Comment: Penguin opens a new chapter in rogue traders

It is not just investment banks that fall prey these days to the antics of out-of-control rogue traders, or so it would seem. Quite a number of industrial and service companies have been laid low by the rotten apple employee, too. But why did it seem so inevitable that the first media company to be made a laughing stock of in this way would be poor old accident- prone Pearson?

The first line of defence when confronted with the sickening discovery of a wrong 'un within your midst is to claim that it could have happened to anyone. Both Barings and Morgan Grenfell used this excuse and it was again being liberally applied yesterday by Pearson. If this seems faintly unbelievable, there's always this convenient little fall-back line - that the wrongdoer was clever, manipulative, devious and covered his tracks well.

Furthermore, Pearson claims, in the world of book publishing it is easy to hide antics of this sort. But if what Pearson is trying to say here is that Penguin is a shambolic and poorly organised environment in which this kind of thing tends to go by unnoticed, it doesn't seem to help its cause much either.

Ah well, if all else fails there are always the auditors to blame. Quite a few nods were being made in that direction yesterday too, though this is always a poor excuse when the main duty of care when booking sales lies with directors.

As in all these cases, there can in the end be no mitigation here. To fall victim even to a fraud as apparently motiveless as this one is to demonstrate serious failings in organisational structure and control. In Pearson's case, it seems to confirm all the stock market's worst suspicions of sloppy and unprofessional management. Coming so soon after the Mindscape fiasco, it surely would have drawn blood had the old regime still been in place.

As it is, Pearson has already cleaned out the stables. There's a new team at the top, none of whom can really be blamed for this, and new auditors too. If Marjorie Scardino acts as tough as she talks, then a wind of change will shortly be sweeping through this sleepy old organisation; the neglect and sentimentality that allowed this and other disasters to happen will soon be a thing of the past. But is she going to get the chance? There surely couldn't be a better time than this for that long-rumoured break- up bid. Some investors are going to be saying enough is enough, management changes notwithstanding.

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