The Chairman's Curse hangs over Sir lain as BT runs short of cash
CHRISTOPHER FILDES
How mortifying it is for a chairman when the shares in his company rally on reports that he is heading for the old heaveho. This has happened to Sir fain Valiance, the chairman of British Telecom, and it is the only boost that the shares have had for some time. In just over a year they have lost almost two-thirds of their value. The market has now realised that there may soon be more telephones than ears but, even so, BT's is quite a tumble for a company which inherited its customer base, led the field in the privatisation stakes, and ought to have been a world leader. From a standing start Vodafone came through to overtake it, attempts at strategic alliances do not seem to have delivered strategic results, and the concert party with AT&T of America sounds scratchy. BT's most pressing trouble, though, is the oldest one of all in business: cash. A year ago, when Gordon Brown started auctioning wireless licences, BT was bidding up. Now it is staring at debts of BO billion and is looking for things to sell off. Not so easy, as France Telecom found when it sold Orange, which now looks more like a lemon. The most natural course for BT would be to ask its shareholders for more money, but they would want to see a strategy, and, I imagine, human sacrifice, too. Sir fain joined the Post Office before BT was split off, came with the package at privatisation and has been chairman since 1987 — long enough, even if he had not sealed his own fate by becoming president of the Confederation of British Industry, an appointment long established as the Chairman's Curse.
Watch it or not
'DOWNING Street, SW1. The two homes without a TV licence know who they are. So do we.' These sinister posters have broken out like a rash. The street-names vary, and the detector vans may not have reached Whitehall yet, but the small print adds: 'Action being taken in this area to ensure addresses are correctly licensed. Information correct at time of going to press.' Who says so? An agency of the Post Office called SSL. The business of collection has been subcontracted to it by the British Broadcasting Corporation, which is responsible by statute for the administration of the licence. These efforts serve to bring in the £2 billion a year (almost free of tax) by which the BBC lives. Like it or not, watch it or not, its agents are watching you, so pay up or end up in court. Hector would never hector us like this, for the Inland Revenue has more sense and better manners. Soon enough the BBC's charter comes up for review, and its chairman, Sir Christopher Bland, will have his work cut out to defend its private income. He should confine Big Brother to the screen.
Sweet song, sour ending
PIPING up an old sweet song, here comes the Nationwide Building Society: 'What's the point of making a fat profit? We'd only give it back to you.' The Nationwide would rather spend its money undercutting other mortgage lenders, who have shareholders' mouths to feed and dividends to pay. Who used to sing this song? That's right: the Equitable. The joys of mutuality and the economies of doing without shareholders were the theme of its advertising, until the members found out that they had to provide the capital and share the losses. In Vanni Treves they have at last got a credible chairman, which is something.
A bone to pick
IT must be fun to introduce a Private Member's Bill to amend the Parliament Act 1911. Two years earlier the House of Lords had been persuaded to reject the Budget and damn the consequences, and this Act was one of them. It began by laying down that the Lords would never again get their bands on a Bill for raising money. In those happy days, governments did not need to raise much money (battleships were the biggest expense) and the business of raising it was relatively simple. We now have a Chancellor who spends a billion pounds a day and whose genius is for complication. Year after year his Finance Bills get longer and longer. The Treasury's struggling draughtsmen put together a great stack of paper, packed with technicalities, and invite the House of Commons to pick the bones out of it. Not a chance. We have a two-tier Parliament in which the House of Lords is the revising chamber, but the year's most complex piece of legislation never gets revised there. Lord Saatchi believes that it should be, and this is the point of his amendment to the Parliament Act. He does not challenge the Commons' supremacy over the executive when it comes to raising money, or its right to determine who pays tax and at what rate. He just thinks that it could be done better and more simply if their Lordships were allowed to help. His own Bill is a model. It runs to a paragraph and will not need revision.
Take cover
THERE is a market solution for everything, even for the risks of standing up to the financial regulators. Bernard Fleurose has taken them on in the High Court this week, though the accumulating costs may ruin him. What a pity he wasn't insured. The Futures and Options Association has arranged a policy, through Jardine Lloyd Thomson, which can be used to cover the staff of the FDA's member firms for the legal costs of defending themselves against the regulators' rulings. A firm with two dozen people can buy cover for just under 1.4,000 a year. As a staff benefit for City workers, this is novel but needful. The catch is that the cover runs out two years after an individual loses his job, and it is four years since Mr Fleurose lost his. Unlike him, the regulators can afford to play for time.
The Dodger's Opera
THE presidential pardon for Marc Rich, the financier and tax-dodger, has got up the noses of investment bankers whose attitudes to money tend to be robust. Can the Clintons' chum, I wonder, be descended from the Rich family of impresarios? In 1728 John Rich put on The Bear's Opera, by John Gay, with its themes of crime, prison and pardon. It was the smash hit of the eighteenth century and its success was said to have made Rich gay and Gay rich. This, too, would no doubt have been within Bill Clinton's powers.
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