In Pursuit of the Three Stooges

In recent months there have been widely reported cases of allegedly unseemly acquisitiveness by three senior UK businessmen – Bob Dudley, Sir Martin Sorrell and Sir Philip Green. The ‘three scrooges’ were quick to protest that there had been no wrong doing, and this may well be true if the criterion used is that of conduct deemed to be illegal. But all three cases may be said to hinge on a quote from Alice in Wonderland: “The more there is of mine, the less there is of yours”; and our three businessmen, thrust unwillingly into the limelight, have been extraordinarily successful in transforming this broad advice into a way of life.

I should declare an interest at the outset. Sir Philip Green stands accused of helping himself to BHS funds that had been thought to be in place to pay the pensions of BHS employees. My interest stems from the fact that my own company pension scheme, into which I paid for many years, is thought to be at risk because of current upheavals in Tata UK. That might explain an acerbic tone in what follows.

The case for the prosecution and persecution of the three scrooges has been led by Paul Dacre, the fulminating editor of the Daily Mail, and, in more muted vein, by The Times. As of July 29 it would appear the fuss about the enormous reward packages of Bob Dudley and Sir Martin Sorrell has abated, but the arguments for (not many of these) and against the activities of Sir Philip Green continue to fill the papers and the airwaves.

Let me set the scene with a few quotes from the classics about the behaviour under scrutiny:

Blessed are the poor in spirit for theirs is the kingdom of heaven. (Matthew 5,3)

For what is a man profited, if he shall gain the whole world and lose his own soul? (Matthew, 16,26)

It is easier for a camel to go through the eye of a needle than for a rich man to enter into the kingdom of God (Matthew 19,24)

These words from Matthew are undoubtedly memorable, but they give too much wriggle room ­– the sort exploited by the expensive legal advisers for the grasping trio.

The life of man, solitary, poor, nasty, brutish and short. (Hobbes, Leviathan)

Hobbes may have had a point back in the 17th century in Malmesbury, Wiltsire, but what about today? A more accurate version today, at least in the UK, would be that the life of man is gregarious, cordial, long and getting longer.

So, why all the grumbling? Well, there is today a regrettable amount of relative poverty –  but, much more worrying, an ever-widening gap between incomes at the top and incomes at the bottom.

Either poverty must use democracy to destroy the power of property or property in fear of poverty will destroy democracy. (Thomas Rainsborough, quoted by Nye Bevan in Why not trust the Tories)

There is a scene in a Woody Allen movie, set in the Roman Senate. A ‘left wing’ senator addresses his colleagues: “Fellow Senators, close to this very building some of our fellow citizens live in dreadful poverty. Fellow Senators, how say you?” The (presumably affluent) senators rise and in unison chant: “F*!* the poor.”

Broadly speaking, the practice of fat cats in the city from time immemorial has been to take as big a cut as possible from the money which flows through. The size of this cut has varied only slightly down the ages, from the enormous at the bottom end to unseemly looting at the top end. I hesitated about the use of the word looting, and I think it appropriate to stress that I am speaking here only of legal looting, rather like the honest graft practiced by George Washington Plunkitt and his Tammany Hall colleagues in New York. (John Holden, A Cushy Number)

One other point to make here: I am anxious to avoid any temptation to adopt a censorious tone about the morality or lack of it with regard to the three scrooges. I will restrict myself to a few modest proposalss to clip the wings of the avaricious.

Many years ago – 1963 to be precise – I attended the Harold Wilson “White Heat of Technology” Labour Party Conference. While there I heard a speech by a moderate man – moderate at least to my callow ears – appealing for moderation in all things, a policy which was sure to secure the support of the voters at the next election. The moderate man’s name was Robert Maxwell and he later gained some notoriety. Specifically, he managed to transfer money from company pension funds into accounts under his own control. But even that sharp practice was not sufficient to stave off disaster, and like Luca Brasi in The Godfather, he joined the fishes.
So, we need to distinguish between the words and the deeds of the key protagonists.

Bob Dudley, CEO of BP

The Bob Dudley furore can serve as modest starter to get our show onto the road. As Daniel Finkelstein said in his Times column onApril 20, “Paying anyone £14M to run a company is absurd.” For his part, the then-Chancellor George Osborne sensed the way that the wind was blowing and added his voice to widespread criticisms of the deal.

A selection of letters from Times readers, many of them BP shareholders, suggested most were opposed to the deal, partly on the basis of the scale of the amount and, of equal if not greater relevance, the fact that BP had lost £4.6M during the year in question.

In the end the stentorian calls for moderation, and for Mr D to play the game, were insufficient to curb his acquisitive propensities and the deal was duly approved by those in a position to do so. So far so good for those seeking to ensure that rich should get richer.

Sir Martin Sorrell of WPP

The case of Sir Martin Sorrell differs from that of Bob Dudley in two significant ways. His reward package was about £70m or roughly a multiple of 5 of the deal achieved by Bob Dudley – that’s some gap.

The other point of difference, a significant one, is that the company he runs, WPP, is very successful when measured against the usual performance criteria of growth, and increase in shareholder value. There is no suggestion he has been guilty of anything remotely illegal. His offence is the size of his reward. How relevant is the criticism of Lord Finkelstein and others in the context of Sir Martin providing effective leader­ship in a very competitive global commercial environment.

Some critics of Sir Martin have written and spoken eloquently about the morality of his behaviour. Alex Brummer, the City Editor of the Daily Mail, wrote: “Does any chief executive deserve to earn 2000 times the average employee in a company stuffed with highly creative people.”

For my part I considered this point in the context of the biblical quotes at the start of this article. I asked myself: What is meant by “poor in spirit?” What exactly is the soul and how does it feel about money? Do we need more inform­ation about the diameter of the camel, and the dimensions of the eye of the needle. I decided not to pursue these philosophical matters and instead opted for a more prosaic approach.

For his part Sir Martin soaked up his punishment and departed the scene bloody but unbowed and doubtless consoled and sustained by the £70M package he had secured.

Sir Philip Green formerly of BHS

The going will be tricky in what follows. Dudley and Sorrell have retreated into the shadows, but the case of Sir Philip Green continues to hog the headlines. And Sir Philip is not a shrinking violet, ready to turn the other cheek.

Green was placed 29th with a net worth of £3.22 billion in the Sunday Times UK Rich List for 2016, £280m having been deleted from his assets as a prudent precaution against any demand made on the Croydon-born tycoon to reduce the (BHS) pension deficit.

In The Times on April 27 Alastair Osborne got stuck in: “Barely two days have gone since BHS fell, putting 11,000 jobs at risk and leaving a £571m hole in the pension fund. And Sir Philip wasn’t even running the show, having dodged that bullet 13 months ago by flogging the retailer for £1 to a consortium led by the twice bankrupt buffoon Dominic Chappell. Yet it’s clear who’s getting the blame with the likes of Alastair Campbell claiming that the whole thing has a whiff of the Robert Maxwells about it” I had a feeling Maxwell would pop up at some point.

Sir Philip took a lot of punishment in the early rounds but he has made a comeback, helped by the fact that Frank Field, Chair of the Parliamentary Committee appointed to enquire into the matter, appeared to have found him guilty without the tiresome formality of a hearing. Even more helpful was a report by Ian King in The Times of May 16, headlined “BHS leaves regulator looking distinctly green around the gills”. King excoriated the performance of Lesley Titcomb in her capacity as pensions regulator, writing: “Lesley Titcomb was utterly unconvincing during her appearance before the … select committees. In particular her assertion that she found out about the sale of BHS only in March, 2015 from the newspapers was shot down within hours.”

Later Mr King noted that “Ms Titcomb’s decision to launch an investigation into the BHS schemes only after the sale look more like an exercise in backside covering than a genuine attempt to resolve the crisis.”

Sir Philip was predictably pugnacious and elusive when he appeared before the Parliamentary Committee. One hapless committee member was reprimanded by him simply for glowering at him. I shudder to think of his behaviour when he is not restricted by cameras and microphones. His performance ould be compared with that of a veteran boxer up against a strong young challenger – clinch­ing, down on one knee, using the ropes, and producing a flurry of counter punches to rock his opponent back on his heels.

At one point Sir Philip ( as of today he is still Sir Philip) made the point that it is the responsibility of all prospective purchasers to to take all possible steps to establish the assets and liabilities of a business, and he may well make the point that his responsibilities ceased at the point he paid the £1 into his bank. Lawyers (especially those employed by Sir Philip) will be poring over the rules to establish exactly the law has to say on this crucial matter.

I will do such things. What they are yet I know not.(Shakespeare, King Lear)

A suggested action plan

Something must be done, we might say. Like what? How about measures along the following lines?

+ Implore Jeremy Corbyn to persuade his warring colleagues in the Labour Party to put internal squabbles on hold and develop effective policies backed by the required amount of detail to put a stop to the activities of the three scrooges and any of their colleagues minded to follow their example.

+ Measures to include taxation of excessive “earned” income and of excessive retirement pensions at confiscation levels, including retrospective recovery.

+ Sack Lesley Titcomb, the hopeless discredited pensions regulator. The replacement regulator to keep a watchful eye on the vultures circling above our vulnerable pension funds.

+ Taxation rules and arrangements that will be clear to all, and especially to those required to pay at the top end.

+Ignore the threats that will be made by those who feel threatened by the tightening up to take their business elsewhere. Ought we really to be apprehensive about the departure of those at the top whose clear priority is to maximise their share. Let them depart our shores in search of more tolerant arrangements about who gets what.

+ Generous reward packages to be given the widest possible publicity – I suspect that Sir Paul Dacre can be relied on to do his bit here.

+ Appeal for whistle blowers to get busy with their whistles – your country needs you. Once some momentum is gathered to curb the activities of the greedy there will no lack of information forthcoming about hitherto undisclosed sharp practices and about ways and means of bringing about the required reforms.

+ A tricky issue to consider – from time to time we read about people leaving businesses under the constraint of a gagging order to ensure that they don’t squeal. To be more polite, so they do not reveal what they know about who has done what and who know what at the top of the tree. We should take careful look at these gagging orders with a view to curbing them where they conflict with the public interest. (It is interesting to compare the readiness of most business sectors to impose gagging orders with the most welcome readiness of many politicians to turn Queen’s evidence following their departure/eviction from office. See A Journey by Tony Blair.)

+ What about the effect, if any, of the leave vote on the matters under discussion? A remain vote would have made it easier to curb the looters. But we are where we are and must act accordingly.

This article first appeared in Tribune Magazine on August 14, 2016

 

 

 

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Author: holdenforth

50 years in management - mostly as a sharp-end man. Occasional contributor to Tribune.

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