Tomkins chief under microscope

By NICK GOODWAY FOR MAILONLINE
Updated:

 

An investigation into the financial affairs of Greg Hutchings, chief executive of the tarnished conglomerate Tomkins, will be completed 'as soon as possible' new chairman David Newlands said.

Newlands confirmed that the company had 'launched a full review of both historic and current practices' following 'recent speculation and allegations relating to certain board practices at Tomkins'. Tomkins shares fell a further 4 1/2p to 164 1/2p, leaving them only pence above their five-year low of 156 1/2p.

The inquiry began on Friday after Newlands learned that Hutchings' wife, Caroline, and the family's housekeeper had appeared on the company's payroll in the past. That arrangement was cancelled this year. The investigation is being conducted by the company's auditors, Arthur Andersen.

Hutchings, who was paid £1.45m last year, has been looking increasingly beleaguered after leading institutional shareholders forced him to split the roles of chairman and chief executive earlier this year. Now they want to know whether he told the truth at last week's annual meeting when he denied that the company owned corporate jets.

Investors have long been concerned about standards of corporate governance at Tomkins. One influential City figure said: 'We have had reservations about the style of management for years. Until David Newlands came along it appeared to be a board that was in the chief executive's pocket with an ineffectual group of non-executives.'

Any question of a pay-off if Hutchings is forced to step down would be 'grotesque,' he said, adding: 'He has been over-paid for years. His overpayment has been matched only by the company's underperformance.'

The stock market value of Tomkins has shrunk from a peak of £4.4bn in 1998 to just £1.5bn. From a mighty all-acquisitive buns-to-guns conglomerate, Tomkins has been forced into a series of disposals culminating in the £1.14bn sale of Ranks Hovis McDougall in July.

The Arthur Andersen investigation is also looking into the use by Hutchings of four corporate jets and two luxury London apartments. One of these is in Peninsula Heights, the block where Lord Archer, for whom Hutchings acted as treasurer during his ill-fated London mayoral campaign, has a penthouse.

Hutchings founded Tomkins in the early 1980s at the height of conglomerate mania, having learned his trade as an executive at Hanson Trust. Newlands, former finance director of GEC, took over as chairman in the summer with the express task of repairing relationships with the City. Sir Brian Pitman, former Lloyds TSB chief, joined as a non-executive director at the same time.

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