Great Portland fireworks fizzle out: Chairman dismisses concern over link with private interests

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The Independent Online
EXPECTED fireworks at Great Portland Estates' annual meeting yesterday were defused by Richard Peskin, the chairman and managing director. He brushed aside concerns over a contract between the company and a private business he owns, closing the meeting after only a few minutes.

Mr Peskin pre-empted objections to the close relationship between his private interests and those of the UK's sixth-biggest quoted property company by promising that a longstanding agreement between the two would be reviewed at the next board meeting in October.

He said he was 'genuinely astonished' at the interest aroused by a pounds 3m management fee paid by Great Portland to Basil & Howard Samuel, a management agent owned by Mr Peskin since he inherited it in 1988.

B&HS, which employs 35 staff and works solely for Great Portland, has managed the property company's portfolio since 1959. According to Mr Peskin's statement, Great Portland's board considers the arrangement each year and has so far concluded that it is in the best interests of shareholders.

The cost of B&HS's services - 4 per cent of Great Portland's gross rental income of pounds 84m - was 'on a true comparison the lowest of all the major property groups', Mr Peskin said.

He added that the fees charged were lower than the arrangement allowed and said that charging the full amount would have cost Great Portland an additional pounds 6m since 1986. A spokesman for the company denied that the reduction was a tacit admission that the original fees were uncompetitively high.

Mr Peskin said that a decision to review the relationship between the two companies had been taken before recent press comment drew attention to the arrangement. He said that it had always been disclosed in Great Portland's report and accounts and expressed surprise that no one had thought to mention the deal before.

B&HS pays Mr Peskin an undisclosed salary, which supplements the pounds 33,000 he was paid last year by Great Portland. The quoted company has undertaken to bring his salary up to the combined level if the relationship with B&HS is severed.

It is understood the board's review will focus on the 57-month notice required for termination of the deal, possibly cutting it to 36 months in line with the Cadbury recommendations.