Return of the unacceptable face of capitalism?

Sir Richard Needham's resignation from the board of Lonrho brings back bad memories of the group's controversial past

When it comes to assets, a majority stake in a Mozambique hotel is all that links the sprawling, Africa-focussed Lonrho conglomerate which was built up by controversial businessman Tiny Rowland in the second half of the last century and the overhauled group today.

Yesterday, that slender asset link was joined by a corporate governance connection, as the former trade minister Sir Richard Needham quit the board of Lonrho following a row about pay and transparency.

In his resignation letter, Sir Richard consciously alluded to Lonrho's one-time reputation under Mr Rowland as being – in the words of then Prime Minister Edward Heath in 1973 – "the unacceptable face of capitalism".

"You will remember only too well that the allegations, years ago, that the company was dubbed an unacceptable face of capitalism, dogged its reputation. It would be a pity if history was to repeat itself," Sir Richard wrote.

In essence, the corporate governance complaints against Mr Rowland's old Lonrho and executive chairman David Lenigas' new Lonrho – a vastly slimmed down operation largely dedicated to agribusiness – are quite different.

As he built Lonhro into a giant in the 1960s, 70s and 80s, Mr Rowland was accused of cosying up to suspect African regimes and, in the case of Zimbabwe – then Rhodesia – of breaking sanctions. That accusation – which was never proved – prompted the outburst from Mr Heath. The sale to Colonel Gaddafi of a stake in some of Lonhro's hotels just three years after the Lockerbie bombing further tarnished his reputation.

By contrast, Sir Richard's concerns about the new Lohrho centre on the proposed hike in the salary of Mr Lenigas, from £500,000 to £750,000 – and the way he allegedly rushed it through.

Sir Richard, who served as minister for Northern Ireland under Baroness Thatcher and as trade minister under John Major, complained that he only found out about the Mr Lenigas' salary jump at a board meeting in April, where he was told by the Australian chairman that he needed to rubber-stamp it straight away because "the accounts are going to the printers in three hours".

Sir Richard reluctantly signed off the accounts after cutting Mr Lenigas' pay rise by £50,000 – leaving him with a total of £700,000 for the year.

His acquiescence was conditional upon him joining Lonrho's two-person remuneration committee, chaired by Frances Cook.

That request wasn't granted and Sir Richard resigned as soon as he heard.

"Is it a big deal? I would say so, yes," said Panmure Gordon's analyst Damian Mcneela.

But Mr Lenigas came out fighting at his company's annual shareholders meeting in London yesterday.

"I feel that what Sir Richard did was an attack on me and on Lonrho," he said. "He put a gun to my head and said unless he is appointed to the remuneration committee he would resign. We don't take ultimatums like that. We don't do it in Africa and we won't do it here."

Taking one more pop at Sir Richard, Mr Lenigas said: "You can't take the politician out of the politician."

Separately, Ms Cook said: "We would welcome a third member to the committee but this has to be done through the correct channels."

The appointment of a third remuneration committee member would go some way to smothering modern-day Lonrho's association with Mr Rowland. It will be interesting to see if it happens.

The below was added at 11am on May 31, 2012.

Lonrho did not respond to the allegations made by Sir Richard Needham in full when asked on 29 May, but lawyers for Lonrho told the Independent on 30 May that Sir Richard Needham approved the accounts in question on three separate occasions, on 26 March, the 2 April and finally on the 3 April.

They said that Mr Lenigas was not involved in the discussion about his pay and did not rush the proposal through because the accounts were going to the printers or tell Sir Richard to rubber stamp it, adding that Mr Lenigas had not personally spoken to Sir Richard in more than three weeks due to business commitments.

They added that Sir Richard's backing of the accounts was not conditional on him joining the board’s renumeration committee. They said Sir Richard asked Lonrho the day before the annual meeting to be appointed to the committee “by the end of the day”. The company was not looking for another member of the committee and refused to circumvent its own usual process for such appointments through its nominations committee, and Sir Richard resigned as a result.

The company also noted that Sir Richard, in his resignation letter, described Lonrho as a company of "enormous potential" and that Mr Lenigas' "role in getting to where it is now and where it will need to go, is of great significance".

Timeline: From Tiny Rowland to David Lenigas

1962

Although the company was incorporated in 1909 as the London and Rhodesian Mining and Land Company, it was not until Tiny Rowland was appointed to run the business in 1962 that it began to diversify into the huge conglomerate it was to become.

1973

Edward Heath, then prime minister, accused Tiny Rowland of being "the unacceptable face of capitalism". Mr Heath's comments were based on accusations that Mr Rowland had flouted sanctions against Zimbabwe – then Rhodesia – although these were never proved.

1983

Tiny Rowland branched into newspapers, adding The Observer to the stable of luxury hotels, distribution companies, car dealerships, textile mills and breweries. A later attempt to add the Harrods department store to that stable failed.

1993 (part one)

Tiny Rowland and Mohamed Al-Fayed finally ended their bitter feud, 18 years after Mr Al-Fayed trumped Mr Rowland in their battle to buy Harrods – unfairly in Tiny's view. Not that Mr Al-Fayed was a great fan of Tiny – for years he hung a stuffed shark in Harrods' food hall, with the word Tiny engraved on its belly.

1993 (part two)

That same year, Mr Rowland was ousted as head of the company following a bitter 18-month battle for control with the German property tycoon Dieter Bock. The group was largely broken up following his departure. Five years later, Mr Rowland dies, aged 80. A year later, in 1999, the mining business is spun out as Lonmin.

Yesterday

Seven years after being brought in to revive the Lonrho business, executive chairman David Lenigas is indirectly linked to Mr Rowland, as Sir Richard Needham quits the board over Mr Lenigas' pay.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones