Pearson backs ex-Penguin boss ahead of grilling

The Pearson board yesterday stood behind Peter Mayer, the former head of Penguin Books in America, saying it believed he had no knowledge of the accounting scandal that has forced the media group to take a pounds 100m charge against its 1996 accounts.

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.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Voices
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice
music

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004
music

Singer says the track was 'force-fed down people's throats'

News
i100
Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album