Hurn resigns as chairman to spare the Pru's blushes over his past problems

Directors under fire: FSA report on the Marconi fiasco is set to highlight management failings
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The Independent Online

Sir Roger Hurn, the ousted chairman of Marconi, yesterday resigned from the board of Prudential ahead of the publication of a damning report into the stricken telecoms company which is expected to criticise Sir Roger as well as other former managers.

He said he was stepping down as chairman of Prudential in order to avoid embarrassing the insurance giant. He said: "I am concerned that [Prudential] should not be adversely affected in any way by my recent involvement with Marconi."

Sir Roger's role at Marconi will come back into the spotlight in the next few weeks when a report by the Financial Services Authority into the company is published.

The FSA has begun to circulate the report to individuals it names so that they can comment on its findings or appeal. The report is expected to be damning about Marconi's decision to suspend its shares on 4 July last year before it issued a profit warning after the market had closed.

Prudential strongly denied that the announcement about Sir Roger's resignation had been prompted by pressure from shareholders.

A spokesman said: "There has been no indication at all that this has been an issue for institutional shareholders. This was entirely Sir Roger's choice and he has been thinking about it for a while. He is a truly honourable gentleman and he made this decision in the best interest of Prudential."

Sir Roger, 63, said he had wanted to announce his resignation when he could also say who would succeed him. But "market rumours" pressurised him into confirming his resignation now, he said.

While Prudential's board has stuck by him, directors may well have been relieved that he made the decision public before the insurance giant's annual general meeting on 9 May.

The FSA report could be published before the meeting and the AGM is already expected to be difficult as shareholders challenge the lavish pay package awarded to Prudential's chief executive, Jonathan Bloomer.

Fund managers welcomed Sir Roger's move to resign on his own initiative. William Claxton-Smith, director of Clerical Medical, said: "There was no 'he must go' campaign, but Sir Roger has done the decent thing. He also acted with honour when he left Marconi by not taking compensation, unlike John Mayo and George Simpson."

John Rogers, director of the National Association of Pension Funds, said: "The Prudential has been a leading light in corporate governance issues. So this move is appropriate."

Sir Roger will continue at Prudential until a successor is found. Britain's second-largest insurer said it was in the "advanced stages" of recruiting one, who is expected to be an external candidate. Sir Roger, who received a salary of £309,000 last year, will receive no pay-off.

Derek Wanless, the former chief executive of NatWest and author of the Government's report into the future on the NHS, and Peter Ellwood, close to retirement from his position as chief executive of Lloyds TSB, are thought to be possible successors.

Sir Roger is also deputy chairman of GlaxoSmithKline and a non-executive director of Cazenove. He will continue in both of these positions.

Prudential's shares jumped 13p to 755p, but analysts felt Sir Roger's decision would not have much impact on investors. Gordon Aitken, an analyst at Credit Suisse First Boston, said: "Shareholders might be slightly relieved but it does not make much difference to the running of Prudential which is driven by Jonathan Bloomer and his team."

HOW THE CRISIS UNFOLDED

The forthcoming report from the Financial Services Authority, which is believed to have prompted the resignation of Prudential chairman Sir Roger Hurn, is expected to heavily criticise the way Marconi handled its July profit warning.

Sir Roger, who was forced to resign as chairman of Marconi in September of last year after a second profit warning, is expected to come under fire from the FSA for his role in the confusion that surrounded the 4 July warning.

On that day, the telecoms equipment maker released a statement to the Stock Exchange at 7.03am detailing the sale of its Medical Systems business to Royal Philips Electronics for just over $1bn (£690m).

But two minutes later, it demanded its shares be suspended from trading on the London Stock Exchange ahead of the release of a trading statement.

Marconi's directors, it said, were meeting for the first time since the end of the first quarter of its financial year to consider trading. That meeting is not thought to have started until 4pm while the long-awaited trading statement did not hit the screens until 18.26pm.

The decision to hold the meeting at 4pm meant the shares were suspended from trading for an entire day, left the City assuming the worst and hit shares in telecoms and technology stocks across Europe.

The statement confirmed investors' worst fears with the news operating profits would be half the previous year's as it announced plans to axe 4,000 jobs.

John Mayo, who resigned as deputy chief executive two days later, has since said that he asked for the meeting to be brought forward to avoid suspension. Lord Simpson of Dunkeld, who resigned as chief executive in September, said at the time the statement had been made as soon as it could have been.

By Liz Vaughan-Adams

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