The FSA looks set to officially reprimand Lord Simpson and his chairman Sir Roger Hurn, saying they had sufficient information to warn shareholders about Marconi’s difficult trading position before the shock profits warning in July 2001 that nearly killed the company.
ACCA-trained Lord Simpson had had a solid and illustrious career until the Marconi troubles. When he joined GEC, later to become Marconi, his predecessor saw him as ‘a man with a vision’ and was confident Lord Simpson would continue his success. At the time the company had a healthy cash surplus.
Born in Dundee in 1942, Lord Simpson was the son of a mill manager and grew up in Perthshire. After studying accountancy, he worked first in the Scottish gas industry, and in 1969 moved to the motor trade where he later became chief executive of Leyland Daf.
Simpson then became head of the Rover Group when it was owned by British Aerospace. During his time there, he turned the shaky Rover business around and sold it to BMW for £800m.
In another successful business turnaround, Simpson in 1994 took over as chief executive of components group Lucas Industries, which he ended up selling to US competitor Varity.
Although on the surface Simpson’s leadership skills appeared flawless, his critics always accused him of just being a ‘deal maker’, who still had to prove he could run a business.
Initially when he took over at GEC his critics were silenced. He set about almost immediately dismantling the company, selling the old Marconi defence business to British Aerospace for £7.2bn.
Although this sale upset the French, the Germans and Tony Blair – who had wanted BAe to merge with German defence company Daimler Chrysler Aerospace – most experts said Simpson had managed to get a very good price for the defence business.
His next move was to restructure GEC, bringing in John Mayo as finance director and rebranding it Marconi, a telecoms equipment company. He then went on a shopping spree in the US, falling, like many others for the hi-tech dream, and bought several US companies including Reltec and Fore Systems.
But as the high-tech dream turned into a nightmare, hunger for Marconi products declined and debts mounted.
By July 2001, seemingly out of the blue, investors were faced with a shock profit warning and plunging share prices. Within one year, Marconi’s market value went from #35m to its shares being classed as junk bonds. Thousands of people lost fortunes, while many employees lost their jobs.
With his reputation battered, the disgraced accountant, who was ennobled in 1997, remains on the business scene as non-executive director of several companies, including HBOS, Nestle and Alstom.
But the aftershocks of the Marconi scandal continue to rock his world. To read more on Marconi go to: www.accountancyage.com/news/1131927.
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