Computer meltdowns, government cock-ups, inflated floats, on-off mergers, tax avoidance, Libor-rigging … when the financial news wasn’t farcical, it was often plain criminal
This has been a vintage year – maybe not for business but for commercial farce and scandals. So the Observer‘s business awards committee was deluged with entries as it met to dole out this year’s gongs. After deliberating, cogitating and digesting all the worthy efforts, the following (far from exhaustive) list emerged.
The Noel Edmonds mock crystal sherry decanter for deals (or no deals)
In a year when corporate financiers were shy of even publicly suggesting deals – never mind attempting to complete them – this was hardly a hotly contested field. However, the judges were impressed with the standard of farcical entries the City managed to conjure up, including defence group BAE Systems‘ failed attempts to merge with European counterpart EADS, plus the equally comical (but ultimately successful) efforts to combine commodity trading firm Glencore and miner Xstrata.
In the end, despite the roll-call of highly paid advisers – the outcomes were actually decided by the interventions of two heavyweight politicians. The creation of a European defence giant was scuppered after Germany’s chancellor, Angela Merkel, registered her disapproval.
In the UK, however, we possess a former top-ranking politician who takes a slightly different view to lubricating the wheels of commerce, and so the late intervention by Tony Blair, peace envoy extraordinaire, saving the formation of Glenstrata was the judges’ unanimous choice in this category. When Glencore announced in February that it was making a tilt for Xstrata, the mining firm in which it already held a 34% stake, it seemed little could go wrong. That seems fantastically complacent now.
First, Xstrata shareholders didn’t like the price or the amounts they were expected to pay the miner’s management just to persuade them to stay. As they whinged, Qatar’s sovereign wealth fund started buying up Xstrata shares, eventually soaking up a 12% stake that everyone assumed would be voted in favour of the deal. D’oh!
The Qataris then surprised almost everybody by demanding a better price, and Glencore’s boss, Ivan Glasenberg, was forced to call in Blair – hereby supplying a different headline to a story that might be viewed as a surrender.
The Kieron Dyer diamond earring for overpricing assets
In a year with few real transactions, our judges focused their energies on examining 2012’s major flotations. Here, there were early signs that a challenging field might emerge, with shares in Manchester United’s long-awaited US float quickly slumping from even its discounted price, before recovering by the end of the year.
But, just as there is currently a large gap at the top of the English Premier League, so one runaway leader eventually emerged in this category.
Facebook’s shares were offered to the market in May at $38 (£24) a pop – and pop is exactly what they did: the market currently reckons that the price was 30% too high.
In terms of paper losses, that looks costly. Founder Mark Zuckerberg’s Facebook stake is now worth $5bn less than when the company floated.
The Charles Ponzi endowment for white-collar crime
This has been a stellar year for entries in this category, with a string of financial criminals eager to benefit from the endowment and enroll on various residential courses: stockbroker Nicholas Levene got a 13-year stretch for a £32m Ponzi scheme; UBS “rogue trader” Kweku Adoboli was jailed for seven years on two counts of fraud; Rajat Gupta, the former Goldman Sachs director, was sentenced to two years in prison for leaking boardroom secrets to the former hedge fund manager Raj Rajaratnam; while Peter Madoff, the kid brother of the current king of white-collar crime Bernie, got 10 years for his role in his sibling’s vast scheme.
But the judges also took into account the current financial circumstances of the entries, which left them with a clear winner. Asil Nadir, the fallen business tycoon who spent 17 years as a fugitive in apparent luxury in northern Cyprus before returning to the UK in 2010, was jailed this year for stealing £29m from his failed Polly Peck empire. He has told the court that he is now broke, although the court is taking a slightly different view. It said he had to pay back £5m of the money he stole, or face a further six years in prison, so this award may come in handy.
The Sid Waddell memorial salver for the stretched analogy
The salver is obviously in its inaugural year, following the untimely death of the peerless darts commentator, but instantly there was a clear winner.
Her Majesty’s financial press was the unanimous choice of the judges for its work on what they called the “shareholder spring” – a cunning homage to 2011’s Arab incarnation, only this time the soundbite encapsulated the actions of courageous investors who suddenly realised they had a vote.
The spring comparison didn’t quite stretch, of course, perhaps because one rebellion was notable for the overthrowing of repressive regimes; while the other featured a few men in suits popping along to some conference centre to ask another bloke in another suit to stop trousering so much pay.
Still, the list of protests was long and undistinguished. In mid April Citigroup shareholders rejected the bank’s plan to pay its chief executive $15m (£9.4m) for a year during which its shares fell by 44% – and it seemed like such a novel ruse that others decided to join in the fun.
Shareholders in Capital Shopping Centres, AstraZeneca, Barclays, Aviva, Trinity Mirror, William Hill and WPP (among others) all had a tilt at the City’s latest parlour game and, on a few occasions, some were even listened to.
The Dick Van Dyke medal for poor banking behaviour
As usual, our blue riband gong was by far the most hotly contested field, with several of the biggest names in the sector submitting world-class claims.
The judges highly commended the entries of Barclays and UBS (Libor-rigging), Standard Chartered (alleged sanctions-busting) and Royal Bank of Scotland (technology failures), but they still came out hailing a clear winner.
Earlier this month HSBC was fined £1.2bn by US authorities for having systems so lax that it let billions of pounds be laundered for drug barons in Mexico. Our judges were especially impressed with the bank giving cashiers in its Mexican branches extra-wide windows, to allow the piles of cash to be paid in.
The Oliver Hardy punch bowl for operational competence
The first saw the Department of Transport award the rail franchise between London and Glasgow to First Group – which prompted threats of a legal challenge from the incumbent Virgin and then the government’s admission that it had actually cocked the whole thing up.
That shambles will cost the taxpayer at least £40m in compensation to the original bidders, but probably a lot more once all legal costs have been factored in.
Still, the judges thought that even more impressive was how G4S didn’t quite manage to anticipate the arrival of London 2012, when it admitted just weeks before the start of the Olympic Games that it would not be able to fulfil its contract to supply thousands of security staff. Rarely does the inept performance of a private company require the government to call for army reinforcements, but such was the size of this blunder the troops arrived. Wags immediately called for heads to roll. Deputy heads did.
The Jimmy Carr award for tax planning
Another category that taxed the judges, especially as the figure this gong is named after (following a career telling jokes about tax avoiders) put in a stellar entry of his own.
Still, the committee felt that 2012 was the year in which an overseas entry should be honoured, with a string of well crafted submissions ranging from Swiss-based commodity trading firm Glencore to enterprising internet businesses such as eBay and Amazon.
All were highly commended but coffee chain Starbucks stood out from this high-class field for paying virtually no UK corporation tax – and then making an absolute Horlicks of trying to defend itself. A better strategy in 2013 might be to pay more taxes, and fewer PR advisers.
The Paul Volcker plate for double-dip recessions
At the start of 2012, the Treasury was anticipating a return to growth. It was proved right but sadly the UK economy started improving only after it had slipped into a double-dip recession. The year as a whole is expected to be flat.
So for that statistical achievement alone, the committee felt compelled to recognise the chancellor, George Osborne. He also stands on the threshold of a tantalising achievement, as he goes for the triple-dip in 2013.