Any other business

I remember Nikkei’s journalistic values – and I’m not sure they’re much like the FT’s

Plus: Busting myths on Lloyds’s takeover of HBOS; AO World’s troubles; and the thrilling Yanis Varoufakis

1 August 2015

9:00 AM

1 August 2015

9:00 AM

It’s nearly 30 years since I worked in Japan, but I still have a few words of the language and a certain idea of how the place worked. The role of the business press, for example, was to trumpet export successes of Japanese corporations, and not to report shenanigans in which securities firms boosted prices of selected shares by pushing them to housewife investors, to generate campaign funds for favoured politicians.

So I’m curious how the Financial Times will fare under its new owner Nikkei, the very Japanese media group that has paid £844 million to acquire the world’s most prestigious business title. Has the culture changed since my day? I asked an old friend last seen in a karaoke bar behind Shimbashi station: ‘There’s not much evidence of objective inquiry: the mainstream press are a pretty docile bunch, and Nikkei is very much part of the system. They were critical of Olympus [the scandal-hit electronics group] but only because the story was reported abroad and the company was marked for a fall; likewise Toshiba recently. They sometimes take an adversarial attitude to government… but I’d say the editorial board can always be relied upon to place national interest ahead of the public’s right to know.’

Rather confirming that impression, a Japanese minister said the FT deal ‘will make it possible to transmit information on Japan’s economic situation to the rest of the world more accurately’. Meanwhile, Nikkei chairman Tsuneo Kita says, ‘We share the same journalistic values.’ To which the optimistic answer must be: up to a point, Lord Akegane (that’s Japanese for copper).

Black horse down

Shareholders seeking compensation from Lloyds Bank and its directors for failing to disclose the dire condition of HBOS when asking them to vote for its takeover in 2008 should equip themselves with copies of Black Horse Ride, Ivan Fallon’s book on the circumstances of that notorious deal, which was immediately followed by a bailout.

At the time, Lloyds was seen as a low-risk operator that might have sailed through the financial crisis if chairman Sir Victor Blank had not been cornered by prime minister Gordon Brown at a party and strong-armed into rescuing crippled HBOS, on the basis of minimal due diligence. Having interviewed many players involved, Fallon concludes that is largely a myth. He says the dullness of Lloyds’ strategy over the previous decade had driven it into a cul-de-sac; in search of growth, Blank and his chief executive Eric Daniels had long eyed HBOS for take-over and knew plenty about its business, but feared the competition authorities would stand in their way; Brown merely offered to push those hurdles aside in order to see HBOS swiftly into safer hands.

The ‘myth’ made the previously well-respected Blank look weak for allowing Brown to bully him into such a terrible deal. But the Fallon version makes the Lloyds men look more like Fred Goodwin of RBS in his determination to buy ABN-Amro despite rumblings of trouble ahead. One reviewer says ‘Some will see [Black Horse Ride] as an apologia for Blank and Daniels’: I think it makes them look worse.

Warning unheeded

I picked up positive vibes about the online white-goods retailer AO World long before the stock market started to get excited about it. Here was a progressive, fast-expanding business, based in formerly depressed Bolton, that was liked by customers for its keen prices and user-friendliness and by staff for its emphasis on workplace wellbeing. When it came to market at 285p a share in February 2014, I called the valuation of £1.2 billion ‘slightly ridiculous’ but congratulated founder John Roberts on his windfall of £86 million cash plus shares worth £400 million: ‘Who can say he doesn’t deserve it?’

The stock shot up to 378p, slid to 150p, climbed back to 330p — then crashed after a profits warning early this year. It now stands at 125p, and flak is flying from investors led by hedge-fund grandee Crispin Odey, who holds 7 per cent of AO but says the flotation was ‘overhyped and overpriced’. The consensus seems to be that AO is still a smart business with decent prospects — some brokers rate it a ‘buy’ at the current price — but that in a competitive, low-margin sector, it’s unlikely ever to meet the ambitious targets that might, at a stretch, have justified the first frenzy for the shares. And no one has forgotten that Rothschild and other bankers who arranged the float collected more than £25 million between them.

The uplifting AO story I first discovered has turned, for the time being, into a cautionary tale of dotcom delusion. That’s exactly why I warned John Roberts last March to ‘be careful not to let his standing as an authentic entrepreneur be tainted by the market’s eagerness to make a fast buck’.

Bad thriller

Three months ago I expressed the hope that international technocrats were working on ‘Plan B… to bring back the drachma without chaos if continued [Greek] membership of the euro is impossible’. It turns out Plan B was indeed afoot, but that the operatives concerned were not men with clipboards from Washington and Basel: they were a secret team within the Greek finance ministry set up by this column’s favourite former minister, Yanis Varoufakis.

His wheeze was to hack into tax computers in order to outflank the IMF and European Central Bank (which control Greece’s public revenue flows) and create a ‘parallel payments system’ that would come into action if Greek banks collapsed — and switch to drachma if ‘Grexit’ was the only option left. This caper that never happened may sound ‘reminiscent of a bad thriller’, as Greece’s centre-left Potami party says, but it adds weight to my campaign to give Varoufakis a special Spectator Parliamentarian award for sheer entertainment value. It won’t surprise me if he pops up next on Jeremy Corbyn’s campaign bus.

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  • Sean Grainger

    Mr W I hadn’t got you down as a panicker. The FT is a huge international brand. They’ll look after it.

  • Zalacain

    “I’d say the editorial board can always be relied upon to place national interest ahead of the public’s right to know.’”
    99% of the time the national interest is in the public’s right to know. These things are not opposed. The inability to understand this might be a clue to Japan’s economic stagnation of the past couple of decades.