Tiny faces last battle at Lonrho: Reports of pounds 5.5m annual costs set to dominate agenda Claims add to controversy over Lockerbie film

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The Independent Online
TINY ROWLAND is expected to face an attempt to strip him of his role as joint chief executive of Lonrho at this morning's meeting of directors of the mining conglomerate dominated by the tycoon for 33 years. The move follows reports he costs the group more than pounds 5.5m a year in pay, expenses and perks.

Dieter Bock, the German businessman who has run Lonrho in uneasy tandem with Mr Rowland since taking a near-19 per cent stake in the company at the beginning of last year, is thought to be behind moves to test support among fellow board members for Mr Rowland's continued role as his joint chief executive.

The claims, spiced by Mr Rowland's recent controversial sale of the rights to a film on Lockerbie to a company connected to the Libyans, are expected to force their way on to the agenda of today's monthly meeting of directors.

'I'm sorry, I'm too busy to talk,' Mr Rowland said yesterday, when asked about the allegations.

'Common sense would tell me they'd discuss the salary issue,' said a source close to Mr Bock. 'Given the fact that the story was planted in that particular way, there is clearly dissent on the board,' he added.

On top of paying him a pounds 1.2m salary, Lonrho is said to have contributed pounds 500,000 to the costs of Mr Rowland's house in Belgravia and Hedsor Wharf, his house in Buckinghamshire, pounds 1m in business expenses, the near-exclusive use of the company jet and pounds 300,000 in staff costs. Other costs linked to him apparently include the funding of the education of the children of African business contacts.

The annual accounts show that the 76-year-old Mr Rowland received pounds 1.6m in salary and other expenses. The reports mean he will come under pressure to detail the extent to which he benefits personally from expenses met by the company.

This has rekindled a debate about the financial relationship between Mr Rowland and Lonrho, first raised more than 20 years ago during an earlier, unsuccessful attempt to unseat him. At the time his expenses and lifestyle were famously dubbed 'the unacceptable face of capitalism' by Edward Heath, then prime minister.

His power base has since been greatly weakened by his decision to sell half his shares to Mr Bock, who now owns 18.8 per cent of Lonrho, while Mr Rowland's holding has fallen to just over 6 per cent.

Mr Bock's hand has been strengthened by the way he has driven through changes to the company's articles of association, and the removal of longstanding supporters of Mr Rowland from the board.

The articles now provide that it is up to Lonrho's directors, on a majority vote, to decide who should fill roles such as chairman or chief executive. A director can be removed from the board altogether - in which case he automatically loses any executive post - if presented with a notice signed by three-quarters of his co- directors. Lonrho might have to pay compensation, however.

Of the 13 remaining board directors, only Rene Leclezio, the chairman, and Robert Dunlop, deputy chairman, are longstanding supporters of Mr Rowland. Moreover, severance payments of dollars 732,000 and pounds 120,000 and of pounds 772,624 respectively were approved for the two men at the company's annual meeting earlier this year. Mr Dunlop is due to leave at the end of this month and Mr Leclezio at the end of October. In addition to Mr Bock, the other directors include three non-executive directors brought on to the board at his insistence. They are Sir John Leahy, a retired diplomat, Peter Harper, a director of Hanson, the conglomerate, and Stephen Walls, chairman of Albert Fisher, the food company.

Sir John, who is also a member of Lonrho's remuneration committee and chairman of the nomination committee, which recommends who should fill executive posts, said yesterday: 'All will become clear after the event.'

The remaining directors are thought to be more likely to support Mr Bock than Mr Rowland.

If dismissed, Mr Rowland could seek the support of other shareholders for an emergency general meeting that could re-nominate him.

At least 10 per cent of shareholders need to vote in favour of calling such a meeting so Mr Rowland would need support. He would also need a majority of shareholders to back his reappointment.

Lonrho's share price ended up 6.5p at 142.5p, as the stock market welcomed the prospect of a resolution to the leadership struggle.

(Photograph omitted)

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