Climax in C&W power struggle
Monday 20 November 1995
The power struggle at Cable & Wireless will reach a climax today at hastily convened meetings between the group's directors that could result in the departure of the chief executive, James Ross. He is expected to go unless Lord Young of Graffham, the chairman, is ousted or reduced to a less influential, non-executive role.
The extraordinary developments follow months of speculation, culminating in a statement last week that Lord Young will stay as executive chairman until his 65th birthday in February 1997. The announcement outraged Mr Ross, who is said to have approached non-executive directors weeks ago to say that he could no longer work with Lord Young.
Cable & Wireless' executive directors will meet this morning with non- executives led by Win Bischoff, chairman of Schroders, to demand an end to the chaos. There is a consensus that the executives will back Mr Ross, who will not attend the meeting. This afternoon the non-executive directors are expected to attempt alone to resolve the acrimonious dispute.
One senior executive said: "Cable & Wireless needs unambiguous, unequivocal and strong management. Starting from that base it is extremely difficult to imagine Lord Young and James Ross can co-exist."
He added: "If we have to turn on its head what was announced last week then we have got to be prepared to do that. The present position is unsustainable." He went on to warn that there is a worry that unless something is done, the company will become vulnerable to takeover "for all the wrong reasons".
Those favouring Lord Young say that he has the support of the non-executives and that Mr Ross will be forced to knuckle under or quit. But there are conflicting views on the balance of opinion and, in particular, on whether Mr Ross has won backing from Ulrich Hartmann, the head of Veba, C&W's European partner, which has a 10.48 per cent stake in the group.
One insider said that Mr Ross is increasingly irritated by what he sees as Lord Young's interference with day-to-day running, and by deals he has struck, which Mr Ross considers outside the main thrust of the group. The chief executive's drive is to build a tripartite structure based on Asia, the US - where C&W is in negotiations with Nynex - and on Europe.
But there is also a view that Cable & Wireless needs Lord Young's ability to open doors. According to a former C&W employee: "David Young is an affable wheeler-dealer while James Ross is a scientific manager with no strategic vision - a speedy tailor for the 1990s." He added that Linus Cheung, the executive director in charge of C&W's all-important Hong Kong Telecom arm, would be in favour of any solution that gave him more autonomy. "He complained at one point that he had to get permission from London to go to the bathroom," he said.
A key problem for Mr Bischoff is that, should the battle end in Mr Ross's departure, there is no obvious successor within the group. Duncan Lewis, who in September resigned abruptly as chief executive of C&W's Mercury Communications subsidiary after only nine months in the job, was seen as a natural successor. Ironically, Mr Lewis left because he did not see eye-to-eye with the man he was apparently destined to succeed.
Insiders say the dark horse is Rod Olsen, the C&W finance director, who is highly respected. But one said that Mr Lewis, who is credited with rapidly turning around Mercury's fortunes, could be recalled - he has yet to take up another post.
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