CITY AND SUBURBAN
The nerd who bust the safe at Morgan Grenfell put not your trust in trustees
CHRISTOPHER FILDES
Randers too libellous to mention are rotating below ground or seething above it. Where they failed, the nerd from Morgan Grenfell has triumphed. He worked out how to crack the safe. The cumbrous piece of engineering that protects the money (now £123 billion) in our unit trusts has changed little from the 1930s. One sharp operator after another has been tempted by the prize within. They found ways to make money out of unit trusts — thirty years ago the game was to promote a new one, pock- et the initial charges and leave the trust to wither on the vine — but taking money out defeated them. Now they have been out- smarted by a gormless-looking maths freak who, sent out by his wife to buy a pot of chutney, came back with 42 pots because he could get a keener price. What he did was to bend the rules on buying unquoted securities: shares whose value was not test- ed in the markets but depended, for his purposes, on what someone said it was. He was allowed to do that if the shares were notionally on their way to market. So investors who thought they were buying into a European growth found that they had bought into companies with names like Waferprod. The trustees were there to pro- tect them and took £377,000 in fees for it. The most they did was to leave a dubious note in the accounts and then stand aside. This mechanism of trusteeship now begins to look like the old safe's weakness. Big banks and insurance companies take on the job but it does not attract their best minds. When the Framlington group succumbed to a hostile bid, the unit holders were told that they had been taken over with the estate, like sheep on a tenanted farm. Questioned, the trustees merely mumbled that it was none of their business. These trustees owe their appointments to the trusts' managers, who pay them. It is time to make them answerable to the people whose money is supposed to be in trust.
No sense of humour
IN Morgan Grenfell's owners, Deutsche Bank, this disaster has induced a sense of humour failure which goes right off the dial. We have ways of making them laugh, but not this time. First they pay a fortune for a fine old City bank with a splendid provenance, but in somewhat distressed condition. Then they infuriate the burghers
of Frankfurt, their home town, by making London Deutsche's centre for investment banking. Then they commit another for- tune to a purpose-built London office, complete with its own Bridge of Sighs. Then the salesmen go out to sell Morgan Grenfell trusts to Deutsche's customers all over Germany. Then the balloon goes up. Now Deutsche must shell out further for- tunes. It will pay compensation. It has had to buy job-lots of shares from the suspect trusts. It may even find that it owns Wafer- prod. Picture the burghers' smirking faces. Picture Deutsche's directors, who have found plenty of ways to lose money at home without going out of their way to lose it here. This, and not some factitious flap about the single currency, is the real threat to the City. It will lose business if it comes to look inept, or casual, or undermanaged, or just a risky place to be — as Hong Kong or Singapore might, on a bad day, look from London. Morgan Grenfell's nerd has gone beyond a joke.
Bilge trouble
ONE way to pass the time while waiting for the railways to answer the telephone is to keep me posted about 0345-and-upwards. This is the new number to which all inquiries are referred, or would be, if the calls got through. My friend Stanley Ross of Tradepoint found it reliably engaged for days on end. Trying to get to and from his boat on the south coast (bilge trouble there's a lot of it about) he has been reduced to taking taxis. Roger Ford of Modern Railways and Rail Privatisation News explains that this Hutberian improve- ment (= deterioration) has been wished on us by the railways' regulator: 'Everyone has to have equal access to service information at local charges.' I suppose he has achieved that. Ringing up the airlines used to be like this — you could spend hours trying to attract their attention — until they realised that they were in business to sell tickets. I would like to think that the penny will drop with some privatised railway, in spite of its regulator's worst endeavours. Don't call us, we'll call you.
Up in the clouds
THE tallest and vainest building in Europe emerged this week from Sir Norman Fos- ter's drawing-board, accompanied by puffs of pure fatuity. It will come in handy in the City, its promoters say, because banks are merging and will need bigger offices. Banks, like most businesses, want smaller offices and fewer of them. That is one rea- son why they are merging. This tower would look down on NatWest's tower, which is empty, on Barclays' bulge, which is also empty, and on Sir Brian Pitman at Lloyds Bank, who has devoured Hill Samuel and TSB, shut their head offices, fired most of the inhabitants and fitted the rest into Lloyds' own stately home in Lom- bard Street. Another puff says that this tower would serve the City as a virility sym- bol. Margaret Thatcher was urged to adopt a strong pound as a virility symbol. She declined, saying that she did not need one. The City, too, can keep its pecker up with- out Sir Norman's help. I rely on its Court of Common Council to throw stones at his glasshouse. The Court might reflect that this proposal comes to it from Trafalgar House, which owns Cunard (two black balls at the masthead: I am proceeding in circles out of control) and, until it fell into the arms of some Norwegians, could claim to be our least successful major public compa- ny of the decade. Its tower would replace the bombed Baltic Exchange, which was built like a cathedral, with potatoes traded in the south transept. I would put it back.
Grade One
MICHAEL Grade rebuts my airy sugges- tion (31 August) that he defines public ser- vice broadcasting as 'what I do, old boy'. At Channel 4 he runs a corporation whose remit is laid down by Parliament. This has the odd effect of making him (on £542,000) our highest paid public servant. Second: John Birt. Third: Eddie George. Distances: £212,000, £103,000. Keep up the good work, old boy.
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