F&C rapped over 1991 accounts: Trust fails to reveal directors' pay

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The Independent Online
FOREIGN & COLONIAL Investment Trust, which is celebrating its 125th birthday this week, has been rapped lightly over the knuckles by the Financial Reporting Review Panel for failing to reveal the full amounts it pays to its directors.

The Panel took exception to the trust's 1991 accounts, which gave remuneration details only for its chairman and the six non- executive directors. The report gave no information about the amount paid to Michael Hart and the other four executive directors who are more directly responsible for managing the trust's pounds 1.4bn.

Mr Hart and his executive colleagues are paid by Foreign & Colonial Management, the fund management firm that manages not just the flagship trust but also the other investment trusts, pension funds and unit trusts of the group. F&C Management is only partly owned by F&C Investment Trust and its results were not consolidated with the trust's 1991 figures.

The trust had believed its report met accounting requirements. Mr Hart said the executive directors' salaries had not been disclosed because, apart from himself, they spent much of their time looking after other funds. It would have been 'quite wrong' to suggest their salaries were paid solely for their work on F&C Investment Trust.

In the trust's 1992 report published yesterday, F&C has recognised the criticism by providing estimates of the amounts paid to the executive directors in respect of the trust. These show that Mr Hart, who spends most of his time managing F&C Investment Trust, was paid pounds 138,000 last year, a 21 per cent increase from pounds 114,000 in 1991.

The trust, which has a very good long-term record of investment performance, increased net assets by 22 per cent to nearly pounds 1.2bn during 1992, outstripping the FTA All-share index.

The total paid to the directors rose from pounds 195,000 to pounds 227,000. John Sclater, the trust's chairman, was paid pounds 29,000 against pounds 25,000 in 1991. Apart from Mr Hart, no director was paid more than pounds 30,000.

The Panel also queried F&C's non-consolidation of its management firm. Mr Hart said consolidation would have made little difference to the results, adding only 0.1 per cent to net assets and 2.5 per cent to net revenues.

However, Mr Hart said, because of the rapid growth in the management firm's business, the trust had already decided to consolidate its 1992 results before it was contacted by the Panel in February.

It is believed the Panel regards F&C's transgression as a relatively minor infringement.

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