BUSINESS WITH PERSONALITY REDKNAPP SHARES SLUMP AFTER ON TRIAL SPURS BOSS BLACKBERRY RESHUFFLE FACING BUNGS EXECS FINALLY ADMIT DEFEAT P17 CLAIMS P34-35 Issue 1,555 Tuesday 24 January 2012 www.cityam.com FREE BRUSSELS IN NEW ATTACK ON BANK PAY ▲ in contracts with senior executives year. POLITICS so that they can get money back if In his speech at Guildhall yester- BY JULIET SAMUEL actions are later deemed to have day, Barnier also told a City audi- caused certain kinds of losses. ence that Brussels is not trying to BRUSSELS could make its ultra-strict But Barnier suggested that more undermine London as a leading rulebook on bankers’ pay even intervention could be necessary to financial centre. harsher, commissioner Michel avoid a “violent reaction” from “Contrary to what I often read, Barnier said yesterday during a visit increasingly resentful European vot- there is no plot. No plot to under- to the City. ers. mine the City. No plot to boost Paris The ideas under consideration He told Reuters: “If banks are inca- or Frankfurt at the expense of the include forcing lenders to set a max- pable of self-discipline with regards City,” he claimed, suggesting that imum ratio between their most and to bonuses, then we must act.” Britain would continue to be “at the Asil Nadir and his wife, Nur, arrive outside the Old Bailey yesterday least highly pay staff and requiring He added: “Among the ideas that heart of Europe”. bankers’ fixed base salaries to we are exploring is a ratio between He added that if Europe had given account for a minimum amount of fixed salary and bonus… Another in to UK demands for “safeguards” their total pay package, as opposed idea which could be considered is a for the City at a summit last month, to their bonus. ratio between the lowest level of pay it would have undermined the sin- Nadir stole £150m and If introduced, the new rules in a bank and the highest level of gle market by leading to counter- would be the second major overhaul pay.” demands by other states. of bank pay regulations in less than Either of the measures would lead He also warned that Europe’s two years, threatening to throw to a complete rethink of banks’ costs move to examine structural reform fled to Cyprus, court told lenders’ cost planning into disarray. bases. of the banking sector could lead to Europe introduced the strictest Investment bankers, in particular, the imposition of a rival system to pay regime in the world in January are often given most of their reward the Vickers Commission ringfence. ▲ considerable power over its operations last year, forcing no more than 20-30 in a variable annual bonus rather “Do not assume that the conclu- COURTS and management, and that of its sub- per cent of awards to be given in than their base salary. The system sion of this thinking means repro- BY PETER EDWARDS sidiaries, particularly in Northern cash upfront – with the rest in allows banks to cut some awards ducing the UK approach to the EU,” Cyprus... He abused that power and shares or deferred pay. Banks also down to the bone when revenues he said. ASIL Nadir, the Turkish Cypriot helped himself to tens of millions of have to include “clawback” clauses are suffering – as they have this EUROZONE NEWS: P6-7 tycoon, stole £150m from his own pounds of PPI’s money. company more than 20 years ago, a “As a director of PPI and a signatory court heard yesterday. on the account, he was entitled to Nadir switched £146m and $6.4m instruct PPI’s bankers to transfer (now £4.1m) from his Polly Peck funds... However, he would have no Cable’s plan for clawbacks and International empire to a bank he authority to transfer or authorise owned in Northern Cyprus before funds from PPI for his own personal fleeing the country, the Old Bailey benefit or that of his family or associ- was told. ates.” tougher votes on director pay The businessman, now 70, Nadir, former chairman and CEO of siphoned off the money for himself, Polly Peck International, was due to ▲ POLITICS his family and his associates between stand trial in late 1993 but fled to Cable, left, said he also wants tatives to sit on remunera- 1987 and 1990, it is alleged. Northern Cyprus and did not return SHAREHOLDERS will be to make it easier for compa- tion committees. Companies Prosecutor Philip Shears, QC, told until August 2010. Nadir, who lives in given binding votes on execu- nies to claw back money will also escape having to jurors Nadir had moved the cash into Mayfair, arrived at court with his wife. tive directors’ pay as part of from directors if poor per- publish pay ratios, showing a “fairly complex structure of offshore He faces 13 specimen charges of coalition plans to reform the formance subsequently the gap between highest- and companies” in Switzerland, the theft, relating to £33.1m and $2.5m, corporate landscape. emerges. But he dropped lowest-paid members of staff. Bahamas and beyond, at times using which he denies. The case continues Business secretary Vince plans for workers’ represen- ALLISTER HEATH: P2; P3 his mother’s bank account. and is expected to last between four “He was a man who wielded very and six months. ▲ ▼ ▼ ▲ Certified Distribution FTSE 100 5,782.56 +54.01 DOW 12,708.82 -11.66 NASDAQ 2,784.17 -2.53 £/$ 1.56 unc £/¤ 1.20 unc ¤/$ 1.30 +0.01 28/11/11 till 01/01/12 is 92,879 2 News CITYA.M. 24 JANUARY 2012 Music industry shows content is king NEWS | IN BRIEF Petroplus halts fuel deliveries Petroplus has been forced by its lenders to stop delivery lorries from leaving its performance in years. Collapsing CD REFORMING CEO PAY if it turns out that what seemed to be a refinery in Coryton in Essex, the area’s sales are now almost being compensat- Of course, there was lots of bureaucrat- good performance in fact wasn’t, as a MEP Richard Howitt said yesterday. The ed for by surging paid-for downloads, ic, time-wasting nonsense in Vince result of a hidden scandal, for exam- struggling company’s shares were sus- and no longer only thanks to iTunes. Cable’s executive pay speech yesterday ple. These are now already the norm in pended from the Swiss SIX exchange Global digital revenues grew 8 per (see page opposite). Many of the pseu- finance as part of deferred compensa- yesterday as it continues talks with its cent to $5.2bn, according to the IFPI, do-reforms announced won’t amount tion schemes. It is great that notice creditors. Petroplus has already closed with single downloads up 11 per cent to much. But shareholders’ rights will periods of more than a year will have three refineries in Europe but has been by volume and albums up 24 per cent. be reinforced and it will be they, not to be ratified by shareholders; again, committed to keeping open Coryton, EDITOR’S LETTER The top selling single was Bruno bureaucrats, who will be in charge of this will reduce payoffs for failure and which can output 220,000 barrels per Mars’ Just The Way You Are, at over corporate pay. This is good news; the some of the extreme termination pay- day and employs around 1,000 people. ALLISTER HEATH 12.5m paid-for downloads; while prices substantive changes announced yester- ments that have done so much dam- are low, these are real numbers. The day are pro-capitalist and give share- age to the City’s reputation. Labour group sounds jobs alarm MOST industries have done well from number of users paying to subscribe to holders more clarity and power. Boards I would have gone further: for exam- The International Labour Organization the extraordinary change unleashed a music service grew 65 per cent to work for their owners and that is how ple, shareholders could be responsible sounded the alarm on the global jobs situ- by the internet since the web went 13.4m. In the US, digital channels now it should be; reasserting and strength- for directly appointing members of the ation in its annual report published yes- mainstream in 1994. Among the few account for 52 per cent of revenues; ening that link is the best way to pre- remuneration committee. But – terday, as it called for more coordination exceptions have been content business- globally, it is 32 per cent, surpassing vent rewards for failure. inflammatory rhetoric aside – at least of fiscal policies, repair and regulation of es, including the media and music the proportion reached by the film, That is why it is a good thing that Cable hasn’t really made any existing the financial sector and support for the industries, which have seen their old newspaper and book industries. this announcement was a damp squib failings much worse (apart from a few real economy. “What has changed with business models decimated by the The beleaguered music industry is in the sense of being less controversial minor and ultimately irrelevant nods respect to last year is that our forecast technological revolution and which not out of the woods yet; piracy than expected: many of the silly or to form-ticking and to fake diversity) has become much more pessimistic,” said have struggled to build a viable alter- remains a huge problem. But its ability unworkable ideas (such as appointing and has actually proposed some real Ekkehard Ernst, one of the report's native.