Back to its lowest standards

By This Is Money
Updated: 04:22 EST, 13 February 2005

 

STANDARD Life may be under new leadership in the shape of the smooth-talking and dapper Sandy Crombie, but don't be fooled by appearances. As this financial monster - I mean the company - edges nervously closer to demutualisation, it is worryingly reverting to type.

The refreshing period of glasnost under Crombie is over. Standard Life wants to go back behind its own version of the Berlin Wall and return to its bad autocratic, undemocratic and unaccountable ways. Senior management is ready to use its vast book of dirty tricks to stop three independent candidates getting on to the board at the annual meeting in April, thereby upsetting the Standard Life applecart.

Michael Hogan, Paul Braithwaite and David Stonebanks are standing as independents because they want policyholders to have a true voice in the run-up to conversion next year. The three are long-standing Standard Life customers.

They are intelligent, sometimes abrasive, and always vociferous. They say they have the interests of policyholders at heart. Such talents cannot necessarily be attributed to the six approved board candidates against whom they are standing. Only six of the nine will be elected.

Standard Life is trying to head off the threat of Hogan, Braithwaite and Stonebanks on two fronts. First, behind closed doors, it is gently twisting their arms in the vain hope that they will put off their quest for a board place until another year. Such arm-twisting, however, seems doomed because the three are determined to stand for election.

Second, and more disturbingly, Standard Life is preparing to use every electoral trick to ensure the election of the Gang of Six. Under voting rules that an east European dictator would be proud of, Standard Life is proposing that policyholders will not be allowed to vote only for Hogan, Braithwaite and Stonebanks and abstain from casting their remaining three votes. Instead, they will be required to cast all six votes. Failure to do this will result in chairman Sir Brian Stewart casting any unused votes as he sees fit. In other words, he will use them to prop up support for the Gang of Six.

Such practice goes against all good corporate governance rules. It also flies in the face of the stance adopted by other mutuals such as Britannia building society, which does allow members to abstain from voting without triggering the right of the chairman to use any uncast votes in any way he wants.

Standard Life's attempt to stamp down on those members prepared to upset the status quo in the months leading up to conversion reeks of blind panic. It is also despicable. Yet we shouldn't be surprised, because we have been here before.

Three years ago, Standard Life rejected Ronnie Sloan's nomination as an independent on the tenuous grounds that reprinting voting forms would cost £1m. It was also ruthless in undermining ' carpetbagger' Fred Woollard's attempt to get the mutual converted to a plc in 2000, raking up dirt against him at a rate that Alastair Campbell would have been hard put to match.

Despite the appointment of Crombie the Charmer, Standard Life remains an archaic institution run by an inward-looking board accountable to no one other than an occasional prickly regulator.

In the interests of democracy and to dispel claims of a return to bad old ways, Crombie should announce as soon as possible that Hogan, Braithwaite and Stonebanks can stand for election. Simultaneously, he should ensure that if members do not want to cast all six votes, they should be allowed to do so. We live in a democracy. It is a fact that arrogant Standard Life seems to forget.

Eurolife is still not paying up

EARLY this week, the 2,300 Secured Bond investors who have been anxiously waiting 21 days for their capital back from financial services group Eurolife - as per the bond's terms and conditions - are likely to be updated on developments.

It seems investors will receive two mailings, one from plan provider NVesta, part of Eurolife, and one from Eurolife Capital Funding (ECF), another subsidiary that is ultimately responsible for returning the £15m due to Secured Bond investors.

The key one as far as investors are concerned will be from ECF and it will not make for pleasant reading. Investors will be asked to vote on a 'reconstruction' plan, which, if they agree, will result in the return of only between 25% and 39% of their original capital.

The return of any more capital will depend on the ability of the parent company to free cash from the firesale of other assets within the group.

On Friday, lawyers were still arguing over the exact contents of the ECF letter. The Financial Services Authority has promised to publish guidance notes on the deal for investors on its website fsa.gov.uk. Financial Mail will give its verdict next Sunday.