The business heroes and villains of 2010
Who were the good guys and who were the bad guys in business and economics in 2010? James Moore is your guide to The Independent's halls of fame, and shame
Friday 24 December 2010
It's hardly been an easy year in the City, so heroes have been thin on the ground. But
The Independent's business staff have managed to find eight who we believe have achievements in 2010 that are worth celebrating.
The villains were, unsurprisingly, rather easier to find. And a (dis)honourable mention should be made here for virtually every senior banking executive in the square mile. We could have probably filled the section with them, twice over. But there'll be plenty of time for banker-bashing in the new year, given that the bonus season will be well under way next month and the small-business lobby is still furious about the lack of credit being made available to small and medium-sized enterprises.
But before we present our individual awards, we also have two group "team" awards to bestow. The team hero-of-the-year gong goes to Pirc, the corporate governance consultancy. Its work doesn't always get the credit it deserves, not least because many people greet the words "corporate governance" with a big yawn. But it remains a fact that good, well-run companies usually have good governance in place. And you only need to look at the financial crisis to see the effect of failures in this sphere. Pirc's work highlighting the bad guys and advising shareholders on when to kick up a fuss deserves recognition.
As for the "team" villains, well there are plenty. We have decided to bestow a joint award this year on the boards of Prudential and HSBC. The former is singled out for blowing more than £300m of shareholders' money on the disastrously mishandled bid for the Asian insurer AIA. We thought about including Tidjane Thiam, the chief executive, or Harvey McGrath, the chairman, in the individual awards but the entire board collectively endorsed the deal at a rowdy AGM this year and it would therefore seem churlish to leave the rest of them out.
As for HSBC, if the unprecedented boardroom bust-up over Stephen Green's successor as chairman wasn't enough, then how about all those veiled threats to quit Britain if the Government doesn't learn to love bankers? Would we miss them if they did leave? Now there's a question.
Steve Jobs: Hero
Chief executive, Apple
A year that threatened to take a bite out of Apple's unerring rise has ended stronger than ever for the technology giant, with more promise for 2011. The debacle over the iPhone 4's reception has been largely swept aside, and 2010 will be remembered as the year the company popularised the tablet. The questions over what such a device would be used for have been consigned to history, and this holiday season has already been labelled an "iPad Christmas". The iPad's success has prompted competitors to stampede into the market with devices including Samsung's Galaxy Tab and Research in Motion's forthcoming BlackBerry Tablet. Even clothing retailer Next is selling one, but none have come close to knocking the iPad off its perch. Apple's share price started the year at $210.73 and peaked this week at $322.21, showing Mr Jobs still has the magic touch. Apple's fiercely loyal fan boys and girls are already anticipating the iPhone 5 for next year, as well as the second incarnation of the iPad.
Justin King: Hero
Chief executive, Sainsbury's
It has been another impressive year for Justin King, who has hardly put a foot wrong since he took the helm at Sainsbury's, the UK's third-biggest grocer, when it was on its knees in March 2004. When the economic storms clouds gathered in 2008, Sainsbury's was singled out by industry experts as being vulnerable as consumers traded down. In fact the opposite has been true, as existing customers have stayed loyal to the brand and new customers have arrived, helping Sainsbury's grow its underlying pre-tax profits by 8.1 per cent to £332m for the 28 weeks to 2 October. While Sainsbury's still has the lowest operating margin of the big four supermarkets, partly the result of it having fewer freehold stores, the grocer's sales growth was comfortably ahead of Tesco, Morrisons and Asda, according to the latest industry data. Speculation is already mounting about Mr King's next role, but few expect him to go move anywhere until after the London 2012 Paralympic Games, which Sainsbury's is sponsoring.
Adam Posen: Hero
Bank of England MPC member
For telling Mervyn King, to his face, in public and in front of MPs on the Treasury Select Committee, that he had strayed over the line and gotten too political. That was brave, especially for a mere external member of the Monetary Policy Committee. The Governor's public support for the Government's deficit reduction plan was honest and had been requested by ministers; but it was still deeply political. For in endorsing a governing party's plan you necessarily imply judgement about the opposition's alternative. A government's borrowing is its affair, a matter of accountability to parliament and people, nowadays tempered by judgements from the Office for Budgetary Responsibility. Mad as it may be, it is not a matter for the central bank. The Governor's role, like the Bagehotian description of the monarch's, should be confined to the right to be consulted; the right to advise; the right to warn. Mr Posen, rightly, advised and warned Mr King.
Christopher Dodd and Barney Frank: Heroes
US Senator and US Representative
The Senator and the Representative, the wise man and the wit, the pair who steered a Wall Street reform bill through their respective houses of Congress and turned at least some of the lessons of the financial crisis into new law. No one, least of all these two, would argue that the resulting Dodd-Frank Act, signed by President Barack Obama in July, is perfect, but it brings all systemically important firms under the purview of the Federal Reserve for the first time, not just banks; it establishes a "third way" for resolving the collapse of these big firms, as an alternative to bailouts or bankruptcy; it establishes a consumer protection regulator that might help stamp on unscrupulous lending; and it forces those "financial weapons of mass destruction", the derivatives at the heart of the crisis, to be traded on regulated exchanges for the first time.
Willie Walsh: Hero
Chief executive, British Airways
Willie Walsh has had a good year. Arguably the gods have not been on his side, what with volcanic ash in April and unmanageable snowfall in December. But Mr Walsh has won victories in his campaign to drag Britain's once-public flagcarrier into the modern age. First, merger negotiations with Spain's Iberia finally came together. Then BA's not-quite-merger with American Airlines was cleared by regulators on both sides of the Atlantic, notwithstanding the opposition of rival Sir Richard Branson. Even Mr Walsh's stand-off with the trade unions, facing down repeated strikes over terms and conditions for cabin staff, can be considered a success. The spat is not over – Unite is re-balloting its 10,000 BA members and warning the row is "deepening". But in reality the terms and conditions are already in force, BA kept most of its planes flying during the strikes, and the public appetite is waning for industrial action by people lucky enough to have jobs.
Marius Kloppers: Hero
Chief executive, BHP Billiton
Marius Kloppers failed to take over Potash Corp and saw regulators stymie his plans for an iron ore joint venture with Rio Tinto. And yet BHP's shares remain among the most loved by mining analysts. The reason, simply, is that he seems to have been careful not to let his zeal for big-ticket deals get in the way of keeping his business on an even keel. BHP is awash with cash, with market talk of higher dividends and share buy backs. So far at least, Mr Kloppers has shown how to strike a balance between acquisitions and running a tight ship.
Margaret Cole: Hero
FSA managing director for enforcement and financial crime
Insider dealing is a notoriously difficult crime to prove and convictions have been thin on the ground. However, under Margaret Cole, the City watchdog has got busy with a string of charges levelled against alleged white collar crooks. There have also been a number of dawn raids, and not just against the small fry who gets a tip-off about a takeover from the director of an Aim-listed company he happens to meet down the pub. No, we've seen the heavy mob descending on the likes of blue-chip investment banks and hedge funds. The tip of the iceberg? Perhaps, but mention "Margaret Cole" around the Square Mile and people might start looking over their shoulders for a change. Nervously. So we make her a rare hero from the regulatory sphere, on the condition that her department achieves some convictions in the coming year.
James Murdoch: Villain
Chairman & chief executive, News Corporation in Europe and Asia
It has been quite a week for the Murdoch clan. After months of calm, the saga of News Corporation's long awaited move on BSkyB burst into life this week. The European Commission cleared the takeover – which in its present form values Sky at £12bn – on competition grounds this Tuesday. And then the whirlwind, as Vince Cable handed the family a whopping great Christmas present. His comments about "waging war" on Rupert Murdoch saw him taken off the case, with the decidedly more friendly culture secretary Jeremy Hunt in charge instead. This threatens to obscure the necessary debate over the impact of such a merger on the UK. Rival media groups wrote to the government, fearing that joining Sky's pay TV network of 10 million homes with The Sun, The News of the World and The Times would lessen the range of competing voices in the UK. Other dissenters included Claire Enders, the respected media industry analyst, who wrote a 20 page report warning that plurality would fall to an "unacceptably low level". Even God is not on the Murdochs' side, as the Church waded into the row last month calling for the deal to be blocked.
Andy Hornby: Villain
Chief executive, Alliance Boots
There are plenty of reasons why Alliance Boots, the pharmaceuticals giant and owner of the high street chemist Boots, may ultimately prove to have made a wise choice in hiring Andy Hornby, the former disgraced banker, as its group chief executive last year. After all but running HBOS into the ground, Mr Hornby has a point to prove, is still young at 43 and also has previous experience at Asda to count on. That said, we question his political nous for accepting nearly £2.1m – including an £805,000 bonus – for just nine months work at Alliance Boots in the year to 31 March, while taxpayers were still picking up the tab for his disastrous reign at the bank. In his defence, Alliance Boots had a strong year, posting trading profit up by 12.7 per cent to £1.07bn, but how much of that is down to Mr Hornby's nine-month contribution is open to debate.
Tony Hayward: Villain
Former chief executive, BP
After the Deepwater Horizon explosion that killed 11 people and unleashed the largest oil spill in US history, BP chief executive Tony Hayward became public enemy #1 in his company's largest market. "Sometimes you step off the pavement and get hit by a bus," a stunned Mr Hayward said when he resigned three months later. But he hadn't helped himself. The man who had promised to focus "laser-like" on safety, handled the public relations spectacularly badly. The gaffes started within weeks of the tragedy, with Mr Hayward's suggestion that the environmental impact of the spill was likely to be "very, very modest". But what really enraged the American public was the quip that he "would like his life back", an error compounded by an "evasive" appearance before the US Congress Energy Committee and a day off to go yacht-racing with his son. By the time he was replaced by US-born colleague Bob Dudley, Mr Hayward had been branded "the most hated and clueless man in America."
Hu Jintao: Villain
General Secretary, Chinese Communist Party
The Chinese get bored and resentful at the West telling them what is in their best interests, but what are we to do? As time offers some perspective, we can see ever more clearly that the biggest single cause of the recession was the "global imbalances". Of these, the China-US relationship is the most lopsided. Part of the blame rests with America's lazy desire to live beyond its means, part with China's unrealistically low exchange rate and export-led boom. Now the US has declared a currency war, politely termed "quantitative easing"; creating billions of dollars that the Chinese have to buy up, if they want to keep their currency low. It is a war China cannot win, as America can print money until it capitulates, by which point the world will face another round of financial chaos. Does Mr Hu really want that?
Mark Zuckerberg: Villain
Founder of Facebook
He was cast as villain in the movie of his (young) life. In The Social Network, an Oscar contender, Mark Zuckerberg nicks the idea for his stormingly successful website from Harvard University contemporaries, and screws over his friend and co-founder to make it big in Silicon Valley. It didn't seem like coincidence that the real Mr Zuckerberg promised to donate $100m to the New Jersey schools system in a highly-publicised piece of philanthropy on the eve of the movie's opening. Meanwhile, the 26-year-old entrepreneur has struggled to allay the privacy concerns that increasingly surround Facebook, which has been sharing more of its users' information with the rest of the net – unless specifically asked not to. The young billionaire's ethics have been put under a harsher spotlight than ever this year.
Lord Adair Turner: Villain
One thing you can't accuse Lord Turner of is a lack of energy. He seems to pop up every five minutes with a bold initiative here, a strategic reform there. However, if he ever had a halo it has been well and truly binned over the report put together by the regulator into the near collapse of Royal Bank of Scotland, which he tried to keep secret. Amid mounting pressure from the likes of the Chancellor, George Osborne, and the Business Secretary, Vince Cable, he first said there was no report. Then he said he couldn't publish anything without the permission of RBS itself (with the implication that it wouldn't be forthcoming). Strangely RBS's board, none of whom worked for the bank during the financial crisis, said they'd be only too happy for the report to be aired. But that's not all. Further ammunition for the prosecution comes from the Mortgage Market Review, which threatens to deny home ownership to a generation. The Council of Mortgage Lenders says under its rules half of all mortgages issued over the past five years would have been banned. Off to the back of the class with you, Lord Turner.
Anil Agarwal: Villain
Executive chairman, Vedanta Resources
Anil Agarwal, the executive chairman of the London listed Indian miner Vedanta Resources, is one FTSE 100 boss who, we would wager, is probably glad to see the back of this year. His company's plans to mine bauxite in India's eastern Orissa state induced the ire of environmental and human rights groups, with protesters descending on its annual meeting. In the end, the plans failed to win government backing, hitting Vedanta's share price. But not before the issues became some of a cause célèbre, with activists persuading shareholders from the Church of England to the Norwegian state pension fund to get rid of their stakes in the company.
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