November 5, 1991
What was it?
The newspaper tycoon’s mysterious drowning led to an explosive pensions scandal that still ripples through our financial futures.
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What happened?
The Czech-born owner of Mirror Group Newspapers was found dead after falling from his yacht off Tenerife. His son Ian said the tragedy touched not only Maxwell’s family but also his employees and shareholders. Never a truer word was spoken, as the subsequent investigation into the group’s finances revealed a £400 million-plus black hole in pension funds caused by the systematic plundering of cash to prop up his ailing empire. The following year his companies filed for bankruptcy protection and the Department of Trade and Industry (DTI) began to investigate the 1991 Mirror Group News flotation. Amid revelations of unscrupulous business dealings, accountancy fiddles and continued speculation around Maxwell’s “super-spying” for Israel, his son Kevin was declared the UK’s biggest bankrupt with debts of £400 million. Kevin and Ian were tried for fraud in 1995 and acquitted the following year. The DTI report published in 2001 found that Maxwell bore the primary responsibility for the collapse of his empire and that Kevin’s conduct had been “inexcusable”.
Did justice prevail?
Thousands of workers who had saved for years found that their retirement funds were at risk. While most were saved from penury by the 1995 Pensions Act, the City delayed arrangements for compensation, by which time many of the claimants had died. The DTI report was condemned for glossing over the part played by rich and powerful individuals and international banks. Despite the size of the scandal, no one was convicted of a crime.
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And why should we care?
The pension reforms that followed the scandal left few company schemes airtight and 70 per cent of UK businesses are now ditching final salary pensions for new staff.
KAREN BAYNE