Thanks, Rishi...now we just need a sun drenched August! Financial Mail

Fire them if they don’t hold big firms to account, says billionaire hedge fund boss Sir Chris Hohn

BRITAIN’S most powerful hedge fund boss has launched a blistering attack on fund managers over their failure to challenge corporation son issues from climate change to corporate scandals.

Billionaire Sir Chris Hohn – whose firm TCI Fund Management was t he world’s best performing hedge fund last year – said it was ‘time to call bulls***’ on City rhetoric which failed to materialise into action.

Fund managers that fail to hold boards to account on key issues should be fired, said Hohn, the former boss of Rishi Sunak from the Chancellor’s hedge fund days.

Hohn has put $7 trillion asset manager BlackRock – whose boss, Larry Fink, sent a letter to boards in January warning investors will begin to avoid climate damaging firms – and other fund giants in his sights.

The City veteran is riding high after TCI’s $250 million bet against German payment company Wirecard, which collapsed last month after saying £1.7 billion of cash on its balance sheet probably does not exist.

TCI had already filed a criminal complaint against Wirecard in May following allegations of accounting fraud going back years.

Hedge funds and short-sellers have been vilified for preying on the misfortunes of corporations and their shareholders. But there is growing acknowledgement that their contrarian approach and reluctance to accept the company line could serve as an early warning system on major strategic missteps or wrongdoing.

Activists such as TCI, as well as Elliott, Paulson and Nelson Peltz’s Trian Partners, have become both more visible and vocal in recent years. Hohn, who takes both equity stakes as well as short positions, said: ‘There’s a lot of passiveness in the fund management industry.

‘ We were very public about [Wirecard]. We were short 1.5 per cent of the company, $250 million. But we were very public. We filed a criminal complaint saying this was a fraud, needs to be shut down. We were active. We wrote to the board, said you have to fire the CEO.’

He said because TCI’s Wirecard investment was ‘ short’ – City shorthand for borrowing stock to sell and buying it back later when the price drops – it was unable to force change. He added: ‘Everyone chose to ignore us. But we took action. And where you’re a large shareholder, you can force it. We think it’s really quite simple.’

Hohn is a powerful voice in the industry and last year became the world’s top hedge fund manager after a stellar performance by TCI.

His fund grew $8.4 billion last year – more than any other – taking its assets under management up 39 per cent to $30 billion.

Hohn urged major shareholders to table motions for other investors to vote on at annual shareholder meetings to force change.

He said: ‘It’s about time investors call bulls*** on the asset management industry and say,

“What do you actually do?” It’s all right to have some vague thing and say “we engage”. Well, what does that mean?

‘What we’ve learnt as an activist is it’s very easy for a company to ignore you. But when you put an AGM motion [forward], I can assure you the laughter stops.’

The 5 3 - year- o l d, who has donated to climate change group Extinction Rebellion, said fund managers have already acted on pay and created a ‘strong precedent’ for other issues.

Hohn, who wants all companies to reveal their emissions and their plans to reduce them, argues companies which fail to tackle climate change will expose themselves to future financial penalties and costs from increasing regulation, taxation and litigation.

He added: ‘We don’t even need this stuff to be regulated by governments.

‘It just takes one or two of the large asset managers to adopt this policy and overni ght t r e mendous pressure would occur on companies to change.’

Hohn singled out BlackRock – the world’s largest asset manager, whose boss Larry Fink has spoken out about pollution by companies – of ‘greenwash’.

He added: ‘They have all the votes to table on every single portfolio company they own.

‘They can call an AGM motion for a sustainability plan and vote on it. Not every shareholder has enough votes to do so.

‘But the big index funds, the big active managers like BlackRock and Vanguard – they have enough votes.

‘If asset managers are just passive, our position is they should be fired, because not caring about the pollution of a company is l i ke not caring about the balance sheet of a company.’