Corporate Governance

Assignment
Maxwell & Polly Peck
Presented by:
Junaid Usmani
2017-BBA-099
Presented to:
Sir Saad Mehmood
 Maxwell
Do you believe that, following the DTI reports of the early 1970s, the City should have been
more skeptical of Maxwell’s business activities?

In the early 1970s We are also convinced that Mr Maxwell regarded his stewardship duties
fulfilled by showing the maximum profits which any transaction could he devised to show.
Furthermore, in reporting to shareholders and investors he had a reckless and unjustified
optimism which enabled bunion some occasions to disregard unpalatable [acts and un ushers to
stare what he must have known to is untrue ...We regret having to conclude that, notwithstanding
Mr Maxwell’s acknowledged abilities and energy, he is not in our opinion a person who can he
relied on to exercise proper stewardship of a publically quoted company.

Contrast Robert Maxwell’s view of the role of the board of directors and the role of the
non-executive director with recent guidance on corporate governance?

In the first five vears here Maxwell ’s reign. view of the company’s directors, even who he
appointed. Survived for more than one tear. Few could satisfy bus demands are cope with the
stress. 'Go was annoying and mental , Nicholas Davies. who worked for Maxwell for a number
of years, see Maxell’s relationship with the trade unions: After months of wrangling and hard —
bought parties union leader Bil! Keys commented: ‘Maxwell is the greatest wheeler-dealer we’ve
ever mer. a man who can charm the birds off the trees and then shoot them.

What do you believe are the main lessons that can be drawn from the failure of Maxwell’s
business empire?

These problems are presented in perhaps the most important transnational avoidance case ever to
be decided, In re Maxwell Communication Corporation,' presently pending in the Second
Circuit. The case has not yet received much scholarly commentary and the reports so far
published have failed to capture the careful and subtle holdings of the bankruptcy and district
courts. Thus, even though the matter pends in the Court of Appeals, it seems worthwhile to
clarify the issues and the proper analysis. The lower court opinions in Maxwell have
demonstrated how avoidance rules can be applied sensibly in a worldwide proceeding even
within the framework of the highly questionable "presumption against extraterritoriality"
announced by the Supreme Court a few years ago.2 The judges in Maxwell realized that in every
non-obvious case there will be important elements of the challenged transaction taking place in
more than one country and, therefore, no legal device can avoid the necessity for a choice-of-law
analysis. Such an analysis is in any event required by the overwhelming weight of authority in
the conflicts field.
Who were the main losers when the Maxwell empire crashed?

While Mirror Group shareholders were wiped out, arguably the biggest losers were the
pensioners who had £460m looted from their fund. Despite a partial government bailout, as well
as money from the investment bankers who advised Maxwell, most pensioners had to accept a
50% cut in the value of their pensions.

Is it likely that problems of the type and scale of Maxwell’s financial dealings could be
repeated in a quoted company in future?

According to the independent audit carried out by Martin Harris in 1968 have disclosed that
Pergamon’s profit was $140,000 instead of $2.1m. After this report Pergamon’s auditors
resigned and board of trade or DTI investigated Maxwell in 1969. Report mentioned that
Maxwell is not suitable or reliable person to exercise proper methods for public quoted company.

Price water house have carried out some investigation and it indicate the important of unify
accounting standards. This report was regarded as valuable addition to the accounting profession.
After this report accounting standard committee had been setup in order to unify the accounting
standards in financial reporting treatments and audits. But governments were invited by
accounting professional to include some minimum standard to the financial reporting and
auditing.