Daily Mail - 16.08.2019

Daily Mail, Friday, August 16, 2019

Victims hit by

Connaught’s

collapse blast

City watchdog

by Lucy White

Easter sales

push profits

higher for

Asda owner

THIS year’s late Easter
helped Asda post a small
increase in second quarter
sales – but the supermar-
ket’s boss said conditions
are still challenging.
Asda, which is owned by
US giant Walmart, said
sales in stores open more
than a year increased by
0.5pc. The rise came
despite a strong showing in
the same period of 2018,
when the weather was unu-
sually sunny and the foot-
ball World Cup was boost-
ing food and drink sales.
Chief executive Roger
Burnley also blamed Brexit
uncertainty and low con-
sumer confidence.
He added: ‘Our non-food
business has been chal-
lenged. However, we’re sat-
isfied that our food busi-
ness has continued to
perform well and our online
growth continues to out-
pace the market. While I
remain proud of our con-
tinued strategic focus, I am
under no illusions as to
how challenging this mar-
ket remains for all.’
He said Asda needed to
continue its focus on cost-
cuts to drive up profits,
including introducing con-
troversial staff contracts.
It is offering higher hourly
wages, but staff will have to
accept unpaid breaks and
work bank holidays.

A DEADLY fungus strain could send the

price of bananas jumping – or even

wipe out global production.

A type of the Fusarium fungus, which

causes Panama disease, has been dis-

covered in South America for the first

time – on plants in Colombia, which

has declared a state of emergency.

There are around a thousand types

of banana but nearly half of all those

grown worldwide – and most of the

ones eaten in Europe and the US – are

of the Cavendish variety, which is sus-

ceptible to the disease.

There is no known cure and the dis-

covery by scientists in the Nether-

lands has raised fears that the fungus,

which attacks a tree’s roots, could

spread to Ecuador, which is the big-

gest banana exporter, so supermar-

ket fruit sections could be hit.

Prices rise when there is less of a

commodity but it could take time for

any change to take effect. A banana

currently costs 14p at Tesco.

Even though the fungus is not harm-

ful to humans, it could completely

wipe out Cavendish bananas.

The UN has deemed it a ‘serious

threat to banana production’.

VICTIMS who lost over £100m

in a savings scandal have

slammed the City watchdog for

‘whitewashing’ an independent

review into what went wrong.

Savers who trusted failed Con-

naught Income Fund claim its

collapse could have been

stopped – and now believe the

truth could be kept secret.

Around 2,000 people lost their

nest eggs when Connaught went

bust in 2012, losing savers

£106m, amid fraud allegations.

Regulators at the Financial

Conduct Authority (FCA) have

released details of a probe into

their handling of the case, to be

led by barrister Raj Parker.

But campaigners are con-

cerned that any enquiries which

Parker needs to make of exter-

nal bodies, such as the police or

the fund’s liquidators, must be

lodged with the FCA, which will

then request the information.

Mark Bishop, who runs the

Connaught Action Group, says

this could allow the FCA to con-

ceal facts which paint it in a bad

light. He said: ‘If the FCA’s

intention is to deliver a white-

wash that exonerates the organ-

isation and its senior team for

seven years of negligence and

cover-up, it could not have set

up the review more effectively.

‘This is unacceptable, more

than seven years after the fund

was suspended and after many

of the victims have retired and

some have died.’

The FCA will be able to see a

draft of the independent review,

and request changes, before it is

made public. No one below the

level of director at the time of

their actions will be named.

Bishop said: ‘We will have no

right to be notified of such

changes, let alone to question

them, and nor will we be allowed

to scrutinise a draft report

prepublication.’

The FCA said: ‘We are satisfied

that the protocol will enable the

independent reviewer to iden-

tify any failings. The FCA will

not filter or influence which

documents the reviewer can

see. Any individual or organisa-

tion that has been criticised has

the right to make representa-

tions prior to publication.’

1,000Varieties of

bananas worldwide,

although nearly all sold

are the Cavendish type

114mTonnes of

bananas produced

worldwide each year

13.8mAcres of land

used worldwide for

growing them – more than

twice the size of Wales

5bnBananas eaten

each year in the UK

1.4m Bananas thrown

away each day in Britain

20pcOf the UK’s 15m

tonnes of annual food

waste per year is bananas

BANANA-GEDDON FEARS

FROM DEADLY FUNGUS

T

HERE has been quite a
change of tone at Burford
Capital in its ding-dong
with short-selling hedge
fund Muddy Waters.
Just a few days ago, the company
was making bellicose noises against
its tormentors.
But since then it’s done a bit of thinking
about the ‘evolution’ of its corporate gov-
ernance, as you do.
This supposedly Darwinian exercise raises
at least as many questions as it answers.
Burford admits shareholders are not
happy with it being solely listed on Lon-
don’s AIM market, which is more lightly
regulated than some others.
So it is stepping up plans for a second list-
ing in New York, which it says it has been
pursuing for a while.
What was taking so long? And why was
the company, whose founders are both
Americans based in the US, listed on AIM
and incorporated in Guernsey in the first
place? It’s welcome news that Elizabeth
O’Connell, the wife of chief executive Chris-
topher Bogart, is stepping aside as finance
chief – but why was she ever hired?
However brilliant she may be, did it not
occur that this was not a good look? Or that
there must be other excellent candidates?

Speaking of which, what about Muddy

Waters’ accusation that her replacement is

not independent, as he previously acted as

an investment banker for the company?

When questions are raised about account-

ing practice, wouldn’t it have made sense to

hire a chief financial officer who did not

have even the faintest whiff of a conflict?

As for Sir Peter Middleton – who is retiring

at the age of 85 after earning £1m over a

decade – one wonders why, as chairman, he

allowed such flawed governance to go on so

long. It is a sad coda to a distinguished

career at the Treasury and Barclays.

The biggest question, however, is one

for shareholders, including the discredited

Neil Woodford.

It’s quite simple: why did they do nothing

about the governance swamp at Burford

until Muddy Waters came onto the scene?

Why, in other words, did it take action by

short-sellers to prompt some ‘evolution’?

Risky bet

WHEN the Government clamped down on

fixed odds betting terminals (FOBT) with a

swingeing cut in the maximum stake, the

bookmakers wept and wailed about the

dreadful consequences.

But to the surprise of no one, the impact

on GVC – the owner of Ladbrokes Coral and

one of the biggest players – has not been as

bad as first suggested.

Rather than Armageddon, it has hiked its

full-year earnings forecast and says it will

shut 900 shops instead of the 1,000 pre-

dicted. Strong online revenues are making

up for some of the hit.

GVC is well-placed to expand in the US

and is trying to respond to concerns over

problem gambling.

It has volunteered for a TV advertising

ban during football games and donated its

shirt sponsorship at Sunderland and Charl-

ton to the charity Children with Cancer.

Kenny Alexander, the chief executive,

even took the moral high ground, joining

the Church of England in attacking a multi-

million pound deal for Derby County’s new

signing Wayne Rooney to wear a shirt pro-

moting online casino 32Red. But Alexander

has more to do.

Holding the annual shareholder meetings

in the UK and not Gibraltar is one thing.

Placating investors, many of whom voted

against the £37m in pay and bonuses he has

taken home over two years, is another.

Retail relief

THE great British consumer brought

some cheer to nervous markets with yester-

day’s retail sales figures, which were sur-

prisingly healthy.

Or perhaps it’s not so surprising, given

that employment is at a record high, as the

stats earlier in the week confirmed.

Those dauntless shoppers here and in the

US soothed the markets.

Dealers had been unnerved by the

‘inverted yield curve’ – I won’t bore you with

the technicalities, but it’s a historically reli-

able signal from US bond markets that a

recession is on the cards.

Markets often follow a day of turbulence

with a calmer session, but there are plenty

of underlying worries.

Germany lurching into a slump, political

turmoil in Italy, a trade war between the

US and China, an economic crisis in Argen-

tina – and that’s without mentioning the

B-word. Buckle up for a bumpy ride.

Wading in muddier waters

Victory in board fight

THE activist investor push-
ing for a board overhaul at
First Group has won a key
victory after the bus and
rail firm appointed its nom-
inee as chairman.
David Martin, 67, the
former chief executive of
rival Arriva, has taken over.
Shares rose 6.4pc to 121.9p
following the announce-
ment, a day after it won a
bid to operate the West

Coast mainline with Italian

group Trenitalia. Activist

investor Coast Capital Man-

agement, which owns 10pc

of the company, engineered

the resignation of former

chairman Wolfhart Hauser

in June, claiming he was not

experienced enough.

Hauser departed after the

annual meeting, where 30pc

of shareholder voters

opposed his re-election.

RETAIL sales defied gloomy

forecasts and grew 0.2pc

in July.

Analysts expected a 0.2pc

fall compared to June but

the Office for National Sta-

tistics (ONS) confirmed the

surprise rise.

Department store sales

increased for the first time

this year, with month-on-

month growth of 1.6pc.

However the real surge

came from online sales,

which represented the

biggest rise in goods

bought and money spent.

The total spent on the

internet rose by 2.1pc and

the volume of goods

bought digitally rose by

2.2pc. The ONS said the

only area to suffer a fall

was food sales.

HONG Kong has cut its

economic forecasts after

being hammered by increas-

ingly violent protests.

The territory is now

expecting growth of

between 0pc and 1pc this

year, financial secretary

Paul Chan said, down from

a previous estimate of 2pc

to 3pc.

Chan unveiled a £1.9bn

support package to ease

pressure on the economy,

which will include subsidies

for businesses and income

tax breaks.

But he insisted the gov-

ernment is not folding to

political pressure.

Droves of tourists have

cancelled bookings to visit

Hong Kong, and retailers

are expecting a sharp drop

in their sales after ten weeks

of protests.

High Street defies gloom Hong Kong growth cut

Page 73

Ruth

Sunderland

BUSINESS EDITOR