Daily Mail - 13.08.2019

Page 67

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s befits a litigation spe-

cialist, burford Capital

has donned combat gear

and is challenging Califor-

nia short-seller Muddy

Waters over a sophisticated form of

market manipulation.

it alleges there was illegal share activ-

ity on August 6 and 7, leading to a 50pc

cratering of burford shares.

A technical expert engaged by burford

found that ‘spoofing’ techniques, favoured

by investment cheats, are at the heart of its

woes. spoofing – placing an order and then

withdrawing it before it can be executed –

was behind the 2010 flash crash on Wall

street which landed the ‘Hound of Houns-

low’ Navinder sarao in court.

the financial Conduct Authority (fCA)

has begun a probe. its involvement is

unlikely to have Carson block, the trader

behind Muddy Waters, shaking in his boots

given the snail’s pace of past inquiries. it

might be different were the Us authorities

to take an interest.

the speed with which the fCA has

pounced may appear impressive. but brit-

ain’s savers would be more convinced were

the watchdog and its chief executive

Andrew bailey taking an aggressive

approach when it comes to dealing with one

of burford’s biggest backers, Neil Woodford.

it is no surprise that the fund managers

chosen by bestinvest in its ‘spot the Dog’

survey are Woodford, his former employer

invesco, and st James’s Place. each,

together with investment platform Har-

greaves Lansdown, placed their faith in the

discredited guru.

the pain suffered at Woodford’s hands is

palpable. it is unconscionable that he is still

charging fees to savers who will not be able

to get their hands on trapped cash and

retirement pots until December at least.

failure by Woodford to listen to the fCA

and his main promoter Hargreaves

Lansdown on suspending fees shows insen-

sitivity beyond understanding.

Allowing him to trade himself out of trou-

ble is like watching a gambler on the bookies’

‘crack-cocaine’ fixed-odds betting machines

seeking to recover losses. Whatever the

merits of the Muddy Waters critique, there

is no escaping the reality that burford was

pumped by Woodford and might have been

dumped had he not been desperate to hang

on to listed holdings.

Another Woodford triumph is mattress

maker eve sleep. the shares floated at 101p

in May 2017 but have been suspended at 4.9p

pending a potential merger with rival simba.

Unfortunately, a combination of Woodford

obduracy, Hargreaves cosiness and fCA

feebleness means that memory-foam mat-

tresses or not, savers are condemned to

more months of bad sleep.

Quick silver

YoU only have to look at the surge in Astra-

zeneca’s share price to understand how

R&D can drive long-term growth.

A report by innovation foundation Nesta

shows that the short-term way in which pay

among ftse 350 executives is set by remu-

neration committees and consultants dis-

courages innovation.

Long-term incentive plans, which often

pay out the biggest bucks, typically extend

for three years. Given that R&D and inno-

vation can take an economic cycle to pay

off, Nesta says that only 16pc of incentive

plans actually encourage innovation. some

39pc positively discourage it.

the Government’s industrial strategy

sets great store on R&D and innovation

driving productivity and growth.

sadly UK directors and shareholders are

obsessed with the short-term earnings and

share prices which are built into most incen-

tive packages.

indeed, the recent decision of the board of

defence and space giant Cobham to accept

a private equity takeover from Advent and

blackstone in the face of fierce opposition

from the founding Cobham family and the

group’s biggest shareholder silchester,

speaks loudly to how easily boards succumb

to easy money over longer term investment.

it’s bitterly disappointing.

Bulking up

tHe challenge of Netflix, Amazon and

upstarts continues to force the pace of

mergers in Us production and media.

the next deal looks like a coming together

of the Cbs network with Viacom, which

owns Paramount and Channel 5, to create a

£26bn group.

Main investor in both companies is the

Redstone family-controlled National

Amusements, which supports this on-off

deal with a tumultuous history.

in the era of Comcast-sky and Disney-fox

deals, scale looks to be the favoured choice.

Savers who sleep badly

Alex

Brummer

CITY EDITOR

Ex-Goals duo quizzed

GoALs soccer Centres’

former boss and finance

chief are under investiga-

tion by the company.

the five-a-side football

pitch operator confirmed

that Keith Rogers, who left

in 2017, and bill Gow, who

moved on to teacake maker

tunnock’s, are under inves-

tigation over historic finan-

cial irregularities. Goals is

reeling from the uncovering

of ‘improper behaviour’ by

senior staff stretching back

nine years, leaving it with a

£12m tax bill. Rogers and

Gow’s behaviour while at

Goals is part of an investi-

gation which has already

seen shares suspended.

the financial Conduct

Authority is also investigat-

ing, although it refused to

comment. Neither Rogers

nor Gow commented.

ANGLING Direct has

reported strong store

sales amid its expansion.

Revenue for the six

months to July 31 at the

fishing specialist jumped

21pc to £26.52m, against

what it called a ‘challeng-

ing period’ for retail.

Store sales increased by

41pc to £14m, boosted both

by the opening of five

stores and 15pc like-for-

like sales growth.

Online sales were up 10pc

to £11.9m, but third-party

sales declined by 47pc to

£620,000 as the group

shifted to focus on selling

through its own website.

Expansion plans remain

on track as the company

opened a store near Leeds

at the weekend.

DR MARteNs has credited

a new line of sandals for

helping it buck the gloomy

mood on the High street.

Revenue across the shoe

retailer, famous for its

boots, leapt 30pc in the year

to March 31 to £45.4m.

sales across its website

and bricks-and-mortar

stores both climbed, while

revenue grew in europe, the

Americas and Asia. Dr Mar-

tens, which became a

household name in the

1960s after rock star Pete

townshend of the Who

wore its original workers’

boots, said its new line of

lightweight sandals, which

launched in spring 2018, had

enabled the brand to ‘drive

year-round relevancy’.

it sold 8.3m pairs of shoes

in the 12-month period, up

20pc from the year before.

Fishing firm reels ’em in Tough sandals lift sales

Daily Mail, Tuesday, August 13, 2019

BLACKROCK’S fledgling private

equity fund has snapped up a

£725m stake in the US entertain-

ment group that owns the brands

of stars including Marilyn

Monroe, Elvis Presley and

Muhammad Ali.

Blackrock Long Term Pri-

vate Capital is the largest

shareholder in Authentic

Brands. The company, set

up in 2010, buys celebrity

brand rights and then

licenses them out to firms

that want to put their image

on products such as cloth-

ing and handbags.

It also owns clothing brand

Juicy Couture and in May

bought American magazine

Sports Illustrated – which is

famous for its annual swimwear

issue – for £91m.

It is the first private equity

investment made by Blackrock,

which is the world’s biggest

money manager, as it tries to

cash in on the global boom in

private equity deals.

In Britain, these include Advent’s

£4bn bid to take over defence

group Cobham and a £6bn deal to

buy satellite-maker Inmarsat.

Private equity companies pool

money from multiple investors to

buy up already-private firms or

to take public firms into the

private sphere.

FAMOUS FACES

SNAPPED UP IN

£725m DEAL

Will RBS hike

chief’s pay in

pension row?

by James Burton

KPMG sack

partner ‘over

WhatsApp

messages’

AUDitoR KPMG has

reportedly forced out one

of its partners over mes-

sages sent on WhatsApp.

tim Howarth, the firm’s

head of UK financial serv-

ices consulting, was ousted

on friday after a discipli-

nary hearing.

the 53-year-old had

worked at KPMG for 15

years and also ran its risk

consulting service.

His dismissal for miscon-

duct was connected to

messages sent on Whats-

App, according to the

financial times.

A KPMG spokesman said:

‘We hold all of our people to

a very high standard and

take swift and appropriate

action against any individ-

ual whose behaviour con-

travenes the firm’s values.

‘As part of this commit-

ment, we can confirm con-

duct issues have been

raised related to a partner

and, following an internal

investigation and discipli-

nary panel, that partner

has left the firm.

‘Under our process, the

partner has appealed.’

However last night

Howarth said KPMG’s

comments were ‘bizarre’ as

the decision was under

appeal. He said he had

resigned from his partner-

ship and did not expect ‘a

just outcome’.

bAiLeD-oUt Royal

bank of scotland could

hike the salary of new

boss Alison Rose to offset

a £250,000 cut to her pen-

sion payments.

Rbs is expected to shortly

confirm the promotion of 49-

year-old Rose, who is chief

executive Ross Mcewan’s

deputy in the Natwest own-

er’s retail banking arm.

she is expected to be given a

less generous pension package

than Mcewan, but could see

other elements of her pay

boosted to make up for it.

Mcewan gets a salary of £1m

plus a further £1m in shares

each year. He also pockets

£350,000 towards a pension –

equal to 35pc of his salary, which

is far higher than what is given

to ordinary staff.

the retirement payments have

triggered an outcry and Rbs

has pledged to trim them back

for his replacement.

Rose is expected to get 10pc

pension contributions, which

would equal £100,000 if she was

also on a salary of £1m, meaning

she would get £250,000 a year

less than Mcewan in fixed pay

overall. However, it is under-

stood the pay-setting committee

at Rbs could hike Rose’s base

salary to offset this cut. sources

said Rbs already pays its bosses

less than rival bank chiefs, and

the lender may be keen to avoid

falling further behind.

Like Mcewan, Rose will be

entitled to further payments on

top, such as bonuses, a car

allowance and insurance.

the Durham University-

educated banker has long been

seen as the frontrunner to take

charge of Rbs after Mcewan’s

departure. she has reportedly

seen off competition from the

likes of ian stuart, head of

HsbC’s UK retail arm, and her

appointment is expected to be

announced within weeks.

Rose will be tasked with con-

tinuing the turnaround of the

lender. Rbs was rescued with

£46bn of taxpayers’ money after

years of mismanagement under

notorious boss fred ‘the shred’

Goodwin. the treasury still

owns a 62.4pc stake in Rbs.

Mcewan has dragged the bank

back into profit after years of

multi-billion-pound losses, and

the lender is once again starting

to ramp up dividend payments.

However, it has shut more

than 1,400 branches in the past

decade as part of cutbacks to

boost profits. Rbs declined to

comment last night.