Monthly Archives: March 2011

John Gapper

There is nothing like a real-world indicator for an economic phenomenon so I was gratified this week to discover a new proxy for economic growth and development – the number of automated teller machines (ATMs).

Bill Nuti, the chief executive of NCR, the US company that makes ATMs for banks and and point-of-sale checkout technology for retailers, told me that China has just overtaken Japan to become the world’s largest ATM market after the US.

He estimates that the US has 1m ATM machines while both China and Japan have about 400,000 each. Brazil, one of the most rapidly expanding markets for financial services, is currently in fourth place with about 175,000 ATM machines. Read more

Andrew Hill

When it comes to his annual letter to General Electric’s shareowners, Jeff Immelt is no Warren Buffett. Not for him the jokey anecdotes and fables preferred by the Omaha billionaire in his own yearly communication. But the GE letter is still worth a read, if only because of the industrial group’s status as a training ground for future chief executives of global companies. Read more

“History is bunk,” said Henry Ford. When it comes to companies, history suggests he was correct. A long corporate life offers no protection against crisis or poor management. It distorts strategy. It encourages employee complacency. As one chief executive brought in to run a century-old multinational told me recently: “Paternalism haunted this company and it paid a price.”

John Gapper

Renault’s grovelling apology to the three executives it wrongly accused of industrial espionage is an extraordinary episode that indicates a serious lack of judgment by its senior managers. Read more

John Gapper

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.

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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.

Andrew Hill

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

Andrew Hill

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 departmentRead more