VW leadership troubles continue

July 20, 2007

Some stories attract international interest, while others remain almost unnoticed. Serious Volkswagen watchers will be aware of one leadership story that has not gained much international attention.

I picked up the scent of something of interest, because of a little surge of numbers of visitors to this site searching for news about the VW company. That’s when I came across a Reuters report

Volkswagen supervisory board member Guenter Lenz has resigned his seat, becoming the latest casualty of a scandal involving the use of corporate funds to bribe the carmaker’s senior labour leaders. According to a statement from the Hanover works council, Lenz told employees on Tuesday at a plant staff meeting that he would now resign his board seat and his post as the site’s works council boss after previously ceasing to actively execute his duties. The public prosecutor’s office in Brunswick accuses him of aiding and abetting fraud and partaking in parties with prostitutes paid for out of a VW slush fund. Lenz, who has also resigned from the Lower Saxony state parliament, would accept a court sentence for his wrongdoing, the Hanover works council said.

The scandal has already cost the jobs of VW management board member Peter Hartz, group works council chief Klaus Volkert, as well as a member of the German federal parliament.

The Financial Times also commented on the story. As did

Eurotribune a self-declared ‘left-leaning’ publication with communitarian goals. It writes about what it sees as unhealthy industrial arrangements in Germany’s internationals, and is particularly suspicious of the relationships between State, workers councils, and boards of organizations. It sees more trouble ahead for Volkswagen over its leadership and governance.

VW is plagued by a series of corruption scandals involving top union and work council members. Those already netted include the author and name-giver of the infamous Hartz-IV law, VW human resource manager Peter Hartz, as well as an SPD member of parliament. Now the scandal forced the resignation of Günter Lenz, who was at the same time the work council head for VW’s utility vehicle branch, a member of VW’s oversight board, and a member of the regional parliament for SPD. He is under investigation for visits to brothels on company money… Lenz denies the accusation. However, prostitutes have confirmed his story in the case of the top work council man, Klaus Volkert — who now sits in prison. The payments for the prostitutes were approved by Hartz himself.

Leadership lessons

It seems strange that this story was not been followed more closely by the international financial press. Maybe Angela Merkel and Nicholas Sarcozy have found time, in their new-found friendship, to muse over the matter as they explore the equally taxing issues of EADS governance.


The Turnbull attack : A big clunking blow for Gordon Brown?

March 20, 2007

Is it not curious that the former head of the civil service should launch a fierce attack on the Chancellor in an interview that appeared in the Financial Times two days before his budget speech? Might the article illustrate wider leadership issues, as Tony Blair prepares to relinquish the Premiership? To what degree might Lord Turnbull and the FT be seen as engaging in political skirmishes?

An article in the Financial Times yesterday made wider headlines today. The headline seems slightly more strident than those we are accustomed to from the Pink Lady of financial journalism. Former Whitehall chief slams ‘Stalinist’ Brown’it almost shouted.

The Former Whitehall chief is Andrew Lord Turnbull, now a cross-bench peer. His political contributions in that role have recently been confined to three measured speeches, one on proposed reform of Government statistics, and the other two on the Turner report. In one of the Pension speeches he informed the house of his interests, not just as a novice pensioner, but as an advisor to the consulting firm Booze Allen Hamilton, and a wannabe man from the Pru.

In an earlier role he had spent four years as Permanent Secretary to the Treasury working with (to, for, or on behalf of) Gordon Brown. In the FT article, he assessed Gordon as exhibiting

“Stalinist ruthlessness… There has been an absolute ruthlessness with which Gordon has played the denial of information as an instrument of power.”

The interview makes good reading as ammunition in the forthcoming Cameron-Brown battles for the Premiership. These matches are being set up as a two-team tussle between gifted and flexible David, and Powerful but dour Gordon. You might think this resembles another Premiership battle between Manchester United and Chelsea Football clubs. I couldn’t possibly comment.

An unnoticed possibility

The BBC reporting this morning suggested an analysis that had not extended to a close reading of the original FT article. A discussion (on BBC five live) sounded as if it was a little chat, based on the Corporation’s own synoptic news summary of the FT story. It was suggested that the Noble Lord may be so worried about a Gordon Brown Premiership that he had felt compelled to make a calculated statement to the Press at an appropriately damaging moment.

I have been unable to find the answer to an important question. When did the interview take place? The on-line FT version does not tell us. The critical scene-setting sentence ran

‘In an interview with the Financial Times, Lord Turnbull said …’ But was it said ‘In an interview yesterday..’, or was it said ‘In an interview for our post-Budget retrospective on Gordon’s ten years as Chancellor, to appear on Thursday..’

This opens up possibilities beyond the BBC’s suggestion. The FT might have gone for two bites of the cherry, created a pithy and newsworthy story within a background interview for a broader historical analysis of Gordon Brown’s record as Chancellor.

Does this matter?

Only to the extent in which it might help us understand why a vivid description of leadership style appears as a new story. Its novelty lies in the messenger rather than the message, which is pretty much the line being taken by Gordon’s political foes – on both sides of the House.

Magic Madge keeps Pearson in the Pink

January 24, 2007

Shares of the Pearson publishing group hit a five-year high this week. City analysts upgraded its prospects. CEO Dame Marjorie Scardino has received the brickbats in its years of decline and now earns the plaudits in its renewal. Rumors persist that the Financial Times remains an attractive target for an asset raider. Will Dame Marjorie stay to savor the fruits of success, or will she became a hostage to the fortunes of The FT, whose pink pages have come to symbolize the early-morning reading matter of City commuters?

When shares at the Pearson group hit a five year high this week, city analysts upgraded its future prospects. CEO Marjorie Scardino also celebrates ten years as leader of the publishing group, and her sixtieth birthday. Have a nice one, Lady M.

Only FT100 female CEO

It has been a turbulent ten years. Marjorie Scardino was the first woman to lead a major (Footsie 100) company. In her early time as leader, she put in place a policy of disvesting non-core assets (such as the high profile Madame Tussauds). She was lauded in the city, and Pearson shares started to pick up. But the gain occurred during the dot-com boom. Shares rocketed, and then equally rapidly fell precipitously. Her big investment in acquiring National Computer Systems (NCS) at the peak of the boom was particularly criticized as an expensive error of judgment. Scardino’s personal stock also slumped.

Courageous moves

Critics identified the Financial Times as a source of volatility at Pearson’s, and its sale a possible opportunity for consolidation. Scardino linked her future to retaining the FT, as her ‘over my dead body’ quote indicated. The unspectacular recovery of the share price four years had just about fended off the criticism of City analysts.

The current reappraisal reveals that the decision to acquire NCS was as shrewd as retaining it was courageous. It places Pearson at an advantage over other media rivals such as Reed Elsevier who have not invested as thoroughly in educational technology.

Is Pearson’s future stabilized?

Possibly not. The thrust of criticism remains, that the group’s assets are not integrated (that unlovely buzz-word) to deliver synergies (that even uglier buzz-word). As recently as last year, new Chairman Glen Moreno indicated his concerns on the UK’s operating structure and performance. Critics see the potential for asset raiding. And the jewel in the crown is the FT. Other much loved brands such as Penguin are also vulnerable.

Is Dame Marjorie vulnerable?

Possibly. Chairman Glen Moreno says the company has no succession plans in hand for her job. A lingering doubt remains. ‘Back me, back my brand’ was her watchword over the FT. Which also translates to predators as ‘Ditch the Bitch, and Deliver the Brand’. In which case, the Private Equity poker players will be doing a good job at losing a good leader, which are hard to find. Scardino’s protégé Rona Fairhead head of the FT group also becomes vulnerable. The winners in such a battle are likely to end up with the leader they deserve.