Marcus Agius falls on his sword

July 2, 2012

Marcus Agius is ‘Liborated’ as chairman of Barclays

Barclays faces serious charges over the fixing of the London Inter-Bank lending rate (Libor). Its chairman, Marcus Agius resigns. Will Bob Diamond, the bank’s most valuable player (MVP), also be forced into premature retirement?

Acceptance of disgrace and retention of honour

It as ancient symbolic gesture for a leader to fall on his sword, the ultimate gesture of acceptance of disgrace and retention of honour. The gesture is sometimes made with a little help from others. A modern version is the loaded pistol provided to the exposed traitor. The Telegraph reported the resignation [Monday 2nd July, 2012]:

Barclays was fined a record £290m last week for attempting to manipulate the interbank lending rate, Libor, between 2005 and 2009.

Mr Agius, chairman for the past five years, said on Monday: “Last week’s events – evidencing as they do unacceptable standards of behaviour within the bank – have dealt a devastating blow to Barclays reputation. As Chairman, I am the ultimate guardian of the bank’s reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside.”

A metaphoric pistol?

Maybe Mr Agius was handed the metaphorical equivalent of a loaded pistol after being cornered by his enemies. His gesture of self-destruction is something out of the last scene of a spy-thriller. It also appears consistent with his reputation of conducting business in an honourable way. There’s Mr Agius for you. But then there’s his CEO, the finance superstar and controversial Mr Diamond.

Then there’s Diamond Bob..

The impact of the Libor wrongdoings will have further repercussions Mr Aigus and the Bank’s CEO Bob Diamond were expected to receive an invitation to spend a little time with members of Her Majesty’s Select Finance Committee after their next meeting [Tuesday 3rd July 2012].

Now Mr Aigus is gone. But Diamond Bob is a quite different figure. His reputation as a successful financial leader was reflected in his reputation and glittering remuneration year by year. But this is the year of the stakeholder spring. Mr Diamond is no longer described primarily as a generator of wealth and employment, even in the generally admiring pages of the financial press. Despite the recently-imposed fine on Barclays of £291 million, as well as Revenue and Customs tax settlement fine of nearly twice that amount, Mr Diamond may still be seen as a valuable (if somewhat diminished) asset by some of Barclays’ the big stakeholders.

That’s the thing about financial assets. They tend to go up and down in value.

To be continued

The Libor affair is capturing the headlines this week. We examined Mr Diamond’s spectacular knack for making money and generating public enemies in an earlier post.


Sweet and Sour? Anthony Ward shakes up the Cocoa Bean Market

August 2, 2010



Written and Analysed by Susan Moger

When asked the greatest challenge a politician can face, Harold Macmillan replied “Events, dear boy, events”. This is a comment with which senior leadership teams in the confectionery sector in Europe will no doubt identify, on learning the recent news of a raid on the world’s supply of cocoa beans.

It is unlikely that they would have anticipated the effects of the activities of Anthony Ward, a commodity trader specialising in cocoa, whose hedge fund Amajaro has bought £650m ($992m) worth of cocoa beans, 7% of the world’s supply [July 16th, 2010].

According to The Telegraph: Anthony Ward, 50, bought 241,000 tons of cocoa beans and now owns enough to manufacture 5.3 billion quarter-pound chocolate bars. Mr Ward, who is worth around £36 million, holds so much of the market he could force manufacturers to raise the price of Britain’s favourite chocolate bars. The former Chairman of the European Cocoa Association has amassed up to 15 per cent of the word’s cocoa stocks in the last ten years. The cocoa beans from his latest trade are expected to be kept in warehouses in The Netherlands, Hamburg, London, Liverpool or Humberside and are the equivalent of the entire supply of the commodity in Europe.

Ward’s acquisition may have the effect of increasing cocoa prices substantially. The next African cocoa harvest is not due until later September and October this year, and many firms are looking to source supplies for the manufacturing run leading up to the lucrative Christmas and New Year markets.

With a West European Confectionery market worth Euros 44.6 billion in 2008, and a very complex relationship with retailers in terms of products already developed and pre-sold, leadership teams face a tricky balance between delivery of products and the protection of their margins during one of the key demand and profitability-raising periods of the year.

One industrialist who is a former advisor to the UK government on restrictive practices did not feel the issue should focus on what Ward had done, commenting “I think it is too easy to blame an individual for taking advantage of a market opportunity. If he didn’t, wouldn’t someone else have done so? It’s necessary to look at the whole system, and what could and should be done about it.”

Ward’s activities have led some to dub him ‘Chocfinger’ (Financial Times, July 24th p.11) and they have invested the possibly rather prosaic world of confectionery manufacture with a new drama and intrigue. His activities certainly show all those involved in any leadership activity in any sector that external events can have an impact which isn’t anticipated and which can’t necessarily be ameliorated. Taleb called such events Black Swans in his book of the same name.

It remains to be seen whether the confectionery manufacturers’ dealings in sweet commodities will turn sour this Christmas.

Students of Leadership

What lessons might be learned from this story? What can be learned from earlier attempts to corner a market? Are there governance and ethical considerations to be taken into account? What does the story tell us about entrepreneurship?

Image

Courtesy of the Amajaro Board. Image downlaoded from the corporate website [Anthony Ward is 2nd from the right].


Cruz missile ditched at Morgan Stanley

December 4, 2007

zoe-cruz.jpg

Zoe Cruz of Morgan Stanley is the latest high-profile financial leader to depart in the wake of the sub-prime turbulence. The current bloodletting increasingly appears to be more symbolic than rational

According to Forbes

Zoe Cruz was promoted to acting president in 2005, after a glittering career in the company she had joined twenty years earlier. Her promotion occured at a time of considerable board-room battles.

She was regarded as a supporter of Philip Purcell who controversially replaced President Stephan Newhouse and appointed Zoe Cruz and Stephen S. Crawford as Co-Presidents. Several senior figures left the organization at the time, presumably caught up in the in-fighting. Subsequently Crawford also left, and Cruz became the sole ‘acting’ president.

Capella University’s useful executive remuneration site reports that her compensation package amounts to $17 million, hardly big potatoes in these times for someone whose bonuses had pushed past $7 million a year in the recent past.

Financial correspondent Tom Bawden suggested that

The departure from Morgan Stanley of Zoe Cruz, Wall Street’s highest-paid female executive, has heightened fears that the firm is poised to unveil further mortgage-related writedowns. Her exit comes just three weeks after John Mack, the bank’s chief executive, is thought to have reiterated that she was his favoured successor. However, Ms Cruz, 52, was responsible for the division which made the loss-making mortgage investments and appears to have been sacrificed as the latest high-profile Wall Street victim of the credit crisis.

According to the report, the epithet Cruz missile is a reference to her combative business style. However, Mack had publically acknowledged her significant role in the company’s success over recent years.

Her departure has resulted in speculation that the dismissals have also created opportunities for the pool of available and talented executives such as Cruz. Mention has been made of Citygroup.

The BBC quotes a senior financial analyst, David Easthope

“The captains are going down with the ship. Whether they are rising stars or not doesn’t matter. The losses are so large and embarrassing to the organization that they are getting rid of people to satisfy the public perception that they are fixing things.”

Echoes here of tipping point theory of change.

The theory of tipping points, which has its roots in epidemiology, hinges on the insight that in any organization, fundamental changes can occur quickly when the beliefs and energies of a critical mass of people create an epidemic movement toward an idea.

leadership questions

Can we learn more about the nature of leadership as a symbolic process through study of the well-documented demise of high profile leaders?

Might the case anecdotes also permit an evaluation of the nature of tipping points within periods of change?