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“If he chooses to do so, the chairman could become an icon in the industry and the company he created will go from strength to strength,” said Alison Levitt QC in her report last week, prodding Boohoo to tackle its supply chain failures.
As a company, Boohoo has accepted Levitt’s recommendations, of course. But does Mahmud Kamani, the chairman, feel embarrassed or shamed by the report’s findings? Is he up for Levitt’s icon-making challenge?
It’s hard to tell. Kamani hasn’t uttered a public word since last Friday – not in the company’s formal will-do-better response, nor in Wednesday’s half-year report that inevitably showed boom-boom revenues and profits.
The position is bizarre. John Lyttle, the chief executive, may be the smoother PR operator, but he’s the No 2. Kamani is co-founder, 12.5% shareholder and executive chairman. It’s his job to respond to a verdict of deep governance failures.
What’s more, his own comments to Levitt would make anyone question Boohoo’s new “commitment to being a leader for positive change” in Leicester’s textiles industry. Here’s one passage from the report:
When asked whether he felt a personal commitment to Leicester, Mr Kamani replied: ‘No not at all. It’s not down to me. This business isn’t down to me any more. I am the creator. I gave birth to it. My commitment is to the business not to Leicester or the supply base.’
In another passage, Kamani didn’t recognise the name of the company’s own internal auditor, Edward Toogood, who had warned the audit committee of problems in September 2019. When asked about Toogood’s report, Kamani is reported as having replied: “Who is this guy? Who?” By August 2020, the date of the interview, you’d think he would have known.
That interview, by the way, was conducted over video while Kamani had breakfast on the terrace of a hotel in Istanbul. Levitt was unimpressed, saying the setting “left me doubtful of the seriousness of his approach to my review, given his senior position in the company”. Generously, she granted that this may have been “a misjudgment of the circumstances on his part”.
A more serious misjudgment, though, is surely Kamani’s insistence on staying in post as chairman. An outside appointment is the obvious answer, leaving Kamani to concentrate on day-to-day retailing. That structure was tried once, Kamani hated it and he doesn’t want a repeat. At this point, though, it shouldn’t be his choice.
Non-Kamani shareholders own most of the shares. They should insist on having a strong independent chair with a voice.
GardaWorld may yet have final word on G4S
The Canadians at GardaWorld don’t sound like mugs. The tone of the opening shot in their campaign to buy G4S was well-pitched.
There was the right measure of insult. G4S’s senior management has “destroyed nearly £1bn of shareholder value” over the past seven years while letting “scandals, crises and lawsuits” fester. And BC Partners, the private equity firm funding the adventure, remembered to insert some standard words about the joys of serving “stakeholders” and the UK government.
The problem, though, is obvious: an offer price of 190p is not enough. GardaWorld can say it is “full and fair” but G4S shareholders can look at their screens and see that the shares stood at 200p in February.
Yes, the pandemic has slowed things; and, yes, G4S went as low as 102p in June. But a security and guarding business ought to be relatively stable and capable of recovering lost ground. Current shareholders are also free to change the new chief executive if they think delivery is taking too long.
The missing word from GardaWorld’s offer was “final”. In other words, the bidder is free to go higher, which it probably will in time. But G4S’s management is in a proper scrap. Defending yourself against a cash bidder is hard: G4S’s board will have to do more than warble weakly about being at a “critical inflexion point”.
Rolls-Royce needs to start its fundraising engines
October is about to arrive, so is it finally time for that big Rolls-Royce fundraising effort – the one the engine-maker has been contemplating since late August?
Well, one hopes so. During the long weeks of contemplation, the share price has fallen from 240p to 130p, and was down 7% on Wednesday. Global coronavirus lockdown news, and thus medium-term prospects for the aviation industry, is not improving. Some balance-sheet certainty is needed. Hurry up.
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