell companies, whose activities and balance sheets remain shrouded in secrecy.

Those private Maxwell companies--which own the New York Daily News and The European newspaper among other properties--are believed to hold a majority interest in the public groups. So the fall in stock prices has drastically reduced their net worth.

In New York, Daily News Vice President John Campi said Wednesday that he is unaware of any plans to sell the paper, which he expects to become profitable again in 1992 after a “turnaround” following its purchase by Maxwell earlier this year.

Similarly, Sally McElwreath, spokeswoman for Macmillan Publishing, a New York-based unit of Maxwell Communications Co., said there are no current plans to sell Macmillan, which is making money and has a fully funded pension plan. She added that Maxwell Communications’ next debt payment is not due until October, 1992, and that it will be paid on time--if not ahead of time.

In London, Wilson said that Mirror Group is financially sound, but industry experts say it is unclear what Maxwell might have borrowed against the papers, and therefore what their debt might be.

Rumors have been widespread that the Maxwell sons may have to sell the papers to pay the debts of other companies. Among the interested buyers are Australian magnate Kerry Packer and Canadian publisher Conrad Black.

The Labor Party--which is backed by the Daily Mirror alone among Britain’s national dailies--seized on the Maxwell crisis to attack the government for not setting tighter regulations on pension funds and their use.

Times staff writer Thomas Mulligan in Los Angeles contributed to this story.