Mathewson stirs controversy by seeking re-election to trust board

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The Independent Online

Sir George Mathewson is to fly in the face of corporate governance guidelines and stand for re-election as an independent director of the £1.1bn Scottish Investment Trust.

Sir George is the outgoing chairman of Royal Bank of Scotland. His 24-year tenure with the investment trust, one of Britain's biggest and oldest, is almost three times the maximum nine years of service generally considered appropriate for independence.

Shareholders will be asked to approve Sir George's appointment as a non-executive director at the Edinburgh-based trust's annual meeting on 27 January. He may be in for a rocky ride, with the activist shareholder Hermes among the trust's major investors. A sustained campaign by Hermes forced Sir Angus Grossart to step down as chairman in 2003 after 27 years in the job. He was succeeded by Douglas McDougall.

The National Association of Pension Funds, the institutional investment group, questioned whether any director could retain "independence" after almost a quarter of a century on the board. The NAPF spokesman Andy Fleming said: "It would be stretching it to say that Sir George could be an independent director. Twenty-five years is quite some way beyond what most people would think of as independent."

Scottish Investment Trust, which has more than 300,000 private investors, insisted that Sir George could maintain his independence despite a protracted tenure on its board. Steven Hay, its assistant company secretary, said: "Nine years is an arbitrary length of time that these corporate governance people say gives independence. We disagree with that. The board says independence is not a function of service or age. Experience is more important than any length of time." The trust states in its directors' report: "The board believes that each director is independent of the management in character and judgement and that there are no relationships with the company or its employees which might compromise their independence."

The decision of Sir George to step down from the trust's remuneration and audit committees earlier this year was not prompted by his length of service, Mr Hay said.

Royal Bank of Scotland confirmed earlier this month that Sir George will step down as chairman at its annual meeting in April.

He will be succeeded by Sir Tom McKillop, the departing chief executive of the drug maker AstraZeneca.

A fortnight ago, the Scottish Investment Trust announced a tender offer for up to 40 per cent of its shares that will cut the value of its assets by up to £440m. That will offer an exit to two arbitrageurs - Bruno Sangle-Ferriere and Lars Bader - who have built stakes totalling almost 14 per cent of the shares.