Barnevik takes blame and quits ABB

Percy Barnevik, the fêted Swedish industrialist, has unexpectedly resigned as chairman of ABB, Europe's biggest engineering group, taking the blame for the recent plunge in value of the firm he helped form.

Mr Barnevik's departure comes after months of pressure from ABB's investors, led by Swiss corporate raider Martin Ebner, and is likely to be followed by a wider shake-up of board members. The 22-year ABB veteran will be succeeded by Jurgen Dormann, 61, the chairman of Aventis, who was already on the ABB board.

Mr Barnevik, 60, admitted that he had to take responsibility for ABB's sharp share price fall, which was triggered by a collapse in profitability, inability to meet its growth targets and spiralling balance sheet gearing. He said: "I always believed that the board is ultimately responsible. You appoint a CEO and you supervise him. Even as non-executive chairman you head the company, and I also had a long history in the company in early years."

Often alluded to as Europe's Jack Welch, the former head of General Electric, Mr Barnevik's style was legendary. He created ABB from the 1987 merger of Sweden's Asea and Switzerland's Brown Boveri in one of Europe's first cross-border mergers. But it was his decision to split ABB into 1,300 separate entities, to maximise people's energy and entrepreneurial drive, that set him apart. Each unit was given Mr Barnevik's 21-page bible of ABB corporate culture and left to run themselves. "You can never rest on your laurels," he advises. "You have to improve your position every year, every month and every day. Just two or three years of complacency can destroy a strong and successful company."

This year Jorgen Centermann replaced Goran Lindahl as chief executive; ABB axed 12,000 jobs, changed its accounting standards and listed in the US.