Enter Sir John Nott. Sir John was secretary of state for defence under Margaret Thatcher during the Falklands War. He resigned from the cabinet in 1983 and spent the next five years as chairman of Lazard Brothers, the merchant bank. While there he was paid a total of pounds 4.2m. He never needed to work again. But after a chance encounter with one of Record's non-executive directors at the gentlemen's club Pratt's, he was introduced to the company and agreed to help. He joined as a non-executive director and agreed to help sell the company's complex services.
It was a spectacular success for both parties. With his impeccable contacts in the highest echelons of big business, Sir John set up hundreds of meetings with the chairmen and finance directors of large corporations. Mr Record recalls: "Nobody had heard of us, but Sir John gave us access. If he made the phone call, we would never get turned down. He gave us credibility. Prospective clients said to themselves, 'If Sir John Nott's on the board, then that's all right then.' "
Over the following 18 months, he and Sir John pitched to an average of three prospective clients a week. They won many accounts and even where they were turned down, they put the company name about. Record Treasury Management has prospered mightily, scoring as one of the fastest-growing British companies in the five years since.
The rewards for the ex-minister were lavish, too. He was paid only a few thousand pounds in director's fees, but a generous share option package yielded him pounds 600,000 in 1993, when the company was restructured.
There were some drawbacks, Mr Record admits. Sir John was a dab hand at persuading company chairmen to give them a hearing. But the finance directors and corporate treasurers under them - the people who would be dealing with Record - were not always so sympathetic, sometimes feeling bounced into seeing him. But Mr Record still reckons that recruiting an ex- Cabinet minister was one of his better business decisions.
The revelation last weekend that Richard Needham, the former trade minister, was to join GEC less than four months after leaving the Government has again focused attention on the propriety of ex-ministers taking paid positions in the private sector. The Nolan Committee's investigation and recommendations into standards in public life has also stirred the pot.
Much has been said about the ethics of the matter. But there is another question. Do ex-ministers contribute much to the companies they join? What do they actually do? And are they good value for money?
Sir John Nott's efforts for Record were a spectacular example of a mutually beneficial relationship. The performance of other ex-ministers has been patchier. And there remains the public perception that ex-ministers are trousering pounds 25,000 in fees simply for nodding their way through half a dozen board meetings a year.
The boardrooms of big British companies are brimming with politicians, both practising and retired. Most are Conservatives. A study in April by the Labour research department identified 60 former Tory ministers who had left office since Mrs Thatcher came to power in 1979 and had among them 407 paid posts. Altogether they earned pounds 7.15m - an average of pounds 119,200 each.
Most large companies boast at least one figure from Westminster or Whitehall in the boardroom. Usually it is an ex-minister. A few companies, especially in the weapons and banking industries, have more than one. GEC, as well as recruiting Needham, is chaired by Lord Prior, a former Northern Ireland Secretary. Another director is John Lippitt, a former senior civil servant at the DTI.
NM Rothschild, the merchant bank, has both Lord Wakeham and Norman Lamont on its main board. In addition, Lord Walker (Peter Walker) sits on the board of its Welsh subsidiary and Lord St John of Fawsley (Norman St John Stevas) is a director of Rothschild Trust Corp- oration, an associate company. The retiring or sack- ed minister who does not succeed in augmenting his reduced income with at least one company directorship is a rarity. Some, such as Lord Walker, have more than half a dozen.
Ex-ministers have not always worked miracles. Shares in Starmin, a small quarrying products group, stood at 13p when Lord (Cecil) Parkinson, once Mrs Thatcher's favourite minister, was appointed executive chairman in May 1992. By the time he left in January this year, they had collapsed to less than a penny. His appointment in 1992 as non-executive chairman of Usborne, the pig-breeding company, was not enough to save the shares from collapse, though many of the company's problems had begun before his arrival.
The touch of David Howell, the former energy minister, has also been less than golden. Both the hotels group Queen's Moat Houses and the engineering- to-QE2 conglomerate Trafalgar House had a torrid time after he arrived in their boardrooms.
Companies that have underperformed since a minister came along to lend a hand are legion: Lord Lawson at GPA, the aircraft leasing company; Lord Tebbit at the business services group BET; Lord Gowrie at the hotels-to- bookies group Ladbroke; and Lord Howe at the cable maker BICC.
Of course, it would be absurd to blame a troubled company's ills on a single non-executive director. Doubtless these companies would have performed just as badly without their con-tributions. But this still leaves the question of what politicians bring to the party. Companies become imprecise when asked this question, talking vaguely of ex-ministers' superb contacts, diplomatic skills and ultra-sensitive political antennae. Yve Newbold, company secretary at Hanson, concedes that some politicians do not successfully make the switch from cabinet room to boardroom. But she is full of praise for Lord Baker, the former home secretary now on the Hanson board: "He's a very shrewd man with a great sense of business," she says. Barclays, where Lord Lawson is a non-executive director, says the former chancellor was helpful in building up the Far Eastern network of its investment banking arm BZW. Banking sources say the relationship at BZW was not happy. Lord Lawson was not a tea m player and although super-bright and super-opinionated, was not particularly interested in winning business for BZW. Andrew Buxton, Barclays' chairman, begs to differ. "Rubbish," he said last week. There are other examples of ex-ministers seemingly at sea in the politics of the boardroom. Lord Tebbit hardly covered himself in glory at Blue Arrow, the employment agency group. He started off supporting the colourful chief executive, Tony Berry, in sa cking his US colleague Mitchell Fromstein, only to execute a U-turn, helping to sack Mr Berry and reappoint Mr Fromstein. According to John Curtice, senior lecturer in politics at the University of Strathclyde, there are two attractions in having ex-ministers on the board: access and knowledge. Politicians open doors, both in Whitehall and Westminster. Foreign Office and De partment of Trade and Industry ministers often have wonderful contacts overseas - the result of numerous trade missions. Some ministers also have special knowledge of particular industries, either because they worked in them before switching to a political career (for example, Mr Lamont, who return- ed as a non-executive director to Rothschild), or because of relationships with large employers in their constituencies. Another attraction is that well-known politicians can give credibility to small companies, both with customers and shareholders. Yet for all the trumpeting of the virtues of small firms by Tory ministers, few have chosen to sit on their boards. Thismay be because remuneration is mainly linked to company size: blue-chip companies pay non-executives pounds 20,000 to pounds 30,000; a small firm would struggle to offer more than pounds 5,000. Another reason is sheer prestige. Business leaders who are supremely confident in their own spheres are often desperately insecure about the mysterious world of politics. They want someone on their side on the inside. Who better than an ex-minister?
There is a feeling among some that the ex-minister only has to get one thing right to justify his fee. If in a merchant bank, he only has to help swing one privatisation appointment to justify his annual pay a hundred times over. For an arms exporter, on e ace contact in the Middle East can justify it a thousand times. Some critics perceive a more sinister explanation for companies' enthusiasm to hire ex-ministers - that they may in some unspoken way be repaying politicians for past favours. Lord Young, as industry secretary, awarded a mobile phone licence to Mercury, a subsidiary of Cable & Wireless, on the independent advice of the regulator Oftel. He later joined C&W's board and is now the chairman, with an annual salary of pounds 479,000 . Lord Walker, as energy secretary, privatised British Gas. He now sits on the board, receiving fees estimated at pounds 25,000. Similarly, Lord Tebbit sits on the board of British Telecom, a company he helped to privatise. Lord (John) MacGregor was last year appointed deputy chairman of Hill Samuel. The previous year the Department of Transport, where he was then minister, had appointed the merchant bank to advise on the Channel Tunnel rail link. Lord MacGregor took no pa rt in the decision to use Hill Samuel. Indeed, in all these cases, the ex-ministers insist nothing improper took place. Whatever the attraction for the companies, the attraction for the ex-ministers is usually money. A minimum of pounds 20,000 for a non-executive directorship can grow to pounds 50,000 to pounds 100,000 for a deputy chairmanship. The sky's the limit with a chairmanship, although the duties expand. Lord Prior receives pounds 236,000 for chairing GEC. However, being a non-executive director is far more onerous than five years ago, because of the Cadbury Code on Corporate Governance. Non-execs are now expected to sit on sub-committees governing audit, remuneration or appointments. A single non-executiv e directorship takes up about 20 to 25 working days a year, says Mrs Newbold, who is shortly to become chief executive at Pro Ned, the organisation that promotes non-execs. So are ex-ministerial directors a good thing or a bad thing? The answer,as ever, is it all depends. One senior businessman, who fell out with a former minister, said: "My own view is terribly simple. Politicians with good business experience are super to have on boards. But all the evidence I've seen is that those without business experience are counter-productive. If Michael Heseltine [who successfully built up the Haymarket publishing empire before going into politics] ever resigns from Government, I' ll be first in the queue. Otherwise I'd be cautious about recruiting politicians." The question may in any case soon become academic. The tide is turning against ex-ministers, with some private shareholders noisily voicing their opposition. Mrs Newbold says: "Chairmen are certainly pausing a lot longer before taking ex-ministers on boa rd." Also, if Labour wins the next election, demand for former Tory ministers will collapse with their clout. Will we then see a surge of the next government's ex-ministers on to company boards? That would mean New Labour had indeed become very new.
Former ministers in the money
Cabinet posts held
Posts as chairman
Posts as director
Estimated pay LORD WALKER
Agriculture minister, Welsh secretary and energy secretary
Thornton & Co,
Tate & Lyle, Smith New Court, Dalgety, British Gas
pounds 300,000 LORD PRIOR
Employment secretary and Northern Ireland secretary
GEC, East Anglian Radio
United Biscuits (Holdings)
pounds 280,000 LORD YOUNGER
Scottish secretary and defence secretary
Royal Bank of Scotland, Siemens Plessey Electronic Systems, Murray Johnston
Scottish Equitable Life Assurance Society, PIK Holdings
pounds 250,000 LORD YOUNG
Employment secretary and trade and industry secretary
Cable & Wireless
Ministers who might soon be job-hunting
Constituency and majority
Possible future jobs?
Edinburgh Pentlands, 9%
Any exporter; as a former defence secretary, he would be an ideal candidate for arms exporters. Directorship of any of Edinburgh's many financial institutions.
President of the Board of Trade
Galloway & Upper Nithsdale, 5%
Any utility; Lang's predecessors at the DTI have invariably mopped up plum jobs. Any insurer; insurance is the family business.
Stirling, less than 1%*
Scottish financial institutions. Scotland-based British Energy, combining Nuclear Electric and Scottish Nuclear, will be looking to bolster its board after privatisation.
Sir George Young
Ealing and Acton, negative*
Railtrack, the core of BR primed for flotation, or a privatised port. His background as an economist might help clinch a City position. Building firm might like his housing expertise.