Pearson backs ex-Penguin boss ahead of grilling
The backing came as Pearson prepares to interview Mr Mayer about the affair today following his return to the US after a six-week holiday in Europe. A senior Pearson figure said yesterday that Mr Mayer would not prove a reluctant interviewee: "Peter was obviously in charge of the company for a long time and he would insist on being interviewed about this."
Asked if the board believed Mr Mayer was aware of the complex accounting scheme, the Pearson insider said "absolutely not".
Asked if he should have known, they said: "If the auditors did not know and did not discover the cover-up, then you would not necessarily expect the chief executive to know."
This view has been challenged by some City analysts, who say that while they accept that the invoice procedure in publishing houses borders on chaos, certain factors should have set alarm bells ringing. "They were seeing debtor levels rise. Why didn't they question that?" one said.
Mr Mayer became chief executive of Penguin USA in 1978. He resigned late last year to run Overlook Press, a New York-based publishing house he founded in the early 1970s.
Pearson maintains that the complex accounting scheme, which involved book retailers being given unauthorised discounts in return for early payment, was the work of one woman who has since been dismissed.
It is unclear if the woman is still helping Pearson with its inquiries into the matter. "She was. I'm not sure if she still is. She's not very happy," Pearson said.
Pearson believes the byzantine system of accounting transactions created to deceive management and auditors was not an act of fraud but a cover- up. So far Pearson has discovered no evidence of any financial gain by the woman that would have provided her with a motive.
As the investigation by new auditors Price Waterhouse continues, there is concern among City analysts that Penguin's 1997 sales could be affected. They say retail customers in the US must have known about the discounts and possibly increased their orders accordingly. Some analysts believe that following the termination of the scheme,there is a danger that retailers will buy fewer books from Penguin as they will now be paying higher prices. "You just don't know what the profit will be under the new regime," one analyst said.
It is possible that retailers who did not receive the discounts may take legal action to force Penguin to make a retrospective payout. Under an agreement between book publishers and the American Booksellers Association in late 1994, publishers undertook to treat all retailers on equal terms. However, as the agreement was not enshrined in law, it is unclear if will stand.
That's some guestlist! Stunning images show huge dynastic wedding between Ultra-Orthodox Jewish families which attracted 25,000 guests
Man and woman arrested on suspicion of conspiracy to murder victim of Woolwich machete attack, named as Drummer Lee Rigby
'Sickening, deluded and unforgivable': Horrific attack brings terror to London’s streets
Video: Woolwich attack - man with bloodied hands and knife addresses camera
Ingrid Loyau-Kennett, the mother-of-two hailed as a hero for confronting Woolwich attackers, thought: 'better me than a child'
- 1 Man and woman arrested on suspicion of conspiracy to murder victim of Woolwich machete attack, named as Drummer Lee Rigby
- 2 'Sickening, deluded and unforgivable': Horrific attack brings terror to London’s streets
- 3 Grace Dent: I’m not sure how these people can avoid being called ‘bigots’. And the more ‘civilised’, the worse they are
- 4 Woolwich murder: They killed, then they performed - these men should be starved of our attention
- 5 Woolwich attack: The EDL will seek to exploit this evil crime for their own evil ends
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.