May 1, 2012 / 6:10 PM / in 5 years

Murdoch conclusion stirs memories of his old foe Maxwell

LONDON (Reuters) - If he had not died 20 years ago, Robert Maxwell, the disgraced newspaper tycoon, might have allowed himself a wolfish grin at the verdict of a British parliamentary committee on his old rival, Rupert Murdoch.

Murdoch, according to the House of Commons select committee on culture, media and sport, which examined the phone-hacking scandal now convulsing the Australian-born mogul’s media empire, “is not a fit person to exercise the stewardship of a major international company”.

That wording immediately awoke memories of a judgment passed on Maxwell a generation ago by another arm of the British establishment, the Department of Trade and Industry, which had investigated the takeover of his Pergamon publishing business by an American company.

After finding that Pergamon’s profits were based on dealings with Maxwell companies, the department concluded in 1971 that the publisher was “not a person who can be relied upon to exercise proper stewardship of a publicly quoted company”.

Despite the damning verdict, Maxwell went on to run a global publishing empire which positioned him as a rival to Murdoch, just arrived from Australia and already starting to build a media colossus of his own.

For years, the two men bestrode the intertwined worlds of media and politics in Britain. Maxwell controlled the Labour-supporting Mirror group newspapers while Murdoch had the Sun, the tabloid that backed the Conservative Margaret Thatcher.

In New York, they also owned rival tabloids. Maxwell had the Daily News and Murdoch the New York Post.

Both were outsiders, Murdoch with his contempt for the old-school British establishment which he felt looked down on his rude Australian ways, while Maxwell was by origin an East European Jew, some of whose family perished in the Holocaust.

Decorated for bravery by the British army in World War Two, Maxwell also had connections to the world of espionage and later consorted with Communist rulers in the Warsaw Pact in pursuit of his publishing interests.

Endlessly litigious and exuding the sulphurous whiff of financial scandal, Maxwell was dubbed the “bouncing Czech” by then prime minister Harold Wilson, under whom he served as a Labour member of parliament during the 1960s.

The full extent of Maxwell’s fraudulent dealings was only revealed after he died in 1991, when his body was found in the sea near his luxury yacht, the Lady Ghislaine, off the Canaries.

While controversy swirled over whether the corpulent 68-year-old had slipped, committed suicide or was the victim of an assassination by Israel’s Mossad secret service, it became clear that Maxwell had stolen hundreds of millions of pounds from employee pension funds to prop up his crumbling media empire.

The verdict of the Department of Trade inspectors 20 years earlier had not prevented Maxwell, an avowed socialist, from taking control of a string of companies, but in the end the judgment was shown to be essentially correct.

But while Maxwell was accused posthumously of fraud, the case against Murdoch, as articulated by the parliamentary committee and by a judicial inquiry also now in progress, revolves around journalistic ethics.

Murdoch, long seen by his enemies as a sinister power behind the throne in British politics who could make or break governments through his newspapers, was reviled as the “Dirty Digger” in a nod both to his Antipodean origins and the ability of his journalists to unearth scandal.

As the phone-hacking scandal has unfolded over the last few months, Murdoch’s influence over British politicians may well be irretrievably lost, the baleful spell he exerted over successive administrations broken by a series of damaging disclosures detailing how his reporters hacked the phones of celebrities, politicians and even a murdered teenage girl.

The hacking scandal has so far not affected most of Murdoch’s media interests, which include the Wall Street Journal and 20th Century Fox in the United States and pay-TV operations elsewhere in the world. But it may occur to shareholders of News Corp that the 81-year-old Murdoch is no longer the man they want controlling the $50 billion business.

Certainly the language of the parliamentary committee’s report was damning enough. But Murdoch may well be thinking back to what was said about his old rival all those years ago and conclude that harsh words alone will not be enough to put an end to his career.

Editing by Janet McBride

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