Shares in Starmin a small quarrying products group stood at 13p when Lord Cecil Parkinson
Posted in General on 24. Jul, 2010
Shares in Starmin, a small quarrying products group, stood at 13p when Lord (Cecil) Parkinson, once Mrs Thatcher’s favourite minister, was appointed executive chairman in May 1992. By the time he left in January this year, they had collapsed to less than a penny. The retiring or sack- ed minister who does not succeed in augmenting his reduced income with at least one company directorship is a rarity. In addition, Lord Walker (Peter Walker) sits on the board of its Welsh subsidiary and Lord St John of Fawsley (Norman St John Stevas) is a director of Rothschild Trust Corp- oration, an associate company. Another director is John Lippitt, a former senior civil servant at the DTI.NM Rothschild, the merchant bank, has both Lord Wakeham and Norman Lamont on its main board. A few companies, especially in the weapons and banking industries, have more than one. GEC, as well as recruiting Needham, is chaired by Lord Prior, a former Northern Ireland Secretary.
A study in April by the Labour research department identified 60 former Tory ministers who had left office since Mrs Thatcher came to power in 1979 and had among them 407 paid posts. Altogether they earned pounds 7.15m – an average of pounds 119,200 each.Most large companies boast at least one figure from Westminster or Whitehall in the boardroom Usually it is an ex-minister. And there remains the public perception that ex-ministers are trousering pounds 25,000 in fees simply for nodding their way through half a dozen board meetings a year.The boardrooms of big British companies are brimming with politicians, both practising and retired Most are Conservatives. Do ex-ministers contribute much to the companies they join? What do they actually do? And are they good value for money?Sir John Nott’s efforts for Record were a spectacular example of a mutually beneficial relationship The performance of other ex-ministers has been patchier. The Nolan Committee’s investigation and recommendations into standards in public life has also stirred the pot.Much has been said about the ethics of the matter But there is another question. But Mr Record still reckons that recruiting an ex- Cabinet minister was one of his better business decisions.The revelation last weekend that Richard Needham, the former trade minister, was to join GEC less than four months after leaving the Government has again focused attention on the propriety of ex-ministers taking paid positions in the private sector. But the finance directors and corporate treasurers under them – the people who would be dealing with Record – were not always so sympathetic, sometimes feeling bounced into seeing him.
Sir John was a dab hand at persuading company chairmen to give them a hearing. He was paid only a few thousand pounds in director’s fees, but a generous share option package yielded him pounds 600,000 in 1993, when the company was restructured.There were some drawbacks, Mr Record admits. Record Treasury Management has prospered mightily, scoring as one of the fastest-growing British companies in the five years since.The rewards for the ex-minister were lavish, too. Prospective clients said to themselves, ‘If Sir John Nott’s on the board, then that’s all right then.’ “Over the following 18 months, he and Sir John pitched to an average of three prospective clients a week.
They won many accounts and even where they were turned down, they put the company name about. Mr Record recalls: “Nobody had heard of us, but Sir John gave us access If he made the phone call, we would never get turned down He gave us credibility. With his impeccable contacts in the highest echelons of big business, Sir John set up hundreds of meetings with the chairmen and finance directors of large corporations. He joined as a non-executive director and agreed to help sell the company’s complex services.
It was a spectacular success for both parties. But after a chance encounter with one of Record’s non-executive directors at the gentlemen’s club Pratt’s, he was introduced to the company and agreed to help. Sir John was secretary of state for defence under Margaret Thatcher during the Falklands War.
He resigned from the cabinet in 1983 and spent the next five years as chairman of Lazard Brothers, the merchant bank While there he was paid a total of pounds 4.2m He never needed to work again. Persuading the directors of blue-chip companies that they needed to see a firm they had not even heard of was an uphill struggle
Enter Sir John Nott. He had successfully built his company over seven years into a pounds 1m turnover business employing 15 people But it was still a minnow. CREDIBILITY is everything to a small firm trying to win big corporate clients.