Outlook: Into the unknown for the Channel Tunnel crew

Murdoch's move; Standard excuses; All change at Virgin
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The Independent Online

Sacre bleu, they've done it. We are, as the cliché goes, in unchartered waters and whether the Channel Tunnel now sinks under its colossal weight of debt or survives, no-one can be absolutely sure.

Sacre bleu, they've done it. We are, as the cliché goes, in unchartered waters and whether the Channel Tunnel now sinks under its colossal weight of debt or survives, no-one can be absolutely sure.

The one certainty is that the Eurotunnel management are toast unless the leader of the French rebel shareholders Nicholas Miguet has a last minute change of heart and agrees to a stay of execution today. On his past record, that does not sound very likely and the guillotine almost certainly beckons for Eurotunnel's English chief executive Richard Shirrefs and the rest of his crew. Perhaps the Queen should have a word in Mr Miguet's shell-like and remind him that this is really not what entente cordiale is all about.

Replacing the Eurotunnel board with a new set of directors, as the rebels are now entitled to do, is one thing. The business strategy they intend to pursue is quite another. On the face of it, their plan looks suicidal. They want to double the charges for use of the tunnel, which would lead to a collapse in traffic. They want the British and French governments to step in with taxpayers support, even though that is expressly banned by the treaty which paved the way for the tunnel. And they want the banks to take the haircut of all haircuts, without any obvious payback for writing off a large chunk of the £6.4bn they are owed.

The prospect of being wiped out by the ferries and airlines will surely prevent any serious rise in charges. But there is no incentive for the two governments to play ball and the banks will have no hesitation in asserting their rights of substitution if they are pushed into a corner.

Now that the tunnel is built it is not going to close. Indeed, shorn of its debt, there is every chance of it finally becoming a money-spinner for the right management. Whether this will turn out to be crew put forward by Mr Miguet and his pals is another matter altogether.

Murdoch's move

With Rupert Murdoch, things are rarely as simple as they seem. So whilst there are perfectly sound business reasons for relocating his News Corp empire from Australia to the US, the outside world understandably smells a rat. Put simply, if the change of domicile is such a no-brainer, why wait all these years to do it?

Mr Murdoch's decision to take American citizenship a decade ago was little to do with his love of the country and much more to do with the ability it gave him to circumvent US media ownership laws and buy Fox Television. Is there some separate agenda at work again here?

Today Mr Murdoch's US media empire accounts for three-quarters of News Corp revenues and profits. Therein, says News Corp, lies part of the rationale. The operational headquarters of the organisation have long been in the States so why not domicile the company there too? Moreover, a primary New York listing will enable US institutions that are barred from holding the stock to become New Corp investors. It will also narrow the discount between the voting shares, which continue to give the Murdoch family a controlling stake in the group, and the non-voting shares, the currency News Corp prefers to use for acquisitions. Not that Mr Murdoch has any major deals in sight, he hastens to add.

Well, maybe. But what of the rival media mogul John Malone who is now the second biggest shareholder in News Corp and long thought of as a merger partner or perhaps even predator?

Along with the annual love-fest in Adelaide, which passed for the News Corp AGM, Mr Murdoch may have to sacrifice some of the preferential tax treatment and less exacting regulatory oversight he has enjoyed in Australia. The decision to incorporate in Delaware will preserve some of Mr Murdoch's tax advantages, but it will not protect News Corp from the gimlet gaze of the Securities and Exchange Commission.

One further interpretation of News Corp's relocation is that it is simply an old man who has lived there for a long time putting his house in order as succession looms. Don't believe that for a second. Mr Murdoch may be 73 but he is as wily as ever.

Standard excuses

They came not to defend mutuality but to bury the board. The 1,000 or so policyholders who made it to Edinburgh for Standard Life's annual meeting yesterday were treated to plenty of excuses but precious few explanations.

They wanted to know why their bonuses had gone down when those of the directors had gone up. They wanted to know why mutuality was a good thing except when it came to sharing the pain of falling stock markets.

They wanted to know why the non-execs appeared to have dozed off in the back seat reading the actuary's reports. They wanted to know why the management had spent £11m of their money in the last four years defending Standard's mutual status, only to throw in the towel when the regulator tightened the solvency rules.

Since £12bn of value has disappeared down the plug hole in the intervening period, it is a reasonable question to pose.

Above all, they wanted to know how a board which had just executed such a breathtaking volte face, could possible be the same one that expects to lead Standard into the brave new world of public ownership.

Sir Brian Stewart, the chairman, looked as if he might have been happier wearing his other hat at Scottish & Newcastle and explaining to a group of Fountain brewery workers why the place was shutting down. Sir Brian is not the toast of Edinburgh and nor is his chief executive Sandy Crombie, another former mutual stalwart, who finally replaced Iain Lumsden at the top of the greasy poll last year after a lifetime in the business.

Standard Life once ruled the financial capital of Scotland with a rod of iron and a degree of hubris to match. It is not used to being treated like this - by carpetbaggers, perhaps, yes, but not surely by loyal policyholders.

It will have to get used to the sensation. The attacks yesterday on the credibility, competence and experience of the directors are a taste of things to come. The board survived a revolt over pay by the skin of its teeth yesterday. But it is not the right one to guide Standard into the future. A new structure requires a new set of directors and since demutualisation is still two years away, it has time yet to ring the changes.

All change at Virgin

Chris Green has pretty much seen it all, from Dr Beeching back in the 1960s, to the ham fisted privatisation of the railways three decades later and now Labour's belated recognition that Britain's train set really is not working. Save for an unpleasant but mercifully brief spell at English Heritage under the heel of Jocelyn Stevens, he has been a railwayman all his working life. Now the time has come to take a back seat at Virgin Trains, where he will swap the job of chief executive for that of part-time chairman in September and take on the role of roving ambassador and spotter of new rail opportunities.

The timing is designed to coincide with the introduction of 125 mph tilting Pendolino trains between London and Manchester - a vision Mr Green has been waiting to see turned into reality since 1984 when he ran the line in the good old days of InterCity.

Unlike the Advanced Passenger Train, its predecessor of 20 years ago, the Pendolino actually works. There is real money for the railways, though it is often badly spent, and the staff treat passengers more like customers and less like a necessary evil. As the adverts used to say back in Mr Green's days with BR: We're Getting There.

m.harrison@independent.co.uk

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