Ex-Hitachi boss set to run Quindell
New boss bids to transform firm’s bad name
QUINDELL has named a chief executive as the battle-scarred technology group charts a new era, writes Peter Campbell.
The company yesterday named former Hitachi director Indro Mukerjee as its new boss, ending an 80-day run without a leader. Shares rose 3p to 96p. Last week it emerged the group is facing a Serious Fraud Office probe, after it wrote down millions of pounds from past accounts and admitted that its operations have been loss-making for years.
Mukerjee, who is chairman of electronics group FlexEnable and boasts of long experience working in technology companies, will start on September 7.
‘We are delighted to have recruited Indro, who was the outstanding candidate for the role in terms of his experience, his personality and his leadership skills,’ said chairman Richard Rose.
Previous boss Robert Fielding left when it sold its legal division to Australian law firm Slater & Gordon for £640m earlier this year.
The company held back from appointing a successor until it had finished its investigation into a host of deals arranged by controversial founder Rob Terry, who was fired last year after selling shares.
The investigation, which led to the SFO probe, found that many of Terry’s takeovers were not profitable.
SIX months ago, Indro Mukerjee may have been the only business person in London who had not heard of Quindell. Then, the 54-year- old technology executive’s phone rang.
He was asked to take on the largest challenge of his career – leading a company that has featured in headlines for the last two years for all the wrong reasons.
Though few will have heard of him, he has a long history of working in technology companies.
After graduating at Oxford with a degree in engineering sciences, followed by stints at Hitachi and Philips Semiconductors, he led a number of tech businesses including electronics group C-MAC, which was broken up and sold. He is currently chairman of FlexEnable, another electronics firm.
But how much will these prepare him for what is ahead?
A report earlier this month painted a bleak picture of a company that once boasted it deserved a place in the FTSE 100. Quindell had been loss-making for years, and had covered this up with a series of acquisitions that gave the impression of growth, its own re-released accounts showed. It racked up losses of £282m last year, and £64m the year before, as well as writing off millions from the value of past deals.
But it wasn’t just the poor set of figures that spooked investors.
The report detailed a number of obscure financial arrangements, including extensive deals between top management and companies that they either owned or had financial interests in.
In one case, the entire leadership team were ‘inadvertently’ loaned £170,000 by Quindell after the company forgot to collect money from them to pay for shares – including £100,000 handed to Terry, who did not repay the sum until the end of the year. In another instance, a company controlled by Terry sold £454,000 of ‘goods and services’ to Quindell, which also paid £30,000 to Terry’s personal company, Quindell Directorate Services.
One extraordinary event saw the company spend £70,000 renovating a barn – only to sell it for £85,000 to Terry. Even the new management team – parachuted in to carve up Terry’s eclectic empire and clean up the company – had entered into unusual deals with the company, the 180-page report revealed.
Non-executive chairman Richard Rose, who was forced to waive controversial share awards given to him when he joined the company after concerns were raised about the sanctity of the arrangement, was paid £1m for providing consulting services to Quindell during the time it sold its legal arm.
A consultancy firm with links to David Currie, another board member, was paid £2.8m – on top of the £650,000 the previous year for more work.
It is this tangled world of opaque deals and cosy consultancy that new boss Mukerjee will plunge into next month.
‘I’m of course aware of the challenges the company has been facing,’ he said yesterday.
‘At the heart of the company are some excellent people and great technologies. My immediate priority will be to identify how to drive the development of both to serve our customers and create value for our shareholders.’ The items sitting in his in-tray are daunting.
A Serious Fraud Office investigation, launched after the group issued a plethora of writedowns and admitted ‘aggressive’ accounting practices, threatens to derail its recovery.
New management will claim many of the businesses under question have been sold or closed, and that any iniquity sits with past executives who have long- since left the business.
Whether the SFO will pursue former directors or go after the company itself remains to be seen. It is also facing a probe by the Financial Conduct Authority.
MUKERJEE, who takes the helm on September 7, will see his first priority as invigorating and encouraging a workforce who have seen very little positive commentary about their employer for the last two years.
He believes that the underlying business – which monitors vehicles through black box technology – is sound and has the potential to grow exponentially.
A previous deal with the RAC, which was signed by Terry but scrapped because of details buried in a complex funding model based on the company’s share price, could well be resurrected.
Relationships with the company’s customers are reported to be strong, and even staff morale is not as low as might otherwise be expected, according to company insiders.
The other major task facing Mukerjee is building a relationship with the stock market.
The starting point could hardly be worse.
During Terry’s tenure, the only analysts that offered coverage were either the company’s two brokers or had personal links to Terry’s associates.
‘I would not touch them with a barge pole,’ was the most frequent response by analysts when asked if they would consider writing about Quindell.
Not a single analyst covers the company at the moment – though that will change once new brokers Peel Hunt are brought on board.
They replace Cenkos, which was perceived as having close links to Terry.
In rebuilding a relationship with the City, Mukerjee has one major disadvantage: In spite of his wealth of experience at technology companies, he has never held a senior position in a Londonlisted firm.
He faces a battle with the SFO, the stock market and short selling sceptics.
Only time will tell is he is up to the task.