Knives out for 'reckless' Bank of America boss
Angry shareholders demand resignation of Ken Lewis for his role in the acquisition of Merrill Lynch
Sunday 26 April 2009
Ken Lewis was preparing for the fight of his life this weekend in a high-stakes battle to retain his job as chief executive of Bank of America when shareholders assemble for the annual meeting of the financial giant.
But at the same time, his opponents are planning a string of announcements and protests designed to pressure him out, in retaliation for what they say was his reckless decision last year to take over Merrill Lynch and his failure to disclose the worsening condition of its new acquisition in the weeks before the deal closed.
The $50bn (£34bn) takeover, agreed by Mr Lewis in a matter of hours over the extraordinary September weekend when Lehman Brothers collapsed, has soured to such an extent that the US government was forced to inject $20bn into the company and to guarantee $118m in losses on Merrill's toxic portfolio of credit derivatives.
Corporate governance campaigners are expecting a close vote and unions which have been leading one of the campaigns against his re-election will be staging protests this Tuesday outside hundreds of branches in major cities including New York, Chicago and Los Angeles. Campaigners say that more than 10,000 people have already signed "taxpayer proxies" calling on the bank to fire Mr Lewis and to accede to other demands, including better healthcare benefits for its workers and lower credit card interest rates.
"Over the course of a weekend, Mr Lewis transformed a company that was well-positioned to weather the financial crisis into one of its most costly casualties," said Michael Garland, head of Change to Win, a union-sponsored group. "And as it was becoming clear that Merrill was in a worse condition than he believed, he failed to take steps to get out of the deal or to disclose the fact to shareholders."
Dissident shareholders believe that Mr Lewis's position has been weakened by the disclosure last week of his testimony to Andrew Cuomo, New York's Attorney General, who is investigating the Merrill acquisition. Mr Lewis testified that Hank Paulson, then Treasury Secretary, had threatened to have him sacked if he did not proceed with the deal, and that disclosing the widening losses last December was something that "we do not want". In the end, the bank only disclosed Merrill's record-breaking fourth quarter loss beside its annual results in mid-January, at the same time as it announced the Treasury's cash injection. The takeover deal closed on 1 January.
Bank of America says that it acted appropriately throughout the acquisition process. But shareholders are suing, claiming they would have tried to stop the deal if they had known about Merrill's parlous state. One of the groups vying to be lead plaintiff is CalPers, the influential public employees pension fund. It is due to announce its voting intentions tomorrow, ahead of Wednesday's shareholder meeting. Mr Lewis also faces a poll on whether the roles of chairman and chief executive should be split.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 Fifty Shades of Grey trailer provokes moral outrage from US parenting groups
- 4 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 5 Students offered grants if they tweet pro-Israeli propaganda
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...