On Black Ties

 I have won an award.

The honour was bestowed on me at a black tie dinner at Guildhall. It was a jolly enough occasion, and as ever at such events, I bumped into a few people I had not seen for a while. But it got me thinking about black ties, and dinner suits.

In earlier days, when a Gentleman had a Gentleman’s Gentleman, and a Gentleman’s Club, the GG would be on hand to ensure the necessary attire was available, and the GC would be the venue at which the Gentleman would change. Gracious living. Dragging your DJ into work, crumpled up in a bag, on a crowded Tube and then changing in the men’s loo is not quite the same thing.

I don’t like black tie dos. Their initial purpose was to mark one out as part of the ruling elite, or the aristocracy. All such dress codes were one of the many signifiers that one belonged to the club. Read Julian Fellowes’ Snobs and Past Imperfect, which he wrote before Downton Abbey, for an examination of many such codes and symbols, which were designed to separate the Us from the non-Us and exclude the latter.

The possession of a dinner jacket, or other form of dress appropriate to a gentleman, served to keep the rabble out, because they couldn’t afford it. Now an off-the-peg job is available from the high street for a few tens of quid, it all seems a bit outdated.

I would never, like our former Prime Minister, turn up to a black tie do to which I had been invited not wearing a dinner jacket. That is the height of rudeness; all dress codes should be observed, if you choose to attend the appropriate venue, and the same applies to a nudist colony as much as to a black tie dinner.

But I hope not to be invited to another one for a while.

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A Dirty Business

“We are all prostitutes.”

The Pop Group, obscure late 1970s agit-pop band.

A few years back, I suggested that if you wanted to picture the London of the future, think of a City inhabited by 20,000 of the mega-rich and 15 million serfs to service their every need. I was in part joking, I think. It is not so funny now.

An extraordinary, excoriating piece in the New York Times, titled London’s Laundry Business, says the UK is happy to betray the US, and by extension the free world, to protect the City’s supply of dirty Russian money.

Obviously, the context is Ukraine. And the Americans seem to be going through one of their periodic bouts of anti-British sentiment. But the piece has a point. London has become the first choice for some extremely dubious people who are trying to find a safe haven for money which they have stolen, misappropriated or otherwise embezzled.

This has always been the case. London, with its impressive shopping, posh hotels and gracious housing in some parts of the City, has attracted petro-dollars since the oil first came out of the ground in the Middle East. But what has driven house prices to their current, mad levels – and what will keep them there, believe me – has been the arrival of not just the oligarchs, the obvious face of the Russian economic upheaval, but their hangers-on and the not quite so rich further down the scale.

Joining them are the wealthy Chinese and other south east Asians, some of whom have an equally tenuous right to their newfound wealth. Some of those huge towers of flats being built on the Thames, or those luxury apartments in Chelsea or Belgravia, are not even marketed in London. They go up for sale in Singapore or Hong Kong and are bought off plan, unbuilt. No point in selling to the locals – they can’t afford it.

There is an obvious reason why you would want to buy into the London property market, even if you had little wish to live there from one month to the next. Putin has already shown a propensity to fall out with several of those newly enriched oligarchs. It is not inconceivable that he, or any subsequent Russian administration, perhaps one more concerned with social equality, might not one day come after those ill-gotten gains. But not if they are converted into a five million pound flat by the Thames.

The arrival of the super-rich has created an entire eco-climate of services to keep them in the comfort to which they are accustomed, from stupidly priced fashion boutiques for their wives and mistresses and interior designers who will convert their hideous taste into gold-plated reality to high class hookers. The City has a role to play in this. As the New York Times piece points out, there are more than 50 Russian companies quoted on the Stock Exchange.

When they first started to arrive, along with companies from countries that had earlier been part of the Soviet empire but broken away, some of which have appalling human rights records too, there was a genuine debate. Given that some were highly suspect, in terms of how those who controlled them acquired those holdings, should we risk the reputation of one of this country’s greatest assets, the London Stock Exchange?

The counter-argument was, if London turned them down, they would go elsewhere, to another domicile’s benefit. This is the same argument, by the way, that fuels the arms trade. If we don’t sell it, someone else will.

Some of them were allowed to bend the usual rules of corporate governance, which are designed to ensure all shareholders are treated equally. In some cases, this has subsequently done a disservice to those investors who bought in when the companies floated, though those investors will have known what they were buying.

Now there are plans to charge a million pounds or more for British residency, and a visa. What once had to be earned of right is now up for sale, at the right price.

Some years back I had the chance to interview someone who had made rather a lot of money in Russia. He lived in a gated compound in… well, probably better not to say. He was affable enough. But the place was genuinely scary, a small piece of my home town I was allowed into on sufferance by guards who may, or may not, have been armed. You had to ask yourself just why the residents needed quite such heavy-handed security, and why they were obviously prepared to pay so much for that peace of mind. What were they afraid of?

Money talks, and everything is for sale.

On M&A. Or The Lack Of It.

Much has been made of the stock market being buoyed up by the expectation of a load of mergers and acquisitions coming down the slipway. I am not so sure.

There are deals being done, Rentokil Initial selling to Interserve, Dixons and Carphone Warehouse possibly merging. But there has not been a serious mega-deal since Glencore bought Xstrata. That was first mooted in 2012.

The people who are claiming M&A is about to take off are either investment bankers, who have a vested interest here, or those who listen, perhaps over-credulously, to investment bankers. But the feature of the reporting season over the past couple of months has been corporates handing over surplus cash, in the form of buy-backs or special dividends. This hardly suggests an appetite to use all that cash to buy up their rivals.

I was talking to the head of a decent-sized services company  the other day. He was openly contemptuous of those investment bankers. He had been pressured by the same to buy a smaller, under-performing business in an adjacent area to where he operates. This throws up lots of warning  signs.

What would persuade him he could run that underperformer better, save arrogance and hubris? Why was it underperforming in the first place? If it was outside his main market, in which he was doing rather well, what would persuade him he could do as well there?

He would much rather devote his energies to expanding his business through winning new work from multinational clients.

Most acquisitions destroy value. Most do not earn a worthwhile pay-back. Any number of academic studies have shown this. Rather more companies, historically, have been destroyed by extending themselves too far, buying unsuitable assets , than have foundered because they gave investors their own cash back. In fact, I can’t think of one in that last category.

I wonder if today’s senior executives, looking back on the last bout of M&A frenzy , more than a decade ago, are drawing the appropriate conclusion. And learning from others’ experience.

One Damned Thing After Another

It’s that time of year again when companies whose financial year runs to end-December, and that is the majority of them, start to post results for that year.

Between now and mid-March hundreds of such results will be posted on the Stock Exchange screens. Analysts, whose job is to make sense of these on behalf of the brokers that employ them, may be faced with four or five results a day in the sectors they cover. This makes it almost impossible for them to do the job effectively.

Worse, companies don’t like to report on Monday, because this things have to be rehearsed and this would mean senior executives working over the weekend, or, for some reason, on Friday.

Tuesday to Thursday is pretty manic, then. The reason is that companies are under pressure by the City regulatory authorities to report as soon as possible, to get possibly market-sensitive information out into the open.

There should be no surprises. Most of those companies reporting have already issued trading statements at the end of last year or start of this. There are always surprises, though, which keeps commentators like me in gainful employment.

By comparison with the great issues of the age, the civil war in Syria, democracy in China and the Ukraine, this is pretty unimportant, I accept. But there has to be a better way of arranging things.

Sexual Harassment

Some years ago I witnessed an unpleasant and embarrassing example of sexual harassment.

The venue was an early evening party being hosted by a fairly small City PR agency. This was not exactly overburdened with clients; at this level of the market, such businesses are often hand to mouth affairs.

One of our hosts was a well turned out professional woman in her late thirties or early forties. A client arrived, very drunk. Probably straight from lunch.

He proceeded to paw the woman, making a series of stupid and crude remarks. Not that crude, but certainly uncalled for.

In any other situation, the woman’s reaction would start with a stern, get your hands off me. If the man persisted, a slap might follow, a wounding comment along the lines of, what on earth do you think I would see in a shambling, fat old drunk like you, and a demand that he leave and have the decency to apologise in the morning.

This was not open to the woman. He was a client, and she could not afford to upset him. She resorted to a weak attempt at humour. Oh he’s such a joker, isn’t he? You can imagine how she had to handle it. Some of us wondered if we should say something. But it might rebound on her business.

I have no idea what Lord Rennard might or might not have done. He cuts an implausible figure as a lothario; he makes Francois Hollande look like George Clooney.

But in cases where older men in authority prey on younger women with rather less authority, it is all about power. Not necessarily sex. Most well-balanced males would derive no pleasure from fondling a woman who did not want to be fondled.

And the women concerned dare not offend the man, because his position of authority might be used to block the advancement of their career. These days, sexual harassment in the workplace is taken very seriously. But this would not have helped that PR woman trying to keep her business afloat. Or, perhaps, those seeking progress up the slippery pole of politics.

One commentator asked why if Rennard was behaving as alleged, the women concerned did not simply administer a slap. This is why. They daren’t, because it might rebound on them later.

This is why the exercise of such power by those in authority should immediately bar them from holding any such position of authority.

Drugs In The City

An academic has been on his well-meaning hind legs to call for mandatory drug testing of City employees. This is a regular suggestion, a way to limit excessive risk-taking which is often claimed to be caused by those in positions of authority on the trading floor being out of their trees and talking to the pink giraffes, to the detriment of their trading positions.

I am not convinced that drug taking in the City is any worse than in other areas where well remunerated and generally young staff are under extraordinary pressure to perform in a culture of few moral restraints where anything goes. Think fashion. Or TV and film.

The call for mandatory testing has been strengthened by the emergence of the former head of the Co-Op Bank as a regular user. Paul Flowers was not a City type at all, barely known there; indeed, he seems to have operated well below the radar of the regulatory authorities, which tells its own tale.

There is one huge problem with all this, which of course no one discusses. At MegaBank, you employ a massively successful trader, to whom you pay several millions a year in salary and bonuses, confident that he will pull in ten times’ that in new business every year. He tests positive for  weekend marijuana use, say, or even a little light cocaine abuse to help with those 14-hour days.

You promptly tell him he must desist. He has the choice of agreeing to give the stuff up, or heading off down the road to MegaCorp, where they are not quite so sniffy, sorry about that, and will pay him the same amount to bring in all that lovely new business.

Frankly, in such situations most City employers would rather not be required to ask too many questions.