Comment: More of a fall than ‘arise’ for Sir Terry in America
The supermarket giant is tipped to finally pull the plug on its Fresh & Easy business which, according to one analyst, will prompt the “biggest fall in profits in the company’s history”. The cost to shareholders could be as much as £1 billion in lost profit and another £1bn in write-downs.
Some are now saying this will taint the record of Leahy, regarded as one of Britain’s brightest and best businessmen, who pushed ahead with the US strategy which is now seen as a massive strategic error.
If Britain’s bankers are being hung out to dry for little more than failure and management misjudgment, stripped of their knighthoods and seeing their pensions slashed, then why not a former supermarket boss who has made similar mistakes?
Fresh & Easy was meant to break even in its second full year after opening at the end of 2007. Instead it merely gobbled up capital and stocked up on losses because the model Tesco used was flawed from the start. Store openings have been scaled back and current boss Philip Clarke has been in the US desperately seeking a buyer.
Some think its inevitable fate has been delayed by the current management because they clung to the belief that Leahy could not have got it wrong, such was his standing in the company. Now the company faces a humiliating admission of failure and a redundancy bill for more than 4,000 US staff.
But a failed supermarket chain in the US is unlikely to force its former boss to ask the Palace to take back his honour or request a cut in his pension – probably because the taxpayer isn’t involved and therefore the politicians are happy to leave Leahy alone.
Meanwhile, it has been another week of hand-wringing, mud-slinging and antipathy towards the demonised banking industry from those charged with conducting endless inquiries into what went wrong in 2007-8 and why we are all still feeling angry about it.
The various commissions have struggled to find evidence that any of those responsible for causing the banking crisis were anything more than incompetent or reckless.
As such, the banking sector’s inquisitors are identifying scapegoats to blame rather than calculating fraudsters or gangsters to convict and there is a danger that their inquiries are taking on the tone of anti-business witch-hunts, rather than finding any wrongdoing that ought to be properly punished.
But even with no evidence of criminal activity there is a sense among the public that the “guilty” bankers are still “getting away with it” and that their apologies and concessions will hardly cause them any hardship. Vengeance is still in the air and it won’t ease until someone’s head is on a stick.
The soon-to-be Mr James Crosby, assuming the voluntary forfeiture of his knighthood is accepted, at least did what some will regard as the honourable thing, along with handing back a third of his pension.
That said, it is a pity that the former HBOS chief waited until now to make such a gesture. Furthermore, even after his pension is reduced to £406,000 a year he will still be getting more than Fred Goodwin, his former counterpart at Royal Bank of Scotland, who is left to survive on £342,000.
Reputations have been shattered, but the payouts to big company bosses – whether they are running the banks, supermarkets, energy companies or any other business – go on whether they succeed or fail and whether or not their employees share in the bonanza.
No inquiry has found a way to resolve that conundrum.
National owner bets on business
Because the banks have scaled back on lending a lot of small firms these days are getting finance from a variety of alternative sources, such as angels and crowd-funding. Our story on page 17 today tells of a more unlikely provider: the winning co-owner of last week’s Grand National.
Douglas Pryde, whose horse Auroras Encore triumphed at Aintree, is putting some of his windfall into backing small businesses.
Good for him. At a time when bankers are helping themselves to big bonuses it is heartening to know that someone is prepared to spread some of their new-found wealth to help others. The “bank of Douglas” looks like it is open for business.