The Interview: Turnaround specialist who still gets a buzz

Richard Lapthorne, Cable & Wireless chairman
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The Independent Online

A service station on the M42 doesn't sound the most inspiring place but that is where Richard Lapthorne, the chairman of Cable & Wireless (C&W), had one of the most memorable and emotional moments of his business life.

A service station on the M42 doesn't sound the most inspiring place but that is where Richard Lapthorne, the chairman of Cable & Wireless (C&W), had one of the most memorable and emotional moments of his business life.

It was there, with his wife, that a crucial call about tax came through on his mobile phone.

It's rare for a telephone call involving the Inland Revenue to inspire joy and excitement but this one was different.

It meant C&W had settled a £1.5bn dispute with the tax man and that the troubled telecoms business really could be saved.

"Of course that was exiting, the buzz, the emotion I felt. My wife said 'look at you'. I was very emotional about it. I haven't felt that in business for years."

It is now exactly two years since he became chairman of C&W, the famous old telecoms company that was teetering on the brink. He was brought in to try to save the company, turn it round and put it back on a growth trajectory.

The fact that C&W and Mr Lapthorne are still together is evidence that at least part of that plan has been achieved. But if it wasn't for that moment of joy on the M42 he wouldn't be sitting in C&W's London headquarters reflecting on two extraordinary years.

"The tax deal meant we closed tax accounts for 10 years during which time the company had completed 100 corporate transactions in the UK alone," says Mr Lapthorne.

C&W had, like many other telecoms companies, been on a spending binge both here and in the US which had brought a famous name to its knees. Since then Mr Lapthorne has pulled the company out of the US, seen off an unwelcome takeover approach and restructured its UK business, shedding jobs and cutting costs.

"There was quite a lot of chatter when I started this job in the newspapers and among analysts about maybe it was a job that couldn't be done. Maybe you can't save C&W, that was in the newspapers."

This was at the same time as he was trying to appoint a team of non-executive directors to the C&W board. But Mr Lapthorne has never been a fan of sticking slavishly to orthodox rules on corporate governance, especially in a situation as grave as C&W. "I went and got some really good friends whom I rated and they trusted my judgement. I trusted the judgement of Rob Rowley [C&W's executive deputy chairman] as to what the issues were as to my due diligence. So it was friends, who knew friends, who knew friends and we were relying on our ability and not on some check list. The result was we've ended up with a board that is formidable and actually they are perfect from an independence point of view."

Last week the City gave a general thumbs up to C&W's latest trading update. So how safe is C&W now?

"C&W is now secure, oh yes. The financial risk isn't there. But we don't kid ourselves, however, that everything is suddenly done."

Anyway, having got this far with C&W, Mr Lapthorne is about to start his latest job to add to his roster which includes being the Queen's trustee at Kew Gardens. Monday, meanwhile, will see him begin his first full week as the new chairman of New Look, the private-equity backed fashion chain.

After years of slog in the public arena, has the promise of a big cheque away from the prying eyes of institutional shareholders and an inquisitive media finally got the better of him?

"You do a big public company because first of all it's not a bad thing to do - give a bit back and all that stuff. But also frankly it provides you with great networks. Everyone will pick up the phone to take your calls. You get access to professional advisers and you can leverage those into your other companies. It makes sense and it gives you logistical support that is very good for your quality of life.

"But you don't want to spend all your time doing that. You get your fun out of one but you don't want to do a lot of them. But if you do private equity it gives you a different form of life, bearing in mind I regard myself as reasonably fluent financially.

"It's all about business strategy mixed up with financial strategy, mixed up with exit strategies. I've done more than 100 merger and acquisition deals in my career. I've done a bit of balance sheet management and a bit of operational supervision so I find it an environment I'm very comfortable with. And if I do earn some money then at least my grandchildren and children don't have to read about it in the newspapers every five minutes."

Mr Lapthorne organises his life so he works 120 days a year and makes sure there is plenty of time to indulge his passion for gardening and his love of France where he has a house.

As an accountant by training and a former finance director at British Aerospace and Courtaulds, he has never held a job as a chief executive; unlike most other chairmen of large public companies. This sets him apart and has led him to adopt a very specific modus operandi when it comes to work.

"In general I work in batch mode. I have my discussions with the company I'm chairing, I don't go beyond the chief executive except where there are specific reasons like here at C&W with the balance sheet. So it's very simple really. I hold people accountable to me. I have my regular meetings and at the end of my three-hour meetings they're knackered and so am I."

He clearly relishes the role at the top of a company's corporate governance pyramid. He speaks with genuine glee about the massive bonus he was able to give his director of tax at C&W for getting the company through the intense negotiations with the Inland Revenue. And if he hadn't been a chairman who could call the shots he wouldn't have been able to pull off one of his biggest coups. Without telling another soul what he was doing, he secured the services of Lord Robertson of Port Ellen, the former general secretary of Nato, whom he persuaded to join the C&W board as deputy chairman having written the job spec himself and handed it over to the former politician over lunch.

Mr Lapthorne is well aware that C&W still needs the weighty experience of the likes of Lord Robertson to help keep the company steady and heading for some kind of normality. But what about the future for himself?

"All the headhunters know I'm not going to do another public company. I'm happy to do a plc where I bring a private company to the stock market, that's fine, that's part of the deal. But I'm not going to do another pure plc. I've done them now and frankly three turnarounds in a row - Courtaulds was a turnaround, British Aerospace was a turnaround, this is a turnaround - you ask me if I've been lucky, well I don't want to risk a fourth because statistically it's starting to stack up."

Gardener's blooming career

Position: Chairman, Cable & Wireless.

Age: 62.

Education: Calday Grange Grammar School, West Kirby, Wirral.

Liverpool University - BCom.

Career: Trained as an accountant and became financial controller at Courtaulds before being promoted to finance director in 1986 where he stayed until 1992. He then moved to British Aerospace, again as finance director, before becoming vice-chairman in 1998, then retiring in 1999. Apart from C&W, he is chairman of Morse, Avecia and Oasis International Leasing in Abu Dhabi and is vice-chairman of JP Morgan Investment bank. He also served on the board of Amersham between 1988 and 2003.

Pay: £394,949 for the year ended 31 March 2004, plus a shares package.

Personal life: Married, with four children.

Hobbies: Gardening, travel and cooking Sunday lunch for 14 people.

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