Government can benefit from business's expertise – but clear focus is required


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When business meets government, there is rarely a happy ending.

For John Manzoni, the BP veteran just appointed as chief executive of the Civil Service, it wasn’t a happy beginning either.

Health experts argued successfully to overturn a Cabinet Office decision that Mr Manzoni could keep his non-executive directorship at drinks company SABMiller, even though his new job is about as far away from health policy as you could get. Cronyism and conflict of interest has its place, but I don’t believe this was it.

Mr Manzoni’s job is to bring some much-needed corporate rigour to the corridors of Whitehall. One business leader who knows plenty about the inner workings of government described it as an “impact and influence” role, meaning reporting lines were unclear and what he might achieve was anyone’s guess.

The broader point is that the country benefits if there is a closer interface between the public and private sector. Would someone who has spent years locked in the Treasury have made a better trade minister than Lord Livingston, the former BT boss, who is enthusiastically combing the world for UK export opportunities?

One of his predecessors, Lord Davies, had thoughts a while ago on what would make it easier for bosses to switch into government for fixed-term projects. Under his plan, they would commit for no more than two years and stick their shares into a blind trust. It is time to revisit this. Spelling out what can and can’t happen in a code of conduct might defuse the latent controversy around businessmen and women who are willing to do a spell of public service.

There’s a fine line between trust and inertia in banking

 An interesting statistic emerged from wealth magazine Spear’s list of the top 500 advisers to the high-net worth classes, whose compilation was deemed a good enough reason for estate agents, lawyers, yacht brokers and horse traders to pack out The Savoy on Monday night.

Charlie Hoffman, the HSBC wealth manager best known for buying the Duchess of Cambridge’s family home, reckons it takes seven years to gain the trust of clients. That desire for millionaires to tuck away their cash somewhere safe for the long term certainly suggests they aren’t going to chop and change who manages it.

But that seven years it takes tycoons to get comfortable with their private banker can’t be so far off the period when inertia sets in with consumers who have far less to invest. It is staggering that customers of the high street banks don’t switch their main account more often, especially now there are moves afoot to make it simpler.

There were few whimpers of protest from Lloyds customers that at one stage were being parcelled out to the Co-op only to be later informed they would be banking with TSB in future. Now the big lenders are pledging new investment in technology as the quietest branches are slated for closure. It is just the time for dissatisfied customers to remind them that their business can walk out of the door at any moment.

A double succession crisis  on the cards at StanChart

 Knives were predictably out this week for Peter Sands, the chief executive of Standard Chartered. Higher bad debts, strategic drift and a re-opened US Department of Justice inquiry into sanctions-busting: that golden decade of rising profits at the Asia-focused bank seems a lifetime ago.

That the McKinseyite has to pass the baton on soon is in no doubt. But shareholders who have watched Standard Chartered’s shares slide have little reason to keep chairman Sir John Peace in post either.

Compare Sir John to John McFarlane, the incoming Barclays chairman, who is quitting the chair at Aviva and bus and train operator FirstGroup to focus on a single, all-consuming blue-chip role. Sir John pledged to give up something too when he took the Standard Chartered chair in 2009. Five years on, he finally did so: relinquishing the reins at credit checker Experian, while hanging on at Burberry despite the City making clear that multiple chairmanships have fallen out of fashion. It isn’t the first time that Sir John has demonstrated a tin ear for investor concerns.

They say the chairman’s main task is to fire the chief executive, but that is only part of it. He or she must also dispel boardroom tension that harms the running of a company. And if they can’t, they should make way for someone else that can. Problems have festered for so long  at Standard Chartered that a dual succession crisis is now brewing. Yet  there is no need for it.

In Naguib Kheraj, the former Barclays finance director who has sat on the board for nearly a year, Standard Chartered has an ideal chairman-in-waiting. And he might not be too busy to give the bank and its shareholders the requisite attention.

If the numbers don’t add up, the vultures stop circling

 Restating financial results makes a company look weak and the management’s position shaky, but it might also prove to be an unlikely poison pill for takeovers.

I saw some research this week carried out jointly by the Cambridge Judge Business School over a seven-year period which turns on its head the idea that companies become vulnerable to a bid when accounting problems blow up.

It seems the risk of what more nasties lurk beneath the surface outweighs the urge to snap up an asset on the cheap. Food for thought at Tesco as the supermarket group counts the cost of booking supplier payments early.