Rowland fends off challenge at Lonrho: Rival chief executives reach compromise on appointment of non-executive directors

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The Independent Online
ROLAND 'Tiny' Rowland has headed off attempts by Dieter Bock, his business associate and fellow joint chief executive, to dilute his influence on the Lonrho board.

Although a fragile peace appeared to have broken out among the directors of a company locked in one of the most gripping boardroom dramas in years, Mr Rowland was last night mustering his supporters. It marked a further attempt to head off reforms proposed by Mr Bock, designed to reassure investors in Britain's most secretive company.

Mr Rowland has been concerned that Mr Bock's efforts to secure outside businessmen as non-executive directors would force him to disclose more information about the company he has built up over 32 years.

Mr Bock acquired an 18.8 per cent stake in Lonrho at the beginning of this year. He subsequently became joint chief executive working alongside Mr Rowland. As part of the deal, in which he brought much-needed capital to the debt- ridden international trading group, Mr Bock insisted on the appointment of at least two non-executive directors with a view to increasing their representation to four.

The two men he initially proposed were Peter Harper, a director of Hanson, the Anglo-American conglomerate, and Stephen Walls, chairman of Albert Fisher, the food processing and distribution group.

After tense behind-the-scenes bargaining, Mr Rowland has gained a compromise that should ensure that Mr Bock's support among executive directors will be cut back and that his initiative in appointing two non-executives will be braked.

Mr Rowland has proposed, and Mr Bock has accepted, that alongside Mr Walls and Mr Harper will come Sir John Leahy, who served as a director of the Observer newspaper when Lonrho owned it. Sir John, 65, is a career diplomat. The appointments were approved at a board meeting yesterday morning, after which Lonrho said that all directors had unanimously agreed.

Sir John will serve as a non-executive director. The other Lonrho appointee is Terence Wilkinson, managing director of Lonrho's operations in South Africa. Born in 1946, Mr Wilkinson joined Lonrho in 1973. He will serve as an executive director.

Mr Bock's supporters on the new board of 16 are expected to be Robin Whitten, Sir Peter Youens, Nick Morrell, Philip Tarsh, Mr Walls and Mr Harper.

Mr Rowland's supporters are believed to be Rene Leclezio, the group chairman, Paul Spicer, deputy chairman, and Robert Dunlop, another deputy chairman, as well as Sir John Leahy.

Mr Wilkinson is believed to be liked by Mr Bock, but in view of his promotion at the insistence of Mr Rowland could turn out to be a supporter of the Lonrho establishment. The rest of the directors are said to be broadly neutral.

A leading Lonrho analyst described the move as 'a typical Lonrho compromise'. If Mr Bock had not gained the appointment of his nominees he would have called an extraordinary meeting of shareholders to gain their approval.

Mr Bock intends to set up audit and remuneration committees run by the non-executive directors, the first Lonrho has appointed in more than 20 years. In the early 1970s Mr Rowland mounted a boardroom coup with the support of shareholders, and removed eight directors who disapproved of his business methods. Since then he has dominated the company.

Last weekend the Independent on Sunday revealed that at least three directors, including Mr Rowland, are receiving six-figure company pensions on top of their substantial salaries. It also revealed that Mr Rowland had been trying to find buyers for Mr Bock's 18.8 per cent shareholding as relations between the two men cooled.

According to critics Mr Rowland runs Lonrho like a private company, while Mr Bock believes that since Lonrho has its shares listed on the Stock Exchange it should be fully accountable to all shareholders. He has been trying to improve Lonrho's standing within the City by meeting the demands of fund managers for more accountability.

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