Gain work experience as a non-executive director and watch the engine seize up
Lord Carrington–it was the kind of thing that happened to him – was asked to become a director of Rio Tinto-Zinc, one of the world’s two biggest mining companies. This, as he says in his memoirs, was an opportunity to learn about the mining industry. Work experience of this kind will become more widely available, thanks to Derek Higgs, author of the boardroom code of the week. Apply to Laura D’Andrea Tyson, dean of the London Business School and head of a nominating committee which will recommend non-executive directors from outside the world of commerce. When you have been on the board long enough to learn about the business, you will have to go. The Higgs code insists on that, too – because familiarity might compromise your independence. The limited liability company was one of the great Victorian inventions and a mighty engine of economic and financial progress, but tinkering with that engine has now become an industry in itself. It was designed on the principle that directors were elected by the shareholders to be fully and equally answerable for their stewardship. Company law does not distinguish between different types of directors, executive, independent, tokenist or somnolent. The tinkerers are busy dividing them into cabals, little groups meeting and reporting on their own, with a senior non-executive director to act as the non-execs’ shop steward. We shall soon see how much tinkering this engine can take before it seizes up. Indeed, we may see the board, like the annual general meeting, become a formality, with the directors hooting wisely away like a treeful of owls, while the real work of making hard choices is done somewhere else.
FIFTEEN former directors who must rue it used to sit on the board of Equitable Life. They presided over a corporate and social disaster, they took legal advice but they would not take warning, and I did not expect to find myself in sympathy with them, but strange things happen. Equitable under its present board is suing them. A preliminary bout of litigation has established that 5 million of cover is available under the insurance policy that covers directors’ and officers’ liabilities. After that they are on their own and will have to start (they have started) selling their houses. I cannot believe that a process of bankrupting them, even with L5 million from the insurers, would do much to repair Equitable’s finances, even if the lawyers did not take first cut. The present board, so I am told, has been advised by its lawyers that if it does not sue them it risks being sued. Anyone who is offered work experience on the board of a life office – or any other board, for that matter – should consult a lawyer first. Not that consulting the lawyers did the former board of Equitable any good.
Fresh to go
I AM thinking of bidding for Safeway. After all, everyone else is, with Tesco only the latest. `Fresh to go’ is the legend on the window at the Safeway store in Kensington High Street, and it might as well go to me. I would have the advantage of not being in the business, which ought to give me a clear run, since the laws that govern competition put a premium on inexperience. Anyone who now comes forward as a potential bidder is entitled, under the Takeover Panel’s rules, to crawl over Safeway’s books, and I look forward to reading them. I want to test the universal assumption that the quickest way to make money would be to shut the head office in Hayes. Playing to Safeway’s past strengths, would Hayes make a decent wine bar? With consumers’ nerve flagging at last and their debts becoming burdensome, this may seem an odd time to bid up in an all-against-all auction for a chain of shops, but the other bidders seem to see it as a chance that will not recur. Some of them clearly fancy the idea of doing Safeway up for sale. All they will need then is someone to buy it. Perhaps I can wait.
THIS week’s resistible investment opportunity comes to me from Mukasi Zuma, a Director of Project Implementation with South Africa’s Department of Mining and Natural Resources. His project is to get $14 million out of the country and I can help him implement it: on attractive terms, of course. The theme is familiar, but I like his variation: `The South Africa Civil Service Code of Conduct does not allow us to operate offshore bank accounts.’ So he wants to make good use of mine.
Vacancies for sages
RETIRING at 65 is an idea we owe to Bismarck. He built it into his pioneer plan for state pensions, feeling secure in the knowledge that the average life-expectancy in Germany was 45. What an actuary was lost to the world when he turned to politics! By now, though, the sums have changed, Germans are living longer, and in every developed country the balance of population is shifting. Who or what is going to pay for all these golden oldies or, as the Japanese call them, clinging wet leaves? Ken Dychtwald, who set up Age Wave – in California, naturally – has been in London this week as HSBC’s guest to tell us that fixed retirement ages are nonsense and that we should be encouraged to work as long and hard as we want to. Our flexible labour market, which sets an example to Europe and is therefore under constant threat from regulation, should be made to bend a little further, and might even have vacancies for sages. The moral, though, is familiar: never entrust your old age to a government.
Park and fly
WHAT I think today, the Pentagon thinks tomorrow. My unbeatable business idea for the New Year was to open a rest home for retired dictators, thus solving their problems and everyone else’s. Now Donald Rumsfeld, the United States’s warlike Defense Secretary, has taken up the running. He recommends that the senior leadership in Iraq, families included, should be found a haven in some other country, as a fair way of averting a war. Good idea, echoes Jack Straw dutifully. Dundictatin Park, with its lavish facilities and favourable tax climate, will be ready to receive Saddam Hussein and his extended family. Special introductory rates available. Book now.
Copyright Spectator Jan 25, 2003
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