ALEX BRUMMER: Few chairmen give job attention needed


The current spate of Winston Churchill movies shows that the real test of leadership comes in crisis. In the boardrooms of Britain, few chairmen seem to give the job the attention needed for it to be their finest hour.

At bankrupt Carillion, chairman Philip Green could have stopped the ludicrous decision to limit clawback of directors’ pay as the cranes were falling in.

Even more egregiously, if he and the board had shown backbone they never would have allowed Royal Bank of Scotland and other banks to insist on no new money for pension funds as the price of extending credit.

Missing the Churchill spirit: Chairmen are only too happy to accept all the accoutrements of great office but behave like nodding dogs in the face of adversity

Missing the Churchill spirit: Chairmen are only too happy to accept all the accoutrements of great office but behave like nodding dogs in the face of adversity

Chairmen are only too happy to accept all the accoutrements of great office but behave like nodding dogs in the face of adversity. The unchallenging behaviour of Sir Tom McKillop at RBS and Lord Dennis Stevenson at HBOS is well chronicled.

Poor choices of chairman are rarely opposed. It was obvious that James Murdoch should never have been allowed back as chairman of Sky after the troublesome stewardship of News International in the UK, and a conflict of interest as a dominant shareholder when it came to doing deals. No one stood in his way and Sky minority investors have been marginalised.

Several other chairmen face gargantuan tests. Glyn Barker, who spent 35 years at PwC, might look ideal to steer FTSE 250 contractor Interserve away from the rocks. But Interserve looks to have many of the same characteristics as Carillion.

Debts have exploded to £513m, market value has plummeted to just £173m and the pension fund is in deficit.

In addition, Interserve irresponsibly chose to take on fresh public service contracts in the hope that new cash generated can help pay for past mistakes.

Of all leaders, one might have thought a PwC top number cruncher might have understood this.

Perhaps not, given the firm’s unpunished role for its part in the Tesco scandal.

Another chairman who will need to show grit is Mike Turner at engineer GKN. His background as former chief executive at BAE suggests bags of experience.

But in Melrose, GKN has a foe beloved of investors for delivering value.

Chris Miller of Melrose, a product of the Hanson school of accounting, has respect for good engineering but none for heritage and bloated bureaucracy.

Much of what Melrose says is right but it should not be a slam-dunk for investors. Melrose paper is just that and because it has improved margins at engineers in the past it doesn’t necessarily mean it can pull it off again.

Melrose’s three-to-five-year turnaround plan may produce gains for investors but will almost certainly denude Britain’s engineering core.

As divisions are sold to international buyers, historic GKN and its core values will be damaged. With the loss of headquarters, comes the loss of ability of UK firms to make decisions in the national interest.

Turner has much riding on his shoulders.

Media stars

What goes around comes around.

In its heyday UBM owned two ITV franchises, Meridian and Anglia, the Daily Express and a chunk of the Yorkshire Post, plus periodicals and the PR Newswire. It also sought to add Lloyd’s List publisher Informa to its portfolio.

Successive bosses ruthlessly went about simplifying UBM until it became a pure business-to-business exhibition group offering events ranging from advanced manufacturing to fashion.

Informa is now turning the tables with an offer which values UBM at £3.8bn and would help create a British-owned exhibition champion with a value of £9bn.

Paradoxically, the enlarged group might not look that different to old UBM.

The short-term temptation would be to start dumping assets again but a better option would to invest and build.

The real prize must be to challenge Relx, the academic publisher and exhibition concern, that has risen to a top place in the FTSE 100 with a market value of £34bn.

Quite a long journey.

Customer disservice

RBS claims innocence in the battle with firms which said they were damaged by its ruthless Global Restructuring Group.

Its defence will not be helped by release of the 2009 ‘Just Hit Budget’ note, which encourages loan officers to impose sanctions on clients, impose monthly fees ‘or else’ and make the ‘customer unhappy’.

How charming.

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