Was John Duffield the boss from hell?
Bullying and intimidation were rife at New Star Asset Management, evidence presented to an employment tribunal suggests
John Duffield and Patrick Evershed are City veterans and former friends. Both have passed the age of 70 and both have had long and successful careers in fund management. In fact both are still working full-time at asset management companies. But they are now engaged in a bitter employment dispute which reaches day three today. The nub of the court case is simply this: did Mr Duffield bully Mr Evershed out of his job at New Star Asset Management?
Yesterday, it emerged that Mr Duffield is unlikely to testify at the employment tribunal Mr Evershed has brought against New Star, the fund manager Mr Duffield founded and eventually had to sell to Henderson. That will deprive Mr Evershed's legal team of the opportunity to interrogate Mr Duffield over claims about his style of managhement.
The two men come from different backgrounds. Mr Evershed is an economics graduate of Trinity College, Dublin, while Mr Duffield got a first in biochemistry at Oxford. Mr Evershed made his name in the early 70s as a respected fund manager with Framlington while Mr Duffield married into wealth. His bride was the daughter of Sears tycoon Sir Charles Clore and the couple moved to Switzerland and had two children while Mr Duffield spent his time skiing and getting bored.
Divorce in 1976 was the seed of Mr Duffield's self-made fortune in the fund management business. A very competitive man, he wanted to prove to his former father-in-law that he had not married his daughter for money. "I thought that if I had more money than her, that would prove [that I married her for love]."
He founded Jupiter in 1985 and grew its assets to around £14bn within a decade. His approach was to hire aggressive "star" fund managers who were passionate about the market. In perhaps his biggest statement of intent, he based the firm in upmarket Knightsbridge, rather than within the City.
Former colleagues describe Mr Duffield as a "colourful character" who is "not averse to using strong language". He has never worn sharp business suits, preferring an open-necked shirt and v-neck jumper. But his business success was driven by his personality. However, that very strength was to see him leave Jupiter in acrimony.
He sold a majority stake in the firm to German bank Commerzbank in 1995. Within five years he had left the firm in a dispute over money, but not before calling three German executives of Commerzbank Nazis in what he later said was a "joke". In fact he said afterwards: "I didn't say: 'You're Nazis'. I said: 'You're bloody Nazis'."
He left Jupiter with £175m from his share of the sale. He had also made around 50 staff at Jupiter millionaires in the process, including his ex-secretary Angela Hudson, who pocketed £2.5m from the company sale. But his anger at being ousted from the firm he founded led him to to set up a rival, New Star. The name was a pointed reference to his old business and, taking it further, he also based the new fund manager in Knightsbridge. He also poached some of the old star names from Jupiter to the new business and quickly built it up to be a major player with £24.7bn under management at its height in 2007.
Meanwhile Mr Evershed's stock as a fund manager had risen. He specialised in the UK smaller company sector and built his reputation as the joint manager – with Sir William Stuttaford – on the Framlington Capital Fund between 1970 and 1990. From Framlington he moved to Rathbones, where he continued to be highly rated. So it was logical that in 2002 Mr Duffield should come knocking.
He recruited Mr Evershed to run the New Star Select Opportunities Fund, focused on small caps. But Mr Evershed – a high-profile supporter of the Conservative Party – said at the City employment tribunal this week that after joining New Star he was forced to work in an "unpleasant" atmosphere because of the way Mr Duffield dealt with staff, who he "regularly insulted".
Mr Evershed's lawyer Daphne Romney has told the tribunal Mr Evershed said Mr Duffield "called the fund managers morons and criminals". He "asked if they were ashamed of themselves when their funds performed poorly" and was "angry, antagonistic and unpleasant".
The situation finally came to ahead for Mr Evershed in 2008 when he was put under pressure to increase the size of his £50m fund. He claimed the limit was critical to its success. His lawyer said the pressure and arguments put an "impossible burden on the claimant to run the fund" and that Mr Evershed had found it "physically impossible to deal with small cap stocks in this manner".
He left in October 2008 after sending a whistleblower email about Mr Duffield's bullying to the firm's human resources department. Mr Evershed is claiming around £1m for lost earnings. The claim is being defended by the Henderson Group, which snapped up New Star in 2009 after it got into difficulties. Henderson said the claim is "a legacy issue we inherited", adding that it would "vigorously defend the claim".
Patrick Evershed, 72, is probably more well-known in Tory circles than in the Square Mile. He is a long-standing president of the Cities of London and Westminster Conservative Association and makes regular donations to the party.
He was recently described as a "war horse" by the chairman of the local association and, according to the BBC, in 2008 he spent £70,000 of his own money on adverts warning the world about Gordon Brown's "reckless" handling of the economy.
He is an economics graduate of Trinity College, Dublin, and his long, successful career as a small companies fund manager stretches back to 1970 when he joined Framlington, continuing through successful spells with Rathbones and, for some years, with New Star. He now manages funds for the London stockbroker Hargreave Hale and says he has no plans yet to retire to his cottage in Wales.
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