Royal Mail's 'nodding dog' board has put our postal service at risk, says ALEX BRUMMER
Labour’s first major corporate challenge, if and when it takes office, is what to do about the Royal Mail.
Other industrial hot potatoes, such as the future of Tata-owned Port Talbot and Thames Water, also lie in wait.
Specifically, Labour’s manifesto commits a future administration to thorough scrutiny of the Royal Mail deal under the National Security and Investment Act.
The law gives government all the powers it needs to stop the agreed £3.6billion takeover of Royal Mail’s parent, International Distribution Services (IDS), by Czech billionaire Daniel Kretinisky dead in its tracks.
If a sphinx-like outsider were seeking to swallow the US postal service, the deal wouldn’t stand a chance. The US genuinely believes in ‘securonomics’.
Threat: Labour’s manifesto commits a future administration to thorough scrutiny of the Royal Mail's £3.6bn takeover by Czech billionaire Daniel Kretinisky
There is talk of giving the postal union, the CWU, a stake in the new setup. How quickly it is forgotten that when the Royal Mail was privatised, a chunk of stock was given to the workforce. It is reckoned that at least 5pc of the shares are still in the their hands.
The weakest link in the sell-out is the IDS board. Chairman Keith Williams, having had a torrid time with the unions, has thrown his toys out of the pram and negotiated an unenforceable deal with the predators.
The senior non-executive director Sarah Hogg has been silent. The rest of the directors have behaved like nodding dogs.
IDS’s chairman and German chief executive Martin Seidenberg should have been replaced by a new slate of bosses willing to stand up for a British institution in need of revival.
Sometimes one wonders if directors are fully cognisant of obligations under the 2006 Companies Act – passed by a Labour government.
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This requires directors to look at the long-term consequences of their decisions.
They also need to make sure interests of employees, suppliers and customers are preserved. And to make sure any transactions are in the broader interests of consumers.
The surrender faction on the IDS board has failed to come up with watertight guarantees on any of this.
It is almost impossible to do so with a financially driven overseas buyer. Once the company is sold, and command and control is diverted overseas, enforcement mechanisms become ineffectual.
Kretinsky’s 27.5 per cent stake entitles him to a say in what happens. But he cannot be allowed to bring out the heavy roller and flatten a postal service which is vital to every person in the country and many overseas.
Dollar signs
The approval of Elon Musk’s $56billion (£44billion) Tesla pay deal by investors is an outlier unlikely to be repeated.
Executive pay in the US is a far less divisive issue than it is in Britain. Attitudes are fundamentally different.
Americans are much more tolerant of high pay on the grounds that one day they too might find themselves in the boardroom and become richer.
So far this year, chief executive pay among the top S&P companies is up by 12 per cent. Contrast that with colleagues lower down the ladder who have so far seen a 4.1 per cent increase.
In the UK, the pay of top bosses, such as Chris O’Shea at Centrica and Tesco’s Ken Murphy, grabs national headlines. Both companies have big customer bases and workforces, so reward packages are irksome.
In the US, a host of firms – including bombed-out Peloton and LendingTree – are offering chief executives enormous grants of shares in the hope they can turn around the company fortunes.
No wonder British executives cast an envious glance across the Atlantic and stand ready to catch the next plane to New York or Chicago.
Big battalion shareholders BlackRock and Vanguard generally are supportive of big US pay. Nice work if you can get it.
Payback time
The long shadow of David Cameron’s former business associate Lex Greensill is still affecting Swiss banking.
UBS, the winner from the downfall of Credit Suisse, in which the Aussie played a bit part is making good 90pc of the losses incurred by investment funds that backed Greensill. The cost is a cool £710million.
It would be nice to think that investment platform Hargreaves Lansdown would show similar sensitivity to the needs of clients encouraged to invest in collapsed Neil Woodford funds.
