Almost 30 years ago the Guinness affair was one of the great City causes célèbres. It symbolised the unquenchable greed of the financial sector, which in those days was relatively novel.
It was a simple enough exercise in financial manipulation, certainly compared to the incomprehensible adventures of Lehman Brothers and others in the 2000s.
Guinness, a drinks group, wanted to buy United Distillers. Ernest Saunders, Guinness’ boss, realised it would help if his company’s shares were worth considerably more than those of Distillers. So he and others bought up Guinness shares, artificially ramping up their value.
And there was an awful lot of money going into Guinness shares. Saunders apparently raised $100m for the task, which was entrusted to the American arbitrageur Ivan Boesky. When the US authorities caught up with Boesky, on another case of financial irregularity, he volunteered his intelligence on the Guinness takeover as part of a plea bargain. Then the British police and media got stuck into it. In due course Saunders and three others were arraigned on charges of fraud, principally against those who owned Distillers shares.
Nothing necessarily wrong in that. Except that in a new book, the financier David Alliance alleges that it all amounted to an anti-Semitic conspiracy. Lord Alliance was approached to join the share ramping fun, but declined.
What happened next angers him. In the book, he writes: “The Serious Fraud Office... and the prosecution had collected enough evidence to arrest and charge four ‘blue-blooded’ City figures (no Jews this time), including David Mayhew, of Cazenove, and Lord Spens, a merchant banker, with criminal offences.
“The police were said to be dismayed when the Guinness trial was abandoned and the financial press and others who had followed it closely were astonished. It was never properly explained and to this day rankles in my community, which felt itself unfairly targeted.”
He adds that a review is required of “the systematic cover-up of the role played by some of the City’s most ‘respectable’ stockbrokers and merchant bankers, who were happy to take the profits when times were good and let Jews go to jail for them when they turned sour”. Peter Mandelson, the former Business secretary, has written a foreword for the book and called for a public inquiry.
The Guinness four were: Saunders himself, jailed in 1990 for five years, for false accounting, conspiracy, and theft; Jack Lyons, fined £4m for theft and false accounting and stripped of his knighthood; Anthony Parnes, a trader sentenced to 30 months for false accounting and theft; and Gerald Ronson fined £5m, for false accounting and theft.
All four were Jewish (or in Saunders’s case had a Jewish father), while other gentiles accused of the crime got clean away with it. Or at least that is the view of Ronson.
In an entertaining memoir published a few years ago, the property tycoon is blunt: “Whatever happened to the boys from the Establishment? Nothing! ... How come the only people ever held to account were the four of us? And can it just be a coincidence that three of the four were Jews and the fourth was thought to be Jewish?” Like Lord Alliance, Ronson wondered how executives at the blue-blooded stockbrokers Cazenove escaped.
Jewish or not, all those involved were caught by a change in culture on both sides of the Atlantic. The “Big Bang” of City deregulation in 1986 swept away many of the old practices, good and bad, and regulators and public alike began to take a closer interest in the behaviour of the financial world.
Lord Alliance believes there was an anti-Semitic motive in the affair, because, he says, a leading Conservative minister warned a party donor to steer clear because “we’re going to go after the Jews”.
How credible is this claim of a political dimension? There certainly were anti-Semitic elements in the Tory party at that time. Historically, Jews had tended to back the Labour, rather than Tory, cause, and Harold Wilson was notable in his liking for Jewish friends and advisers.
But the in 1980s, to the alarm of some in the Conservative Party, Jewish talent began to emerge in its ranks.
As one Tory remarked at the time, the party used to be run by Etonians but was now run by “Estonians”, a reference to the Baltic/Jewish heritage of such cabinet ministers as Nigel Lawson and Leon Brittan. If anything, Wilson and Thatcher were pro-Semitic in their prejudices, although their lead was not always followed.
As with some other scandals of the time, the distance of three decades makes justice that much harder to secure. The desire for it still burns. Simon Lyons, grandson of Jack Lyons, and joint chief executive of real estate group Enstar Capital, said yesterday: “They threw these guys to the dogs. Anti-Semitism is something that’s easy to bandy about, but in this case it’s pretty clear what happened.”
Yet nany of the participants are dead, and others frail. Plenty of non-Jews have been prosecuted for financial crimes, and it will be difficult to prove the Guinness affair was an organised conspiracy. A public inquiry would amount to a retrial and, if recent experience is anything to go by, not necessarily a satisfactory or conclusive outcome for anyone, Jew or gentile, guilty or innocent, dead or alive.
Life after conviction: What the four did next
Released after 10 months as he was believed suffering from Alzheimer’s disease. Subsequently made a full recovery. Advised Carphone Warehouse, appointed chair of Harpur-Gelco.
Stockbroker, once nicknamed ‘the Animal’. Served 11 months of a 30-month sentence. Expelled from the stock exchange, but believed to be working in finance.
Returned to property business and philanthropy after release from prison. Chief executive of Heron International, which built Heron Tower in 2011.
Not sent to prison because of ill-health, but stripped of his knighthood and CBE by John Major’s government. Moved to Switzerland and died in 2008.Reuse content