Building societies in a storm

By RICHARD DYSON
Updated: 05:48 EST, 29 April 2007

Over the past five days, more than 20 building societies have held their annual general meetings. Designed to give members a say on key issues, the meetings are usually tepid affairs remembered for the quality of biscuits and brews rather than drama. But some of this year's agms had some surprises in store.

Eighty members of Darlington Building Society and its board were stunned when, at the agm on Thursday, a member stood up and announced that the 2007 agm voting results were already published on the society's website - and had been there for more than a month.

The bombshell came late in the meeting at the society's headquarters in the town.

Society chairman William Baker Baker had already fended off prickly questions on executive pay and was about to conduct the voting of those present when he was interrupted by local member David Bodycombe, who brandished papers headed 'annual general meeting results 2007'.

There was shocked silence before Baker Baker asked for the documents to be brought forward.

An excited whispering broke out in the room as members speculated whether the vote had been rigged. One murmured: 'Could it be like the GMTV scam where the results appear to be decided before everyone has had a chance to vote?'

Baker Baker and society secretary David Metcalfe insisted the agm should proceed. But Bodycombe, himself a chartered secretary, objected, demanding an extraordinary general meeting. Dr Ian Ross, a loyal member but long-time critic of chief executive Peter Rowley's pay, agreed. They were overruled and the vote went ahead. More than 10,000 Darlington members voted, either by post or in person.

After the meeting, Metcalfe took Bodycombe to a computer where the figures he obtained before the agm - while bearing no relation to reality - were indeed on the society's website.

Darlington is investigating the matter, but insists its agm results are valid. Hacking of its website has not been ruled out.

The Allendale Centre in Wimborne, Dorset, is usually the venue for sedate meetings of the Rotary Club or the local floral design association. But last Tuesday it was home to a stormy meeting of Teachers Building Society. Those who had attended previous agms said it was the angriest in the society's history. The mutual was set up in 1966 to help teachers buy homes.

The cause of the anger was concern over mailings sent to the 17,500 members, informing them of the agm.

The issue was raised by 49-year-old solicitor Paul Lowe, former secretary to the society, who was perturbed at the fact that a friend had not received a mailing about the agm 22 days ahead of the meeting - as required by the society's rules.

It transpired that the society had used an old mailing list, which meant newer members had been excluded from the agm mailing while many ex-members had not been. Though the 1,000 members affected were sent a subsequent letter, Lowe questioned whether any vote could be deemed valid.

Chairman Alan Frost took a show of hands on whether to continue. A majority agreed it should carry on, though Lowe says most of the people there 'were employees, directors or ex-directors', so 'of course, they voted to continue'.

Lowe, from Blandford Forum, Dorset, was also denied the right to inspect directors' contracts of employment, even though Teachers' report and accounts stated they would be available at the agm.

James Bawa, Teachers' chief executive, told Financial Mail: 'We regret the service contracts were not available.' He said Lowe would be allowed to inspect the contracts at head office.

The agm at Skipton's head office last Tuesday was a tepid affair compared with stormy events elsewhere.

Maybe the relaxing sounds of local chamber orchestra Camerata helped soothe the 70 or so members who mingled with executives over sandwiches and a glass of wine.

With Skipton posting solid 2006 results - profits up 62% - members were more concerned about its ability to remain independent.

John Dawson, a 53-year-old baker from Tarleton, Lancashire, wanted to know whether the board planned a merger. 'I would not be surprised if, in five years, Skipton, Yorkshire and Leeds building societies are one entity. It seems inevitable as competition grows,' he said.

However, chief executive John Goodfellow confirmed the society had no plans to do a deal with a rival.

Other questions centred on the society's encouragement of members to vote at the agm. Jim Robinson, 83, a retired engineer from Silsden, West Yorkshire, said he would like to see a charitable donation made for every vote cast.

He said: 'It would be a nice gesture and I am sure it would encourage more members to get involved and vote.'

But Goodfellow said: 'We had 19% of the members vote this time around. 'We are doing pretty well without charitable donations to bribe people to vote.'

Catholic Building Society, one of the smallest mutuals, was founded in 1960 by Vincent Byrne, a philanthropic veteran of the Second World War. It claims to offer a friendly welcome to the London public. Not so on Tuesday when it refused Financial Mail entry to its annual meeting in its one and only branch in Westminster.

A spokesman said: 'The board has unanimously decided that Financial Mail may not attend.' With that, the tiny society became the first to exclude our reporters from the key event of its calendar.

Requests to receive details of the agm turnout proved fruitless. Chief executive Jim Gilbourne left the society immediately after the agm for another job in the City.