CITY AND SUBURBAN
The Prime Minister of Canada invites me for an intimate weekend in Halifax
CHRISTOPHER FILDES
Dear Mr Chretien: Thank you for your kind invitation to join you for the weekend in Halifax, Nova Scotia. I am told that Hali- fax is at its most characteristic at this time of year (killer midges) and will make an apt venue for your hospitality. Quite informal, you tell me — just us and Bill and John and Helmut and the statutory Japanese and about 5,100 others. However will you find enough motel rooms for them all? You are right not to set an example of extravagance, and if your currency is sometimes referred to as the Arctic Peso, that is just a coinci- dence. I quite understand why, for reasons of security, your principal guests would not actually mingle, but you offer me an oppor- tunity to take a picture of them. That would be nice. I can also see that this sum- mit meeting is your equivalent of a garden festival in Liverpool or Gateshead. It will create employment, pay off some political debts — no wonder Andreotti picked on Naples — and help to put Canada on the map, where it belongs. I am not sure what else it is for. You and your guests will talk about Bosnia, sex, drugs, violence, the Internet and so on, but you could do that in your club or pub. You will issue a commu- nique: Sir Nigel `Supersherpa' Wicks must have written it already, and someone else has leaked it. You will pronounce upon the world economy — this is supposed to be the Group of Seven's economic summit but we all know that you could not agree on whether it is raining outside, let alone on what to do about it. That much was obvious two months ago when your seven finance ministers met, scratchily, in Wash- ington. Lastly you will turn to the interna- tional financial institutions and whether we still need them all. These yearly summits have become just such an otiose institution. So I hope you will allow me to plead a sub- sequent engagement and decline your invi- tation. Canada may be all right, but not for the whole weekend.
Iceless in Seattle
I HAD thought of dropping in on Halifax on my way back from Seattle — in the days before non-stop flights you could have changed at Gander — but found that it was all too difficult without a parachute. Per- haps a week among the Boeings and the Bankers was enough. The chairmen of the world's hundred biggest banks were there for their annual get-together, and as the well-found ship Spirit of Puget Sound fer- ried us all across the water on our way to dinner, it struck me that an iceberg could do wonders for promotion prospects. In the event the bankers encountered no worse hazards than Bill Gates, the supemerd of Microsoft, who promised them a walk-on part in his new electronic world, if they could keep up with it. James Burton was not so much a hazard as a warning. He runs Calpers, which provides pensions for the million people who work for the state of California, and, with $80 billion of assets, is America's biggest publicly financed pension fund. For a Californian, Mr Burton seems reassuringly normal, but his fund is unusu- al. Calpers is among big investors what Mount St Helens is among the high peaks behind Seattle: the one that blows off. Most such investors, in America as in Britain, prefer to keep quiet. Rather than vote with their shares they will vote with their feet. Rather than scrutinise the board they will scrutinise the check-list that certifies its actions, however gross or crass, as Cad- buarially correct. Calpers is, what they are not, an active owner — but for the most basic and prosaic of reasons: experience shows that it pays.
Live volcano
`WE ARE not crusaders,' Mr Burton told the bankers, 'nor do we consider ourselves to be gadflies.' It is just that Calpers wants the best returns for its beneficiaries, and would rather invest in companies where the directors feel that way about it too. Some directors, the world over, are more apt to look after themselves. Looking for them, Calpers last year asked the boards of America's 200 biggest companies to explain how they worked. A second letter which promised to publish their answers (or the lack of them) did wonders for their response rate. Calpers graded their answers, from A+ down to F, and published its gradings. This year Calpers is concentrat- ing its efforts on a 'failing fifty' list of compa- nies which have done badly, and within this has a list of nine where it is enforcing change. (No banks on it, says Mr Burton.) Calpers want to know, for instance, whether the com- panies on its list can get and keep the good people they need. These are questions that an owner might well ask, and Calpers finds that an active owner, like an active volcano, can command attention and achieve spectac- ular effects. It can turn dud investments into good things. 'We believe,' Mr Burton says, `that the presence of an active shareholder, who is monitoring management and is pre- pared to hold that management accountable for performance, does positively affect actual performance.' He has before-and-after fig- ures to show it. Now that his fund owns shares in 750 companies outside America, it can be expected to erupt in our own board- rooms, and I look forward to seeing Calpers on the share register of British Gas. Even better if he could set the lava flowing within our big investors, and let us see which are dormant and which are extinct.
Stepping on the gas
PROFIT FORECASTS are price-sensitive, so I must decline to name the British com- pany whose chairman has set it a new profit target. He is determined that it should make more money than Cedric Brown, the golden gasman. Now that would represent performance . Mr Burton should buy now while stocks last.
Sunny side down
HEALTH 'N' SAFETY bigotry pervades the land of the free. After smokism, eggism. Breakfast at the stately Four Seasons Hotel in Seattle comes with a printed warning on the menu: 'Eggs such as sunny-side up, soft boiled and soft poached are considered undercooked by the Health Department.' Perhaps the department is trying to justify its existence before Newt Gingrich saves money by disbanding it, or perhaps this eggist warning has been drafted by the hotel's lawyers, to stop me suing if my breakfast disagreed with me. Defying my fate, I ordered two properly poached eggs and got them. All right so far.
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