SATURDAY PROFILE: BRIAN SOUTER

THEY stare down at you from the dusty walls of a hundred Scottish boardrooms: the austere oil portraits of Scotland’s traditional Presbyterian business elite. The uniform is stiff collar and tie, the look consensual, tribal and conservative.

What they would think of Stagecoach’s Brian Souter - dressed American casual with his trade-mark open collar - is probably unprintable. For the outsiders are now running the show and, as Mr Souter is proving with his hardball tactics against the rail unions on South West Trains, they play a whole new game.

Mr Souter, Scotland’s most successful businessman of modern times, went, in only 13 years, from a business with a couple of second-hand buses to a stock flotation in April 1993 which raised more than 1 billion. His remarkable drive is often put down to his religious convictions, but this is misplaced.

In fact, he represents only one of a group of social outsiders who collectively gate-crashed the clubby world of Scottish business during the Eighties. Others include Tom Farmer, now trying to buy back Kwik-Fit from a downsizing Ford, and the serial entrepreneur Tom Hunter.

True, Mr Souter was born into, and remains an adherent of, the Church of the Nazarene, a small group of fundamentalist Christians with about 5,000 followers in Britain, who are often described, too cosily, as Methodists. The reality is the sect, which claims 1.2 million members worldwide, is American , and sends armies of missionaries abroad to sell the faith.

Here is the clue to the common starting point of the outsiders who successfully challenged Scottish business orthodoxy in the Thatcher years: they were working class, non-Presbyterian, and usually had a personal introduction to American marketing techniques. The profile fits Mr Farmer (Catholic and worked in the US before returning to start Kwik-Fit) as well as Mr Souter.

The clash between his American fundamentalist drive and being considered a rank social outsider by the Scottish public-school, middle-class establishment, impacted on Mr Souter early. Even now, he still seethes about being rejected for junior accountancy jobs after graduating from Strathclyde University: "A lot of the people that I was interviewed by were terrible snobs. I didn’t go to the right school, live in the right street."

The lad from the wrong side of the tracks was rescued by, of all companies, Arthur Andersen. Mr Souter’s mentor at Andersen was also a fundamentalist Christian, Duncan Whyte, the managing partner. Another ambitious working-class outsider, Mr Whyte went on to carve a career as finance director for arch-outsider Mr Farmer at Kwik-Fit.

Mr Souter says of Mr Whyte: "He carried a banner for me and I’m very grateful." A new Scottish business class was taking shape.

The main personal influence on Mr Souter was his father, Iain, who had been a shepherd. The elder Souter was a workaholic like his son. He drove buses all week. In the evenings he drove taxis. His 25,000 redundancy cheque helped his son to launch Stagecoach in 1980 - a classic example of the failure of Scottish finance to be on hand to help entrepreneurs.

Mr Souter’s commercial methods were not those of gentlemanly Scots capitalism, where disputes are settled on the golf course. Tactics included running buses a minute before their rivals’ timetables, cutting fares or even free services. Competitors went bust, or were forced to sell out to Stagecoach.

As a result, Stagecoach faced a stream of referrals to the Monopolies and Mergers Commission. The MMC ruled that the company’s behaviour was "deplorable, predatory and against the public interest".

Part of a multi-national church, Mr Souter’s ambitions were never confined to the UK. In 1996, he bought the Swedish national railway’s bus business, then firms in Africa, New Zealand, Europe and China. He was quick to spot the potential in rail privatisation. In South West Trains, he has the biggest single rail franchise and later took a 49 per cent stake in Virgin Rail.

But the rise and rise of Stagecoach involved a degree of personal and family dramas, not unlike the Ewings of Dallas.

Ann Gloag, Mr Souter’s sister and close business partner, divorced Stagecoach insider Robin Gloag in 1983. Mr Gloag then set up a rival bus company.

Stagecoach mercilessly crushed the upstart.

Mr Souter’s brother, David, quit Stagecoach because he felt staff were being driven too hard. Mrs Gloag’s only son, Jonathan, often referred to as Stagecoach’s heir apparent, committed suicide in 1999 , aged 28.

The early commercial secret of Stagecoach is not difficult to explain: Mr Souter took advantage of a classic cash-flow business. Growing revenues underpinned yet more borrowing to purchase more competitors. It was pyramid buying with a vengeance.

But, as in any pyramid scheme, there comes a crunch where no more revenues can be "bought", while the accumulated debt mountain threatens to sink the company.

This moment came in the heady summer of 1999, when Mr Souter paid an over-the-odds $1.7 billion for Coach USA, making him the second-largest bus operator in America. The deal looked good in theory, in practice it turned out to be a funding and managerial nightmare.

Early in 2000, there was a boardroom shoot-out. Chief executive Mike Kinski left, while non-executive Jim Leng resigned, complaining Mr Souter was treating the company as his personal fiefdom.

At this vulnerable moment, Mr Souter suddenly found himself in the public glare over his views on gays.

In early 2000, Mr Souter pledged 500,000 to support a poster campaign against the new Scottish parliament’s repeal of Section 28, which outlawed the promotion of homosexual lifestyles in school curricula. The posters verged on the hysterical, and Mr Souter was instantly branded a homophobe.

Worse, he was seen by City analysts as having taken his eye off the ball. Shares went into freefall.

But Mr Souter the outsider proved no counterfeit Robert Maxwell when the pressure was on. He still lives a parsimonious life near Perth. His children go to state schools.

On a personal level, Mr Souter is for real - witty, charming and never overbearing. In other words, Mr Souter has character. His nerve held in the crisis. Mr Souter resolutely seized back control of Stagecoach, stabilised the management team, sold off poorly performing subsidiaries and pursued an aggressive share buyback policy. Shares rallied.

Even 11 September and the post-Hatfield slaughter of rail profits have been taken in Stagecoach’s stride. Last year, revenues were more than 2 billion.

Now Mr Souter faces the RMT union. He has a long record of being tough with unions. He once threatened to fly in drivers from around the country to break a bus strike in the East Midlands.

But the RMT should beware in putting this down to a crude Thatcherism. Mr Souter carries no ideological baggage. A good Scottish Nationalist, he hated Margaret Thatcher.

For Mr Souter the outsider, the RMT is just another establishment road-block to be faced down. This is deeply personal.

Recently, the Scottish National Portrait Gallery held an exhibition of contemporary paintings of today’s Scots business stars. It was a roster of the outsiders - and the portraits were suitably avant garde. That of Mr Farmer was composed of rolled-up pictures of Brigitte Bardot. Mr Souter was hung in bright oils, portrayed with sister, pensive on sofa. He still wasn’t wearing a tie.