Porterbrook Three have a laugh at our expense

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The Independent Online
If Steve Martin ever made a sequel to Planes, Trains and Automobiles then the supporting cast would consist of the Porterbrook Three - Sandy Anderson, Ray Cork and Tim Gilbert. Mr Anderson knows about planes because he used to work for a subsidiary of GE Capital, one of the world's biggest jet leasing companies. Mr Cork knows about automobiles because he was once finance director of Swan National Leasing. Now, however, they all know about trains because in the Lucky Lotto of life they were chosen to be executive directors of Porterbrook Leasing.

Since yesterday they also know a lot about money. Stagecoach's pounds 476m bid will enable Mr Anderson to trouser pounds 36.25m from his Porterbrook shares, Mr Cork pounds 16.74m and Mr Gilbert pounds 10.7m. In anybody's lingo, that ain't bad money for the six months it has taken to turn Porterbrook from a BR outpost into a subsidiary of Stagecoach by way of a management buyout.

It is tempting to say good luck to the Porterbrook Three. After all, didn't they throw up good jobs and mortgage their homes to take their chances in the high-risk world of private railways? Er, not exactly.

Porterbrook Leasing is in the happy position of knowing that 80 per cent of its revenues worth some pounds 1.6bn are guaranteed for the next eight to ten years by - and this is the rub - you and me and every other taxpayer in the land. Alright, but surely they must have done something for the business since they joined. Well, as best we can work out, their "innovative management" has brought in pounds 30m worth of new business over the next five years - hardly the big time when revenues are pushing pounds 300m a year anyway and you have the clout that a fleet of 3,500 vehicles and a third of the market for train operating companies under your belt.

Needless to say, Labour is now stoking the boilers of another "fat cat" (fat controller?) controversy for all its worth and the Government is looking dumber by the day for having sold the business on the cheap.

It is not quite all the fault of the Secretary of State for Transport, Sir George Young. Nor is it all a travesty of justice because every employee of Porterbrook, right down to the humblest receptionist, is in the money big time.

In truth, nobody quite realised what gravy trains the rolling stock companies would be until the Japanese bank Nomura took over another of them, Angel Train Contracts, and demonstrated just how cheaply they could be financed by securitising the debt against future revenue streams and then getting a triple A rating.

But the Government is squarely in the dock for the indecent haste with which it sold off the businesses to meet a nakedly political timetable. Appearing to be a forced seller is rarely a recipe for maximising price.

In the fictional world of Planes, Trains and Automobiles the joke was on Steve Martin. In real life the joke is on the taxpayer and it is the Porterbrook Three who are laughing all the way to the bank.

Playing Frankenstein at Eurotherm

One of the sorriest episodes in British corporate governance is about to come to a close with the appointment of a new non-executive chairman at Eurotherm. The board may even meet today. That will pave the way for the return of chief executive Claes Hultman to the company he is credited with turning around and out of which he stormed a month ago after failing to secure the executive chairman's job.

No one has emerged with any credit from this sad saga. Not the main protagonist Mr Hultman, who has behaved like a petulant two-year-old only to be rewarded with a special treat, nor the institutions who objected in haste and will most likely repent at their leisure, nor the non-executive directors of Eurotherm who have been pushed around to such an extent by all concerned that their role as independent watchdogs lacks all credibility.

The actions of a handful of institutions - the Pru, MAM and Schroders - in instigating the call for Mr Hultman's return has made a mockery of the idea that all shareholders are equal. Behind closed doors, and with a steadfast refusal to comment on their motives, they have negotiated the future board structure of the company with no reference to the rest of its owners. During the past month, the company's shares have drifted in an information vacuum.

The refusal of the institutions to explain their actions probably stems from a rising sense of embarrassment at the hole they had dug themselves into. By overruling the non-executives' decision to call Mr Hultman's bluff, calling cap in hand at his Swedish holiday island to ask him to come back, they have played Frankenstein. The monster they have created is a chief executive who will believe, with some justification, that he is untouchable by an emasculated board.

Ultimately, it is they who may rue Mr Hultman's return. He has nothing to gain and everything to lose by coming back to Eurotherm, where only a continuation of the impressive growth of the past five years will be deemed acceptable. It won't be terribly surprising in those circumstances when he finds a job with a better risk/reward profile somewhere else. Who will look silly then?

Ethics mean profits in the long term

If there are riots, it must be Indonesia. British investors seem pretty unconcerned about the dramatic unrest in Jakarta - as unconcerned, in fact, as they have been about Indonesia's authoritarian government and its repressive policies.

British companies' lack of interest in the politics of these far-away countries is, in a way, entirely understandable. There are few examples of internal conflict rebounding badly on international investors. Even in South Africa, where international sanctions and lobbying limited corporate activities, the interests of British companies suffered no long-run damage. Outrages like Tiananmen Square have simply been shrugged off by corporations who reason that if they don't grab the opportunity then someone else will.

Yet there is more at stake than the hypocrisy of investing in brutal and undemocratic regimes at the same time as sending top executives off on business ethics courses. Consumer boycotts of their products at home are admittedly remote and rarely effective.

But the times are a changin'. The jury decision earlier this week to acquit four women who disarmed a British Aerospace jet is one sign. American consumers have started applying pressure to companies like Nike who buy their goods from Indonesian sweatshops. Britain has more at stake, with the second biggest stock of investments in Indonesia after Japan.

More fundamentally, ethical business is, mostly, good business. If the Tiger economies are to join the first division, they will have to change politically. In the long-run there will be political reform in Indonesia. The companies who recognise that, rather than washing their hands of the politics, will be the ones that profit.

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