Overview: tough call for Sir Rake
Prospects: Sir mike Rake is putting his reputation on the line
The year has been very kind to Sir Mike Rake, head of KPMG International and
soon to be chairman of BT. Knighted earlier this year and unveiled as chairman
of BT last week, things could hardly have gone better in 2007.
Once the back-slapping and handshakes fade, however, the enormity of the task
that awaits him as head of BT, a FTSE 100 company that has had its share of
problems in the past, will surely start to sink in.
What’s happened?
Sir Mike, a career accountant, will succeed Sir Christopher Bland, who joined
BT from the BBC in 2001.
The group was suffocating in debt when Bland arrived, but when he hands over
in September, he will be leaving a different outfit.
It was Bland who recruited Ben Verwaayen as his chief executive. Verwaayen
transformed the company, slashing debt from £30bn to £7.5bn and nursing BT
through the biggest rights issue in British history. .
But, rather like England after winning the Ashes in 2005, Bland is a hard act
to follow and Rake can’t afford to be complacent.
What’s going to happen?
Sir Mike has never led a listed company and admits that his knowledge of
telecoms is sketchy at best.
Verwaayen, like Bland, is expected to head for the exit soon, creating one
headache. But Rake is not the first accounting chief to take on a FTSE 100
chairmanship, and his predecessors do not have the best track record.
Ernst & Young’s Elwyn Eilledge had a nightmare when taking over at BTR,
now Invensys, 20 years ago. Rake’s former KPMG colleague Lord Sharman has hardly
had a much better time.
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As chairman of Aegis, Sharman has failed to silence the incessant takeover
talk from French shareholder and bitter rival Vincent Bolloré.
Then, as chairman of Aviva, there was the small matter of the Prudential
merger, which fell flat on its face.
Rake does have extensive business know-how as the head of a global
organisation and has guided KPMG through some difficult times, not least the
collapse of Andersen and the embarrassing US tax scandal of 2005.
He is going to need every ounce of that fortitude and experience if his spell
at BT is to be as successful as the legacy he has left at KPMG.