ICAP needs a new captain

By THIS IS MONEY
Updated:

 

Michael Spencer has long been regarded as one of the City's more engaging and entrepreneurial characters.

But down the years he has also earned a reputation for sailing too close to the wind.

A year ago he stepped down as chairman of brokers Numis after using his share stake in the company as collateral for loans without telling anyone.

In 2004 he bought shares in Marks & Spencer after lunching with Sir Stuart Rose, shortly before Sir Philip Green launched a bid for the retailer.

As the current Treasurer of the Conservative Party one might have expected Spencer to show great restraint and prudence in his personal dealings ahead of the general election.

But there was no mistaking the dissonance in the Square Mile after his main quoted company, the interdealer broker ICAP, issued a profits warning less than a month after Spencer had trimmed his family holdings and collected a £45m cheque.

Previously, ICAP had been forecasting profits for the current financial year of £311-£347m.

This has been lowered to £295-£315m sending the shares skidding 18%.

ICAP says that neither Spencer nor the company was aware that a downgrade would be necessary until February 4.

It also points out that Spencer received clearance for his share sale from the company chairman Charles Gregson - a long term employee of ICAP and its predecessor companies.

Maybe. But ICAP's handling of the January family share sale did not earn Spencer many friends in the Square Mile.

When his brokers HSBC placed the shares they reportedly failed to provide guidance to the market that the shares were being sold by the chief executive - quite often a big sell signal.

In the three weeks since Spencer collected his handsome cheque the shares have lost 30% of the value.

If one is kind, this could be attributed to the impact of the new ' Volcker Rule' in the US which potentially could cut proprietary trading by the banks. That, however, would only account for a tiny amount of lost income.

The share-price tumble is as much a result of a loss of confidence in the integrity of the chief executive as the profits warning.

If there were a Fabio Capello watching over the affairs of ICAP, or for that matter the Tory Party, Spencer might be out on his ear.

Will the long-term ICAP insider Gregson or David Cameron show the same decisiveness?

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Peace pact

After years of criticism for its feebleness in dealing with financial crime, the Serious Fraud Office can finally claim a real victory.

Bringing Britain's largest defence contractor BAE to justice, after years of allegations and investigations of bribery in the developing world, has proved immensely difficult.

The company has been adamant it did nothing wrong and a pusillanimous British government chose to kowtow to Saudi Arabia rather than bring a prosecution in the UK which might damage the valuable Al Yamamah defence contract.

This left the SFO director Richard Alderman in a difficult position as he was forbidden from bringing a prosecution over Saudi dealings in the UK - while the Americans were still pursuing the company.

Sensibly, he has conducted behind the scenes negotiations seeking global settlement.

This required BAE to acknowledge wrongdoing in Tanzania - to which it sold an expensive and superfluous air defence system - in exchange for admitting some culpability to the US Justice Department over the Saudi contract.

Alderman had hoped to deliver earlier in the autumn of 2009. But a careful game of poker by BAE chief executive Ian King kept the SFO at bay and may well have saved

BAE a great deal of money.

In the end the fines of £286m to be paid to the Americans and the SFO are far smaller than the £500m to £1bn which some analysts had been expecting. No wonder the shares staged 6 percentage-point turnaround.

BAE may still be an arms manufacturer. But it now has a chance to deliver on its ethical promises.

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Chocoholics delight

On Thursday night a splendid carrier bag arrived from the Chicago cheesemaker Kraft containing Cadbury confectionery and Kraft products (Terry's chocolate orange and Toblerone) nestling side by side.

It was then that one knew that the great battle for Britain's iconic chocolatier was finally over.

As the fight went on through the autumn and winter months the delicious deliveries to the City desk became ever more frequent with both sides seeking to prove they produce the most desirable products.

If the fight had gone on any longer I might well have considered alterations to my waste-line of trousers. Statins may also have been necessary.

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