The report yesterday by the director-general of water services, Ian Byatt, highlighting the way that the 10 companies have been feather-bedding their non-regulated businesses at the expense of customers of their core water and sewage businesses is shocking enough.
What is more disturbing, however, is that this drip-drip process of siphoning money from one pot to another - otherwise known as transfer pricing - has been going on for seven years without Ofwat apparently noticing.
But what takes the biscuit for sheer audacity is Mr Byatt's calm assertion that it is all the fault of the auditors. If Ofwat is not there to police and prevent this sort of behaviour through the licence conditions laid down for the privatised water companies then what is it there for?
Ofwat is hardly short of the requisite powers to stop this sort of thing and yet the floodgates appear to have been stuck on open since privatisation in 1989. The water industry's record on diversification into non-regulated businesses has been appalling. When those associate companies rely upon the regulated business for more than half their turnover, the scope for abuse becomes even more apparent.
Mr Byatt says he has now spoken to the offending companies and they have agreed to "remedy their practices in line with Ofwat's wishes". You bet they have. That may not be the end of the story. Transfer pricing is the kind of phrase that makes taxmen prick up their ears. As for Mr Byatt, he has rather blotted his copybook as the most capable and astute of the regulators by publishing the evidence only then to wash his hands of responsibility.
Better to lead than to be pushed
The family shareholders at Parker Knoll have reclined in the executive chairs that made it so famous, taken a long, hard look at what happens to those who try to hold back the tide of enfranchisement and sensibly decided to abandon the company's dual share structure.
This, of course, is not an act of pure philanthropy, borne out of higher motives such as a belief in shareholder democracy. The two-for-three scrip issue that the 40-odd family shareholders will enjoy provides them with a highly lucrative exit route from a business that most of them have probably long since lost interest in, especially after it was renamed Cornwell Parker.
In this day and age a company controlled by those holding just 7 per cent of the shares in issue is not, in any event, a tenable proposition in the long term. It was only a matter of time before the holders of non- voting shares - 93 per cent of the shareholder base - began agitating for change.
Nevertheless, the Parkers and the Jourdans, the two founding families behind the business, deserve two cheers for passing it on to a new set of shareholders in a manner most likely to ensure its continued success.
It was Martin and Tom Jourdan, the two remaining family members on the board, who decided to bring in a new chief executive, James Moore, give him a free hand to overhaul the strategy and then volunteer to step aside.
At Liberty, the Stewart-Liberty family hung on to their voting shares for grim death and look what happened. A South African interloper broke up the cosy party and two changes of management later the business is only just recovering from a torrid five years of guerrilla warfare. In opting for enfranchisement, Cornwell Parker is following a well-worn path But there are still some dinosaurs out there. Schroders, the Savoy group and even the mighty Daily Mail & General Trust may care to reflect that it is better to lead rather than be pushed.
A plan to reduce the annual angst
The average annual meeting is a mind numbingly boring ritual at which shareholders and managers meet, talk, but fail abysmally to communicate.
In April the DTI published a consultation document containing some ideas that would give shareholders more opportunity to get meaningful answers out of their boards. With the threat of government intervention in the air, the Institute of Chartered Secretaries and Administrators stepped in yesterday with a voluntary guide to good practice.There was an audible sigh of relief from the DTI, which loves a good voluntary code of practice since it allows ministers to avoid doing anything themselves.
The most interesting idea from the secretaries is a cheap and easy way to give more influence to the vast numbers of pension fund and other investors whose shareholdings are agglomerated in fund managers' nominee companies.
At present, the nominee company can appoint just one representative to speak at the annual meeting. With many pension funds now managed by vast City organisations, their individual voices have been silenced. The DTI suggested a change in the law to allow the individual pension fund trustees and other investors represented by the fund managers to speak at agms.
But company secretaries reckon the same result can be achieved effortlessly, without legislation, if the nominees issue a separate proxy card to each of the shareholders they represent. The board should then use its existing powers to waive the rule banning proxies from speaking. The idea is so simple it is odd that it has not been thought of before. Perhaps it ought to be incorporated in the Stock Exchange listing rules.
Football club tactics should be studied
It's a funny old game is football. Here, as best can be ascertained, are the circumstances surrounding the bid for Manchester United that never was. Early in the summer VCI, a video and publishing group chaired by Channel 4's chief executive Michael Grade, approached the club offering around 480p a share, valuing it at pounds 300m.
The bid coincided with the closing stages of the race to see who would be awarded rights to televise the Premiership. On 6 June, BSkyB clinched a deal worth pounds 670m.
In the first two weeks of June, Manchester United's shares leapt by a third to a high of 489p. This put them out of VCI's range and forced it to withdraw the offer. Although the rise in the share price was undoubtedly helped by the BSkyB deal, there was also talk of a bid in the markets.
The club, four of whose directors sold 4.5 million shares for pounds 21m on 13 June, insists there was never any need to alert the Stock Exchange to the bid approach Nevertheless, there is surely now a case for the Exchange to study the action replay.Reuse content