THE task of cleaning up the tarnished image of city investment bank
County NatWest in the wake of the Blue Arrow affair has been given to J.
Howard Macdonald, the Scot who made his name in the rescue of
Calgary-based Dome, an oil company set to go down with $8000m of
creditor and shareholder cash in the early 1980s.
A director of National Westminster Bank, he became deputy chairman and
chief executive of NatWest Investment Bank in January and says that he
got the job because he had become a familiar face over the other side of
the bank counter.
''We've known each other a long time, mainly from opposite sides of
the fence, with me as a corporate customer. I was thought of as someone
who could make it work, and the post was described very simply, although
it has turned out not to be that simple in practice.''
He is circumspect about the alleged irregularities which resulted in
the arrest three weeks ago of County NatWest's former chairman Charles
Villiers, the former chief executive Jonathan Cohen, and the investment
bank's finance director Stephen Clark, along with eight other city
executives three weeks ago, but believes that severe time pressure in
city deals can lead to deterioration in business ethics, morals and the
observance of the law.
''It is the responsibility of management to see that the company's
ethical views are understood, and that's now the case at County, and all
of the people we employ subscribe to that. And it's also management's
responsibility to see that employees are not under intolerable pressure
to get a deal done, and we believe we now have an efficient system well
in place.
''Frankly, without being cynical, most people know that County 1989 is
different from County 1987. We've made changes and we're not just saying
ourselves that things are fine now. We've had an outside review.''
Macdonald is no stranger to trouble, and his considerable reputation
as a financial manager earned in two decades in the oil industry is
crowned by his part in the largest financial reconstruction in the
private sector as chairman and chief executive of Dome Petroleum from
1983 until September of last year.
He was called in to help deal with what he describes as ''the most
celebrated bankruptcy in the Western system'', following several years
during which Dome, which had virtually no money, was expanded out of
sight by aggressive buying of a large number of oil companies. Alarm
bells sounded when in 1982, the price of oil faltered and fears of a
total collapse at Dome seemed entirely justified when the oil price
plummetted from $30 a barrel to $8 a barrel, while at the same time
interest rates climbed from 9% to 22%.
''At its peak Dome had borrowed $8000m, but we were able to resolve
the situation so that the lenders got largely repaid and the
shareholders got paid by reducing overheads and selling off non-core
businesses,'' Macdonald said.
''In fact we actually raised more equity, some people considered Dome
an interesting risk/reward situation and we built up a cash kitty of
around $500m by explaining that it was not a deal for widows or orphans,
but an opportunity which would interest the sophisticated investor
prepared to run the risk.
''That was before the second oil crisis, though, and after the oil
price collapse of 1986, there was no way Dome could be saved, although
we managed to find some interested parties and auctioned and sold at a
price which allowed secured lenders to be paid in full and got the
shareholders $1.50 a share.''
He got into the oil industry in 1958 when he was appointed finance
manager at Keir & Cawder Arrow Drilling after qualifying as a chartered
accountant with Thomson McLintock in Glasgow and spending a few years
working in the food industry. Kingston in Surrey was home for most of
Macdonald's career and provided a settled base for him and his wife
Anne, who comes from Ayr, to bring up their three daughters.
Co-founding the Association of Corporate Treasurers is Macdonald's
other major achievement, and he served as group treasurer with the Royal
Dutch Shell Group for the last seven years of his 23-year-long career
with the group. ''The association was founded to enhance the skills of
corporate treasurers,'' he said.
''There is now a chartered body with set exams and a very
highly-skilled pool of treasurers with expertise in transactions
involving 'swaps' which cover exchange rate liability and interest rate
caps, and a growing segregation of skills between the accountancy and
treasury sides, although it is a calling which is neglected in the UK.''
Back in Scotland for the launch of a new venture capital initiative by
County NatWest, which hopes to see more than #10m taken up annually by
businesses north of the Border, Macdonald emphasises that it's been
business as usual at the investment bank. ''In spite of Blue Arrow we
have done a host of good deals, we have access to research through
WoodMac and the NatWest operation is very professional and
decentralised, and we have only been limited by the number of quality
investment opportunities.''
Nothing in his experience has shaken his faith in the high principles
of the business community. ''Morals are the bottom line, most people
have very high standards and aim at doing better than simply staying
within the law. Just because something is legal doesn't mean it's okay
to do it.''
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