Scottish Daily Mail

Musical chairs come to Zug

- By ALEX BRUMMER City Editor

THeRe can be few more humiliatin­g exits from the chair of a major company than that of Sir John Bond from Glencore in the wake of the Xstrata deal.

Counting abstention­s, some 93pc of investors instructed the board to dump Bond. The reputation of the former HSBC chairman has already suffered as a result of some of the calamitous deals done when he was at the bank. HSBC is still, for instance, paying heavily for the takeover of sub- prime l ender Household where the write-offs are in double-digit billions.

There were clues in the Household transactio­n to Bond’s apparent blind spot when it comes to handing out shareholde­rs’ money to executives. It was he, after all, who helped organise a payment of $ 37m to the sub- prime firm’s former boss William Aldinger.

History repeated itself when Bond put his name to a £140m ($223m) golden handcuffs package for Xstrata’s key managers. After shareholde­rs kicked up a stink the deal was amended and Bond agreed to step down when a new chairman was identified. That process has been speeded up by a devastatin­g shareholde­r vote that also saw a cadre of Xstrata directors – Con Fauconnier, Peter Hooley and Ian Strachan – shown the door. Glencore’s robust chief executive Ivan Glasenberg, who controls 8pc of the combined company, always described Glencore-Xstrata as a takeover not a merger. Now we know that was true. The person rising temporaril­y to the top of the pile in this process is former BP boss Tony Hayward who takes on the Rafa Benitez title of ‘interim’ chairman and will run the nomination­s process.

How helpful this will be in winning the hearts and minds of external investors such as Black Rock and Legal & General is hard to gauge, given that Hayward’s stewardshi­p of BP left that company with $42.2bn black hole.

That, in some ways, ought to make him less palatable to big bat- talion investors than Bond. Meanwhile Glencore has set about demolishin­g the Xstrata management legacy with such enthusiasm that it is beginning to look like a vendetta. From London to Singapore, Xstrata offices are being closed and merged with Glencore without sentiment. There will be a minor London presence as HQ is concentrat­ed in Baar, a village in the canton of Zug, Switzerlan­d.

The search for the right kind of chair at Glencore is never going to be easy. The driving force of the company will always be Glasenberg. There have been some suggestion­s that the pretence that anyone can control Glasenberg be abandoned and, like Lloyd Blankfein at Goldman Sachs, he should be given both jobs.

That could only work if institutio­nal investors were satisfied the non- executives were there to ripple muscles rather than act as placemen.

BP besieged

THe Obama Administra­tion’s treatment of BP over its failings in dealing with the Deepwater Horizon explosion was as much political as economic.

Clearly the spill was the worst in the history of the industry, 11 people died and there was some despoliati­on of the environmen­t. But even that is disputed given the natural processes that helped to disperse and dissipate the spill.

It was shameful that Washington engaged in grandstand­ing, including a dressing down for Tony Hayward and Carl eric Svanberg at the White House. Despite this behaviour, and the insistence by the President and officials on addressing BP as British Petroleum (with the emphasis on British,) David Cameron’s Government let BP swing in the wind.

In terms of the lives lost and the environmen­tal damage done, the Macondo catastroph­e caused only a fraction of the damage of Union Carbide in India, the recent Texas chemical explosion and arguably the factory collapse in Bangladesh, where the death toll is in excess of 1,000.

It is has been as if the Americans are determined to bankrupt BP even though it is so much a US company having absorbed Standard Oil of Ohio, Amoco and Arco.

It looks as if some of the businesses claiming compensati­on have been using BP as a cash machine, filing dodgy and unsubstant­iated claims in the manner of some of the payment protection insurance claimants in the UK.

BP is right to seek government help in dealing with the US, but one cannot help feeling this is a little too late. It might also find the public short on sympathy given the group’s alleged involvemen­t in rigging wholesale oil prices.

Exploring Amazon

OF all the US avoiders of British taxes Amazon is the most egregious. Its whole business model is based on a form of predatory pricing that helped to destroy HMV, Comet, Borders, Zavvi and countless independen­t book and record stores, turning our High Streets into retail deserts. There could be no better target for HMRC as it seeks to round up an estimated £35bn of missing tax income.

 ??  ??

Newspapers in English

Newspapers from United Kingdom