Examination of Witnesses (Questions 360
WEDNESDAY 2 MAY 2001
360. May I put a hypothetical question to you?
Just supposing you had decided not to give out the £700 million
handout to British Steel shareholders on the amalgamation with
Hoogovens, would you not then have been able to survive for up
to two years?
(Sir Brian Moffat) No, we would not have done the
deal. Whereas we did not have the £700 million, we have had
the support over the 15 months of many hundreds of millions of
pounds for cash generated offshore.
361. With a company which is so obviously performing
so badly and quite clearly has not been managed terribly well
in the past, otherwise it would not have performed so badly, do
you think it is wise to make large payoffs to former senior employees
of the company?
(Sir Brian Moffat) We made payoffs in accordance with
our contractual obligations and not a penny more as far as the
employees were concerned. I take exception to the question of
the company not being managed properly. I think the management
team and the people in it in the circumstances have done a good
job, a very good job. I would point out that British Steel's track
record in the 1990s was about the best in the world in steel.
362. I should like to come back on that because
I am afraid I do draw that conclusion.
(Sir Brian Moffat) You may; I say I take exception.
363. All I should like to say is that if a company
is doing so badly, has such a poor profile in terms of public
profile over the decisions it has taken, affecting thousands of
workers, then I think somebody has to be held responsible and
I think it is the leadership in such companies. If managers and
leaders in that company have departed, I do not think they should
get a payoff when they do.
(Sir Brian Moffat) I do not abrogate responsibility
and I as Chairman and Chief Executive would take responsibility
for the situation in terms of trying to manage our way out of
it. Much of the situation we are in is not of our making. That
is a fact, a market circumstance, an exchange rate circumstance
driven by a market scene as well, which we can only react to and
try to dig our way out of. That is what we are trying to do and
we are also trying to exhort people in power and influence to
try to help not only sustain but grow manufacturing industry in
this country. Most of my colleagues and myself have worked the
majority of our careers and have been successful to date in that.
It is only in the last three or four years that the situation
has turned and continues to turn so dramatically differently.
It is no use us just complaining about it, we have to try to do
something about it.
364. I certainly agree with most of that analysis.
It is the job of a company to predict changes in market trends
and to be able to respond to those in a global environment, not
in a national environment, in such a changing world. However,
I do believe passionately that if managers do not perform then
they should not be rewarded in any way. I should like to repeat
the question I asked earlier. I asked how long you think you will
remain with the company. I shall ask it slightly differently.
If this company does not start to perform as a result of these
proposed changes, will you then step down?
(Sir Brian Moffat) If the shareholders tell me to,
365. The packages for your senior managers,
your retirement package, your payoffs, are quite handsome. Will
they be as handsome for the workers you are making redundant?
(Sir Brian Moffat) You know the answer to that because
there are different rates. The answer is obviously no. All I would
say again is that we paid the people you are talking about no
more and no less than was in the contract. It is a different sum
and I do not draw the comparison, but I would just repeat again
that we will pay our workers, depending on their service, much
more than the statutory redundancy, but I do not draw the comparison.
366. May I extend the question? Because there
seems to have been such a botched job over this from beginning
to end, and because you were awarded your knighthood for services
to British Steel, have you ever considered resigning your knighthood?
(Sir Brian Moffat) No, I have not.
367. Do you think you should?
(Sir Brian Moffat) May I just correct you? I was not
given a knighthood for services to British Steel. People have
said that, but if you look it up, it was not given for that.
368. Will you consider giving it up?
(Sir Brian Moffat) Why should I? I have nothing to
be ashamed of.
369. As I understand it that was what you were
given your knighthood for.
(Sir Brian Moffat) The inscription I have says "For
services to the steel industry". I do that not only in the
370. You were not awarded it from outside the
(Sir Brian Moffat) But it was for the steel industry,
it was not for British Steel.
Chairman: It was not the royal family of Holland
who gave the award. I really do think that is splitting hairs.
371. I appreciate your resentment at questions
of quality of management of Corus, but if the management has been
so good, why did the former Chief Executives Mr Bryant and Mr
van Duyne have to go?
(Sir Brian Moffat) Because the board determined that
372. Presumably because the board were dissatisfied
with the work they were doing.
(Sir Brian Moffat) Correct.
373. So there are questions about the management.
(Sir Brian Moffat) I have made it quite clear why
they went in the past and I said it to the Committee last time.
374. That is why I was surprised that you made
such a strong defence of the management of Corus.
(Sir Brian Moffat) I am talking about the management
that is. From time to time people do not live up to expectations.
We all do that. It may affect us personally from time to time.
That is unfortunate, but it is a fact of life.
375. Do you think you have lived up to expectations?
(Sir Brian Moffat) That is for other people to determine.
I do not think I have anything to be ashamed of.
376. Do you not appreciate the sensitivity of
the situation when two senior managers resign because of the quality
of their leadership and the lack of progress the company made
under their term of office? They are paid off extremely handsomely
by any account, yet those 6,000 people who are now facing redundancy,
who have been on many occasions told by you directly that they
were doing an excellent job and that is on the record, are going
to get just a bit above an enhanced state redundancy. Do you not
find there seems to be a bit of a problem there and that is why
people feel rather strongly about this?
(Sir Brian Moffat) The contractual situation as far
as the Chief Executives were concerned was approved by the shareholders
in the meetings which consummated the merger. We honoured those
agreements as we had to by law, no more and no less, but the shareholders
approved that situation.
377. Is there any proposal from the shareholders
for an enhanced package for the workers you are sacking?
(Sir Brian Moffat) No.
378. Why not?
(Sir Brian Moffat) Because we have no need to, it
is within our authority. It is not within the authority of the
directors to pay themselves, as you well know.
379. May I take you to two quick questions?
You have told us that it is the fall in UK demand and the cost
of exporting steel which led to the restructure in the UK rather
than in Holland. Yes?
(Sir Brian Moffat) Yes.