Stakes high for GSK in China
"Very difficult and complicated" – GlaxoSmithKline's description of the corruption affair in China – is an understatement. The tale is messy, basic details are disputed and the Chinese legal system is opaque. But the stakes could hardly be higher for the UK's biggest pharmaceutical company.
GSK could end up being thrown out of China if allegations of bribery on a colossal scale are accepted by the Chinese courts. Alternatively, GSK could choose to quit the country in disgust if it feels a senior employee, former country head Mark Reilly, has been unfairly convicted in a politically motivated show trial.
Now there is another sub-plot. Peter Humphrey, the investigator hired by GSK to examine a suspected smear campaign, says from his detention cell that he feels "cheated" by the company because he wasn't shown the details of a whistleblower's allegations of corruption. When he saw them, he regarded them as "credible." He connects his arrest to his work for GSK.
So the supplementary allegation against GSK is that it botched its initial internal investigation and, in doing so, put Humphrey and his American wife in the line of danger. Was GSK more concerned with identifying the whistleblower, and discovering who covertly filmed a sex video of Reilly and his girlfriend, than learning whether its Chinese office was a nest of bribery? If so, chief executive Sir Andrew Witty's judgment would be on the line.
But before everybody runs away with the idea that GSK has screwed up in every possible way, it's worth examining the company's defence. It has been consistent. GSK admits some employees were engaged in "fraudulent behaviour relating to expense claims" but says its internal investigation found no evidence of systemic corruption orchestrated from the top of its Chinese unit. In other words, the company is standing by Reilly. And, on Humphrey, it says he wasn't hired to investigate the credibility of the whistleblower's email allegations but was told their outline.
GSK's position has yet to be tested, of course. The company' internal investigators, and Ropes and Gray, the US law firm belatedly hired to conduct an external inquiry, cannot demand access to bank accounts, for example.
But it is surely not beyond the realm of possibility that the Chinese authorities are exploiting this case for political ends and exaggerating the scale of GSK's corruption, aided by a disgruntled former GSK employee. The aim would be to discourage bribery elsewhere in the country's rickety healthcare system by making an example of a western company in a trial conducted in secret.
The US embassy in Beijing says it is "concerned" that its officials won't be allowed to attend the trial of Yu Yingzeng, Humphrey's wife, on charges of illegally buying information. Yes, that's definitely concerning. Highly alarming would be a better description.
Witty may eventually face hard choices. His first duty is to his employees and to Humphrey: pragmatic compromises would be legitimate. But if GSK regards any convictions and imprisonments as unfair and politically arranged, there could be only one response – say so, and get out of China.
Topping leaves William Hill on a high
It seems like only yesterday that Ralph Topping was being paid a £1.2m bonus to stay as chief executive of William Hill. In fact, it was 2011 and Topping agreed to stay until the end of 2013, so he is entitled to hang up his hat now.
All the same, it jars that Topping will stay on the payroll for another year on his current salary of £650,000 "to provide advice and guidance as required". Being paid to stay and being paid to go is a nice each-way arrangement. It's the "contractual obligation", explains the company. It always is.
In truth, shareholders won't grumble as they did about the retention award. During Topping's six years as chief executive, William Hill has completely outclassed arch rival Ladbrokes. Topping solved the online conundrum, which befuddled Ladbrokes, by importing slick technology from Israeli group Playtech. He has also taken the group into Australia and the US. The long-term prospects in the latter are debatable (never underestimate the power of the local gambling lobby to exclude outsiders) but the punt is justified if the US really is serious about deregulation of gambling.
This column and Topping will always disagree about electronic roulette wheels, or fixed-odds betting terminals (the view here: they are soulless devices that don't belong in proper bookies' shops). But Hills has delivered for its shareholders under Topping; there's no argument there.
Sport Direct staff may get less for delivering more
It is Mike Ashley's staff at Sports Direct who have most reason to be annoyed by the board's insistence on giving the boss the chance to earn a fat bonus.
Shoving Ashley into the established all-staff scheme was the only way the non-executives could strong-arm previously revolting shareholders into giving a nod of approval. But, as the 3,000 permanent staff will have worked out (they're experts by now), every slice of the pie that is ear-marked for Ashley means less for them.
The scheme that was narrowly approved this week allows 25m new shares, currently worth about £190m, to be issued if profits more than double by 2019. If Ashley wants 8m, which is what he would have got under his abandoned tailor-made scheme, that leaves 17m, currently worth £130m. It's still a tidy sum when split 2,999 ways: the current value is about £43,000 and, in practice, the share price would probably double if profits doubled.
But staff will also know that it would have been a breeze for the board to win approval for an old-style scheme, without Ashley, delivering 25m shares for them alone. The performance hurdles, which are now genuinely demanding, could probably have been set a few notches lower as well. In effect, then, Sport Direct's bloody-mindedness may mean staff getting less for delivering more. As a motivational tool, which is supposed to be the point of the scheme, that sounds less than ideal.
Ashley's genius for retailing is intact, so one assumes he knows what he's doing. But 8m shares, currently worth £60m, is spare change to a man whose 58% stake is worth £2.6bn. What was the point of this fight?
Bank governor has cricket fans stumped
This is where hiring an ex-Goldman Sachs banker as governor of the Bank of England gets you, eh? Mark Carney has abolished the cricket match at the Bank of England's annual summer party. Instead staff will play the supposedly inclusive game of rounders and have a three-legged race.
Actually, this development probably doesn't represent the end of civilisation in central banking. Carney merely allowed staff to choose their activities, which seems a reasonable policy. If Carney and his staff don't understand that cricket is the finest game on earth, that's their loss.
There was cute comment from a contributor on this paper's website: wouldn't a game of hide-and-seek be better to discover where the all the QE money has gone?
guardian.co.uk © Guardian News and Media Limited 2010