The City Diary: Forging ahead, slowly, at FundSmith

A disappointing start for FundSmith, the new fund management business of punchy City celebrity and interdealer boss Terry Smith.

The project was supposed to provide a long-overdue redefinition of the fund-management industry, but when I check Morningstar (the financial services website, not the socialist daily) I notice that the fund's performance is ranked 297 out of 329, when measured between its November inception and the end of January. "Terry just doesn't get involved in this type of debate," dodges his spinner. "It is not about a snapshot. This is a long-term investment". Still, FundSmith is showing profits of 2.8 per cent since launch. When Smith quit as chief executive of Collins Stewart last year, he offloaded his 8.9m shares in the broker at 80p a pop. Since then, they've risen by, er, 11 per cent.

Batbold follows Blair fils

Should we be surprised to find Morgan Stanley has hired fresh-faced Battushig Batbold, son of Mongolia's PM, Sukhbaatar Batbold, to pitch for Mongolian natural-resource deals? The US investment bank has form, having offered a desk to Euan Blair, son of our former glorious leader. That saw the progeny of one of London's more opportunistic money-making couples hit the headlines after using the bank's email to hawk England rugby tickets. Who'd have thought it?

The first time I worked here...

How cheering that Nigel Kennedy – the PR luvvie, not the funky-haired violinist – is heading home to The Communication Group after a 17-year absence. Kennedy is one of the few people who'll be able to recall the past of Maureen Smith, the chairman of his new employer, which spins for the likes of blue-blooded bank Coutts and private investment club Pi Capital. Back in 1985, as MD of stock market-quoted Good Relations, Smith landed herself in trouble after selling her holding in the company over drinks at Annabel's to controversial underwriter Christopher Moran. Forgetfully, she failed to notify her board. This did not go down well with other GR shareholders, and a Stock Exchange report eventually found that "Miss Smith's actions were not those that investors should expect from the director of a public company". Good on Kennedy for letting the sleeping dog lie.

Laing recalibrates workers

Laing O'Rourke has sacked 12 employees after they were caught forwarding emails containing "inappropriate" images. We'll have to take the bosses' word on that, as nobody at the construction group seems to want to expand on the content, but if you work for the company you'll be well aware that you need to watch your conduct. In 2006, 1,500 employees were subjected to random drug testing – which resulted in 124 getting whacked for using cannabis, 41 for cocaine and 28 for both (although the hit rate has fallen since). It's one way of managing headcount, I proffer. "We take these things really genuinely and seriously," explains a spokesman, soberly.