CITY AND SUBURBAN
There's a nasty code going around, and Sir Rocco has caught it
CHRISTOPHER FILDES
Poor Sir Rocco Forte. Well, actually, quite well-off Sir Rocco Forte, but you see what I mean. In defence of his besieged company he has had to make the supreme sacrifice. He is giving up the chair of the company his father founded in favour of his deputy, Sir Anthony Tennant, today's chairman for all seasons. Such are the demands of Cadbuar- ial correctness. Sir Rocco had doubled as chairman and chief executive, the Cadbury code recommends that the jobs should be split, and too many of Forte's big sharehold- ers use the code as a substitute for thought. To help stave off Granada's bid they have to be placated. Where, I wonder, have these shareholders been all this time? They might reasonably have complained about the money fruitlessly tied up in the Savoy, year after year, in pursuit of a cherished dynastic ambition. That had serious implications for the conduct of the business. Not a chirrup from them — though at the first cannonade from Granada, Forte shrewdly cut its Savoy stake loose and stood by to throw it over- board. Now, at the last minute, they are pre- pared to make a fuss about Sir Rocco's dou- ble act, not for any harm it does, but because the code (or so they understand it) tells them to. It does not exempt them from using their wits. They have a job to do and if they expect a code to do it for them they are going to be disappointed. I much hope that Sir Ronald Hampel, who in in his spare time from chairing ICI has the job of reviewing the Cadbury code, is going to tell them so.
Shorty D'Oro and the . . .
MEET Shorty D'Oro. He belongs to the remedial class of investors who manage the gold of the world's central banks. Theirs is the biggest hoard of all — last valued at £214 billion — and what do they do with it? They try to keep the price down. Some of the class have found novel ways to do this. Ivan looked the other way while most of the 2,500 tonnes in the Soviet Union's reserves of gold disappeared, leaving no address. There was a promising Portuguese boy who lent half his country's reserves to the investment banking house of Drexel Burnham, kings of the junk bond. (Drexel then joined its bonds on the junk heap.) His Dutch and Belgian colleagues waited until the price was at its lowest for a decade, and then sold. It bounced. Shorty — only his name has been changed — thought that he could make some extra money for his central bank by granting options on its gold. He made quite a busi- ness of this. It could only be a good busi- ness for as long as the price did not go up, but he could always try to stop that happen- ing by selling gold on the world's markets. Where, though, was he to get the gold to sell? The helpful Bank O'Gnome would arrange to lend him a few tonnnes, on terms. Mark you, the terms have been get- ting stiffer, and the price has been bouncing up, which suggests that there is not all that much spare gold about. Why should there be, in a world now consuming 700 tonnes a year more than it produces? American dentists have managed to persuade their patients that gold teeth improve their virili- ty. Supply and demand, left to themselves, will carry the price forward, and if that happens, Shorty will come to regret that he did not find a simpler way of making money out of gold, such as owning it and sitting on it.
. . . world's worst investors
SHORTY'S TROUBLE is that he and his bank have, as central banks do, a conflict of interest. Its gold reserves are there to sup- port its paper currency, which has proved about as lasting and desirable a store of value as a pat of butter in a heatwave. (Shorty's is a hot country.) Central banks do well out of the paper money business. They exploit their local monopolies. If all goes according to plan, a monopoly will shortly be established across the length and breadth of Europe. Gold has always been their competitor. Gold's value does not depend on the caprices of national eco- nomic policies or even on the competence of central bankers. No wonder they resent it, and like to pretend that they have made it obsolete. Our inflationary century of paper money is no advertisement for them or for their skills. If they had any sense they would acknowledge that, and try to manage their £214 billion investment to their advan- tage and ours — but the remedial class of investors has a long way to go.
Bin and gone
I AM one of the 160,000 people on Sir Andrew Large's worry list. The Eligible Life keeps sending questionnaires to me but I just file them in the bin. At the Securi- ties and Investments Board, Sir Andrew wants us all to fill in our insurers' question- naires, so that he can find out whether we were given bad advice about our pensions, eight or nine years ago. If so, he says, we should be due for compensation. Who will have to pay it? I shall. The Eligible is a mutual society, and has no money that does not belong to its members. Carrying out Sir Andrew's investigations has already cost the life assurers tens of millions of pounds, and he does not rule out the possibility that some of them will go bust. Where, then, would their members and policyholders look for compensation? I have a simple suggestion for Sir Andrew. After all these years he should draw a line. He should assume that those of us who bin his ques- tionnaires are reasonably happy with their pension plans, and announce that they have put themselves out of time for compensa- tion. That would improve the Eligible's chance of surviving me, thus shortening his worry list and mine.
Watch it, Prudence
IT IS NOT for me to prejudge the case of Michael Jennings, the Prudential's manager who is alleged to have asked three mem- bers of his staff to marry him. I wonder, though, whether his employers' advertising has confused him. First, there was the Man from the Pru, who called from house to house but always kept his hat on. He gave way to Prudence, a severe young person with a bow who may have been a clone of Diana, the virgin huntress. It was later sug- gested that Prudence could help wannabes fulfil their various aspirations. Now the Pru has sacked its advertising agency again. I hope that Abbott Mead, its new choice, will bring back the Man from the Pm, but this time model him on Mr Jennings.
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