Maxwell Dealings Investigated : Finance: British police are checking allegations that the late tycoon siphoned off pension funds to support his business holdings.
Britain’s fraud squad is looking into allegations that Robert Maxwell siphoned off pension funds in a scheme to prop up his crumbling empire, sources said Sunday.
The late tycoon is suspected of purchasing shares in his own companies with the pension funds and then using the stock as collateral to win giant loans for his business holdings.
The Maxwell empire collapsed under a spectacular debt of about $5 billion last week when sons Kevin and Ian asked court administrators to take over and salvage what they could. The Maxwell heirs had been running the companies since their father’s body was found Nov. 5 overboard his yacht off the Canary Islands.
As Maxwell’s holdings unravel, Britain’s establishment is facing tough questions on how a man described by the government two decades ago as unfit to run a public company could have been allowed to borrow so heavily.
In the months before his death, Maxwell siphoned off more than $700 million from his two public companies and their pension funds.
It now appears that some of the wealth was used to try to support the value of his own shares, said sources close to Coopers & Lybrand Deloitte, one of the accounting firms investigating the case.
Maxwell used the pension fund money to buy his own companies’ stock, they said.
He used shares in Maxwell Communication Corp. as collateral for some huge loans. The stock took a dive earlier this year.
The sources said about $145 million from the public companies went to prop up Maxwell’s loss-making holdings, including the European and New York’s Daily News newspapers.
Inquiries also focused on allegations that Maxwell may have gambled and lost millions on foreign exchange trading and used pension funds to service some of that debt.
British newspapers, long cautious about Maxwell stories because he was a prolific litigant, Sunday devoted considerable space to the entrepreneur.
His own Sunday Mirror led its front page with allegations that Maxwell had seduced a young secretary, promised her a car and apartment and then fired her when she complained he had not kept his word.
The News of the World, owned by rival publisher Rupert Murdoch, quoted an unnamed senior source in the Maxwell empire as saying the media magnate planned to disappear with a fortune in stolen cash when he died.
It said millions of British pounds were smuggled to Maxwell days before he died.