Friends of the Earth and other non-government organisations (NGOs) were hailing it as a famous victory. Balfour Beatty was meanwhile insisting that its decision to withdraw from the Ilisu Dam project, in eastern Turkey, had little to do with the highly active campaign to have the whole thing ditched, and everything to do with long, professional and careful consideration, resulting in a decision taken largely on commercial grounds, after due process and exhaustive study.
Mike Welton, Balfour's chief executive, deserves some kind of an award for doggedly refusing to let the campaigners bulldoze him into early submission, but the fact of the matter is that this was a contract that his company should probably never have become involved in in the first place and certainly should have abandoned a long time ago. "Due process" is an admirable thing, but you have to wonder whether it was wholly necessary given the blindingly obvious conclusions it came to.
As controversial projects in the developing world go, this one had it all. The Turkish government wants to dam the Tigris river in eastern Turkey, throwing up to 25,000, mainly Kurdish, people out of their homes and completely changing the nature of the surrounding environment. Some see the project as part of a wider programme of ethnic cleansing in an area already devastated by years of armed conflict between ethnic Kurds and the Turkish state. Enough said?
There's more. The dam would also flood an area rich in archeological treasures, some of them dating back 10,000 years, and enable Turkey to control more than half the downstream flow of the river into Iraq and Syria, thus threatening the whole region with repeated conflict over water flows to neighbours.
Small wonder that Balfour Beatty, which was asking the Government for $200m of export guarantees for its own relatively small part in the project, found itself the butt of some at times vicious campaigning. Normally agnostic institutional shareholders were galvanised into asking whether the contract was really worth the candle. The Government could have put paid to the whole thing ages ago by simply refusing to approve the credit, but found the goals of its own "ethical foreign policy" somewhat at odds with its parallel desire to look business friendly and toady up to the Turks
So under the then Secretary of State for Trade and Industry, the hapless Stephen Byers, the issue was fudged by imposing four conditions on export aid. Balfour Beatty has taken two years to decide the conditions are too onerous to make participation possible. The Government is off the hook and Balfour Beatty is left looking a right old Charlie.
It's all a bit of a shame really. Dams are an area of particular expertise for Balfour Beatty but, for all the reasons highlighted by the Ilisu dam controversy, not many of them are these days built outside the totalitarian regimes of China, Africa, and the Far East, where concern over humanitarian displacement, the protection of antiquities, river flow to neighbours, environmental damage and all the rest don't figure highly on the list of priorities.
A mighty tome published last year by the United Nations-sponsored "World Commission on Dams" made their construction that much more difficult still by listing an astonishing 26 guideline conditions. If by any chance you manage to satisfy the first 25, you'll certainly get fouled on the 26th. None of this means Ilisu won't happen. The Brits and Italians are now out, but local contractors are still very much in, as are the lead French and Swiss contractors for the turbines, generators and related electrical equipment.
The Financial Services Authority is turning its attention to City public relations firms. This formerly lucrative cottage industry already has plenty to worry about, now the boom in mega mergers and new issues is dead and gone. The FSA wants to use its formidable new powers to make the industry clean up its act as well.
Aside from being the whipping boy when things go wrong, part of the financial PR's lot is to say the things that companies can't be seen to be saying – or that bankers aren't allowed to – since spindoctors do not require FSA authorisation to conduct their business. The FSA worries that this often amounts to market manipulation, which is against the law. PRs, it believes, are frequently instrumental in disseminating inaccurate puff or slander about companies, and that they allow good information to get into the wrong hands before it gets out into the market.
Perhaps surprisingly, the FSA professes to be unconcerned about the most potent weapon in the spindoctors' arsenal, the "drop" of tomorrow's press release to an anointed hack, invariably in the expectation of a favourable slant being put on the story. As long as the material appears coincidentally with the formal announcement, then there isn't a problem, the FSA says.
In which case it is hard to see where the FSA is coming from. The City is filled with a thousand different gossips and voices, many of them badly or mis-informed, but nearly all of them with some sort of an axe to grind. It is part of the journalist's and analyst's job to sort the wheat from the chaff and to disentangle the spin from the truth. Those who don't are soon found out and ignored. It is likewise always going to be next to impossible to regulate an industry whose raison d'etre is to manipulate information, thereby to bolster and defuse its effect according to instructions. The FSA can try all it likes to close down the flow of good and bad information, but as long as there's a market, it will never succeed.
In any previous business downturn, a basket case as bad as Marconi would by now already have been in administration. The banks or bondholders would have pulled the plug, there would be a fire sale of assets going on and it would all be over for this one time stalwart of corporate Britain. This time around it's different. All the effort is going into keeping the casualties alive, through debt restructuring or in BT's case by arm twisting the City into supporting a rescue rights issue. In the old days, they would have been put down. Now they are kept on life support.
It is not altogether clear this is the right approach. In theory, the financial pain isn't as bad, or at least it tends to get more broadly spread, but the lessons are swept under the carpet and as a result the wrecklessness that allowed this to happen will return sooner than we would wish. The old way was more brutal, but it was profoundly more corrective in its effect.
The writedowns announced by Marconi yesterday, for which read the difference between what Marconi paid for these businesses and what they are now worth, defy belief, but the failure in management and controls that allowed it to happen are already water under the bridge, and the value destruction involved just another of those things. In another time and another company, the "impairment charge" announced yesterday by Vodafone – an astonishing £4.5bn – would have caused a boardroom and banking crisis. Today it takes second place to Ebitda and didn't even merit a mention in the Reuters report on the figures. No one likes to admit the boom is over, but this looks more and more like denial.Reuse content