C&W clashes with DTI on foreign appointees

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Industrial Correspondent

The Government has blocked attempts by Cable & Wireless to change its articles to allow both its chairman and chief executive to be non-British. The Department of Trade and Industry said that the decision - made possible by the golden share in C&W - was in the "national interest".

The clash was revealed as C&W gained shareholder approval to allow a foreigner to become chief executive as long as the chairman is British, but faced anger over rumours of a multi-million-pound payout for the former chairman, Lord Young. The company said the DTI's stance on foreigners was "not a problem" but made it clear that it wanted the constraints completely removed.

A spokesman for the Department of Trade and Industry said: "This is something which was in place when C&W was privatised and we want to keep it that way in the national interest. But we have agreed to make a change from two to one."

Brian Smith, chairman, told shareholders at an extraordinary general meeting that the company expects to announce its new chief executive in about two months' time. The group was plunged into turmoil at the end of 1995 when James Ross and Lord Young, then respectively chief executive and chairman, were ousted after a boardroom row.

Mr Smith, who is non-executive and also chairs BAA, said later that he believed the closeness of Lord Young and Mr Ross led to the fracas. He said that his relationship with the new incumbent would be different, adding: "At BAA John Egan [chief executive] does all the work and I run the board. A similar relationship will be established at Cable & Wireless."

Mr Smith said the shortlist of candidates had between six and eight names, including those of non-British citizens. The list is thought to include Duncan Lewis, who left C&W's Mercury Communications subsidiary in September after nine months.

The group expects negotiations with Lord Young over a compensation package to be agreed by the end of the month. There has been speculation that Lord Young would demand a pay-off of pounds 1m or more. Mr Smith declined to comment but said that the outcome would be "amicable" and that "shareholders will not be disappointed".

Mr Smith said he did not consider there was a case for reviewing the positions of non-executive board members on the grounds of failure to act sooner to prevent the boardroom split that led to the departure of Lord Young and Mr Ross. Rod Olsen, the acting chief executive, said little indication of the growing conflict between the two men had been evident prior to the escalation of events in the autumn.