Report on Maxwell

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

The most important lesson from all the events is that high ethical and professional standards must always be put before commercial advantage.

Autocratic Leadership

The scandal of Robert Maxwell occurred as Maxwell was the chairman and the chief executive of the Maxwell Corporation, which gave all the right and large amount of power in the absence of  proper Corporate Governance). As Maxwell was performing the duties of Chairman and Chief Executive so it gave him too much power and it is possible that it was this power which allowed him to defraud his companies. This should never be the case for any organization. Power should  be well diversified so that no one man abuse his power. power. And accountability is very important which which was clearly absent in the case of Robert Maxwell.

Lack of Corporate Governance Legislation

There was a different lack of Corporate Governance legislation or even guidance with the first  piece not being introduced until 3 years later in 1992 by the Cadbury Committee. The lack of guidance or legislation meant that Maxwell was in a position to defraud his employees by playing with their pension funds. Until then there were no specific guidelines to highlight how a company should be run and what are the duties of the directors or chairperson and because of this loophole he Maxwell fraud was not brought to light until un til it was too late. Robert Maxwell company was listed in the stock exchange until the Maxwell scandal effected the organization. However, with Maxwell's employee's trusting him with their pensions this could have been one of the assurances which were given, had it been in place.

Robert Maxwell and Non-Executive Directors:

The key failings of the Robert Maxwell scandal were internal control, as no other directors reported what Maxwell was up to. The internal control failures of Maxwell were vast. Maxwell employed his son's as non-executive directors, when non-executive directors are meant to be independent. He had a tendency of having ‘luminaries’ on board as non-executive directors.