The vagaries of print deadlines can produce odd results. On Wednesday morning in New York, I concluded my column on McKinsey by writing that the firm had better hope that no “third man” came to light in the insider trading scandal.
Lo and behold, on Wednesday afternoon, the prosecutor in the trial in Manhattan of Raj Rajaratnam, the former Galleon Group hedge fund manager, said in his opening statement that Mr Rajaratnam had talked of there being just such a figure inside McKinsey. This is Kara Scannell’s report from the FT:
Jonathan Streeter, a federal prosecutor, told the jury that they would hear a recording of a phone conversation Mr Rajaratnam had with his brother “talking about plotting to get inside information from a consultant at McKinsey”. He said Mr Rajaratnam tried to get the person, described by the hedge fund trader as “dirty”, to “play ball” by possibly placing the person’s wife on the Galleon payroll.
The vast investigation into insider trading on Wall Street that culminated this week in Raj Rajaratnam going on trial in New York accused of securities fraud was always likely to ensnare a large institution – perhaps a big hedge fund or a Wall Street bank. No one, however, expected the institution in question to be McKinsey & Co.
Contrast the reaction to rewards paid to UK bank executives – £28m in share bonuses and long-term incentives to nine Royal Bank of Scotland officers, for instance – with the response to stock awards worth almost $100m for Ford Motor’s Alan Mulally and Bill Ford.
Both pay-outs are being made to executives who took on big turnround jobs – and had no responsibility for what went before. Both contain deferred elements. Both, let’s face it, are huge in absolute terms, however you cut them. But whereas many people seem to believe Mulally, Ford’s CEO, deserves his pay-out, his RBS counterpart Stephen Hester and colleagues have attracted mainly brickbats for their rewards. Read more
Something has gone badly wrong with the management and culture of the bureaucracies that stand between us and economic and financial apocalypse.
In February, the International Monetary Fund flayed itself for institutional and intellectual failings that led it to ignore the scale and interconnectedness of global financial risks. Now Kitty Ussher, a former minister in the UK Treasury, and Imogen Walford have interviewed ex-civil servants, advisers, ministers and Treasury insiders and produced a report for Demos, the British think-tank, about deficiencies in Britain’s most powerful government department. Read more
My first reaction to Best Buy’s closure of its nine branded stores in China was: not again. Another retailer had leapt into the Chinese market – and fallen on its face.
A lot of people argue that general interest newspapers cannot charge online because their content is not distinctive enough – and that only specialist news organisations such as the FT and the Wall Street Journal can get away with it.
However, Felix Salmon has taken the free news argument a provocative step further by suggesting that, even if more specialist newspapers such as the FT can charge, they are wrong to do it.
I find Felix’s argument bizarre but it is worth examining for his (I would argue blind) faith in what Jeff Jarvis has dubbed the “link economy” as opposed to old-fashioned metrics such as revenues and profits. Read more
Howard Davies’ resignation as director of the London School of Economics over the university’s ties with the Libyan regime is a warning to other UK universities trying to close their funding gaps with outside donations.
Sir Howard was admirably clear on Thursday about the reason for his departure:
“There were risks involved in taking funding from sources associated with Libya, and they should have been weighed more heavily in the balance. Also, I made a personal error of judgment in accepting the British government’s invitation to be an economic envoy, and the consequent Libyan invitation to advise their sovereign wealth fund.”
Libya is a particularly dubious case but, as UK universities are pushed to become more business-like to compensate for cuts in government funding and pressures not to raise student fees too rapidly, many are seeking other sources of cash. Read more
I asked Sir Terry Leahy to bring to his video interview with me this week – his last as Tesco’s chief executive – an object or picture that represented a “personal turning point” for him. My heart dropped when word came back from the supermarket chain’s HQ that he’d be bringing a Clubcard.
Sure, this sliver of plastic tells the retail group more about shoppers’ preferences and habits than any opinion poll ever could. But we know what the discount-voucher card tells Leahy about us; would it tell us anything about Leahy? Read more
When creative stars explode, they do so with a more spectacular bang than the average sufferer from a midlife crisis.
Christian Dior this week fired John Galliano, its 50-year-old chief designer, for allegedly making anti-Semitic remarks to a couple in a bar. He denied the claims but it seems that he told others in the same bar: “I love Hitler” and that their forefathers would have been “gassed” – a video of Mr Galliano slurring those words was published by The Sun.
The US investigation into insider trading and hedge funds has been going on for so long that it is easy to overlook its significance. But the insider trading complaint against Rajat Gupta, former managing director of McKinsey & Co, is extraordinary.
Mr Gupta is by far most senior figure to be caught up in the insider trading investigation involving Raj Rajaratnam and the Galleon Fund. The SEC has accused Mr Gupta of leaking information that he gained as a board director of Goldman Sachs and Procter & Gamble. Read more
Iran’s threat to withdraw from the 2012 London Olympics must be the first time anybody has tried to boycott any event because of a logo.
Iran’s claim that the collection of irregular polygons conceals the word “Zion” is only the latest, albeit the highest-level, objection to the design. It triggered controversy (of the “what the heck is it?” rather than the Iranian “it offends our moral principles” variety) as soon as it was launched in 2007. The BBC asked for suggestions and received 600 alternative logos and 10,000 comments. Read more