Rupert Soames – Winston Churchill’s Grandson – A Business Opportunist?
Departing Oxford University with a third class degree was hardly an inspiring career start for well connected rich boy Rupert and his future was unclear, except that he entered politics as many of his wider family had done previously.
But Arnold Weinstock, CEO of General Electric Company (GEC) rescued him from a lifestyle to which he would be unsuited and gave him a job with the company. He remained with GEC for nearly 15 years progressing through increasing levels of responsibility.
The key to his success was a studious adoption and adaptation of Weinstock business philosophy which had created a business empire comprising over 150 companies and a workforce in excess of 250,000.
After GEC he moved into finance working his way up in the banking software company Misys before falling out with its founder over policy direction.
He was a year unemployed before taking up the post of CEO with Aggreko in 2003 where he achieved a measure of success expanding the company into new business ventures worldwide.
Then Serco came knocking and unable to resist the challenge he applied for and got the job of CEO on a salary package in excess of £2million annually.
Serco, the Service Company, a corporation so large no one had ever heard of it in 1990, except the Tory party who outsourced to it just about every public service it had not already privatised.
In 10 years it expanded taking over service provision on long contracts, for health, schools, roads, prisons, RAF ground maintenance, naval support, immigration, refugee control, accommodation, the Olympics, The Commonwealth games. The list is endless.
The profits made by Serco from the UK taxpayer registered in the £billions. The value of the company soared to around £6Billion as it took on huge commitments in Australia and other southern Hemisphere nations. The workforce registered around 130,000 at its peak. Investment trusts loved the company reaping immense financial benefits year on year.
But then it all went wrong.
Early in 2013 an aspiring civil servant in the Ministry of Justice picked up an anomaly. Thousands of ex-criminals, freed suspects and timed served prisoners and dead people were apparently still being fitted with tracking devices and being monitored at a cost to the taxpayer of about £50million annually.
Many months of investigation later and following the company’s refusal to accept it was not appropriate to charge the government for monitoring people who were no longer in the justice system and/or were long dead, Serco was banned from bidding for any new contracts with the government, initially for 6 months and the fraud squad were asked to investigate all contracts presently in place.
The ban hit Serco where it hurt most, revenue started to fall quickly as more and more questions about probity were raised by the press and other media. Almost 25% of the company’s annual revenue was dependent of the UK government. “Ripping off the UK taxpayer” headlines were heeded by the stock markets and Serco’s share price hit the rocks. And there were further revelations about potential fraud in respect of a patient transfer contract in London and East Anglia valued at £290million
Serco started to fall apart as investors withdrew their funds and opposition politicians attacked government incompetence. Day after day new allegations surfaced and the management board were forced to act as the company was about to go “belly up.” In October 2013 the Chief Executive fell on his sword and resigned as did a number of other key personnel.
Not long after his departure a damming report was published bringing to the attention of the UK public, horrors being inflicted by Serco, on the most vulnerable people in the country highlighting a disgraceful level of service provision and management of refugee centres at Yarn Wood and Wakefield. Here is a summary of what was witnessed;
“The rooms were home to rats and cockroaches. Pregnant women were placed in poor housing with steep stairs. Food poisoning was common. Some private contractors did not pay council fees, and tenants’ heating and electricity had been disconnected.” This hellish place is called Angel Lodge.”
Serco was forced to introduce immediate organisational and management changes meeting the requirements of their contracts with government through the provision of accommodation fit for human habitation.
But, leaderless and rudderless Serco lurched from one crisis to another over the next 6 months before accepting an offer to manage the company, from English businessman of note Rupert Soames who was at the time the CEO of the Scottish company Aggreko that specialised in the manufacture and supply of temporary power supplies for projects all over the world.
Aggreko had recently benefited from from a merger with a much larger and well resourced US company, was on a sound footing financially and no longer needed his management skills.
Accepting the offer from Soames was a no brainer for Serco which was in dire straights. The company was in desperate need of a CEO unsullied by business scandals possessing influence on the UK government.
Not long after taking up the post of CEO, Soames identified the company was in a very perilous financial state and went to the market seeking around £200million to keep it afloat.
But bad news kept on coming. There were complaints about unacceptable contract performance in respect of refugee, immigration, accommodation provision and sexual abuse at Yarn’s Wood where female asylum seekers were housed. Something had to be done fast to remedy the situation or the company would sink without race.
Soames moved quickly, recruiting proven managers with whom he had worked previously. His new team examined the books and identified risky contracts and or contracts that provided little, if any financial return.
These were speedily disposed of to other companies. He then ensured a full payment of the outstanding debt in respect of the prisoner monitoring shambles to the Ministry of Justice. But Serco continued to Haemorrhage money despite the changes
By the late summer of 2014, Soames had decided to make major changes to Serco.
He would restructure the company directing it’s activity wholly to support of government contracts. All other business would be sold off. The human cost would be the loss of many thousands of employees and a loss of annual financial revenue of about 30%.
But the changes would not be without risk and he needed to be assured of the Tory led coalition government support through the extension of and award of new contracts. He got that from his friend David Cameron, then leader of the Tory party.
2014: The Scottish 2014 Independence Referendum and big Business Support of the Union
Early spring 2014 and the CBI nailed its colour to the Union cause without consulting their membership. The BBC, a member was onside with the decision in contravention of its commitment to the public to be even handed in all respects
Late August 2014. Scotland is subject to a Unionist “shock and awe” campaign signed up to by over one hundred business leaders who say that the economic case for independence is badly flawed and Scotland would be assured of a successful future only if it rejected calls for independence. A campaign letter issued at the start stated:
“Uncertainty surrounds a number of vital issues including currency, regulation, tax, pensions, EU membership and support for our exports around the world; and uncertainty is bad for business. Scotland’s economy is growing. We are attracting record investment and the employment rate is high. We should be proud that Scotland is a great place to build businesses and create jobs – success that has been achieved as an integral part of the United Kingdom. The United Kingdom gives business the strong platform we must have to invest in jobs and industry. By all continuing to work together, we can keep Scotland flourishing.”
HSBC, The Co-operative Bank, BHP Billiton, Edrington, (owners of the Macallan and the Famous Grouse), The BG Group, Cairn Energy, The Weir Group and many other businesses ranging from farming to fishing with technology, energy and finance thrown in were also actively involved sending personal letters to employees and shareholders beseeching them to vote for the Union cause.
Concerns were raised concerning the probity of the letter, when it was revealed that it had been orchestrated through the cabinet office of David Cameron who had stated publicly, on many occasions that he would not interfere with the referendum process believing it was a decision to be made by Scots alone. Scottish businessmen that signed to letter were numbered in single figures which galled those who intended to vote for independence.
2015: Serco and the Red Road Refugees
With the referendum safely out of the way the Westminster government boldly extended additional control of immigration and refugee support to Serco and the abuse continued.
More and more vulnerable people were moved to Glasgow’s Red Road flats, long declared unfit for human occupation. But Scots were outraged and through public pressure they forced Glasgow City Council to clear the flats of refugees, flatten the affront to modern society and rehouse the immigrants and refugees.
Orchard & Shipman, an estate leasing company based in London, England had been sub-contracted by Serco to manage the re-housing process and took scores of Glasgow City Council and district properties to its books.
Quality varied in range from barely acceptable to good, but rental charges to the UK government increased significantly over the Red Road housing, providing greatly increased profits for Serco who charged the exchequer the premium rental rate regardless of the actual accommodation rental charges.
2016 The European Union Referendum
A leaked letter revealed the real extent of David Cameron’s plotting against the Brexit campaign at the time he was still supposed to be renegotiating the UK’s membership of the EU. He had colluded with big business to fight the Anti – Brexit cause.
Pro-Brexit politicians, such as Boris Johnson were affronted, claiming that Cameron’s efforts in Europe, seeking a renegotiation of the UK’s terms of membership was a fraud and called for an independent inquiry into the matter.
The secret strategy included asking FTSE 500 companies to warn their shareholders of the catastrophic effect on the UK economy if the Brexit campaign was successful and was referenced in a letter dated 8 February 2016, from Serco boss Soames to Cameron 11 days before the latter’s renegotiation deal with the EU was complete. But Cameron had been advising the Commons that he ‘ruled nothing out’ unless he won concessions from the EU.
Boris Johnson raged, “Now we learn that some fat cats have been secretly agreeing to campaign for remain while angling for lavish Government contracts. It makes us look like a banana republic. And it is also now beyond doubt that the so called renegotiation was a fiction designed to bamboozle the public. It was a meaningless mime, a ritual, a kabuki drama in which the outcome was utterly preordained. This is not the far-reaching and fundamental reform we were promised.’
Soames letter stated; “There were two points I thought I might follow up on. The first is how to mobilise corporates to look carefully at the risks Brexit represents. In this respect I am working with Stuart Rose (the head of Britain Stronger in Europe) with a view to contacting FTSE 500 companies who have annual reports due for publication before June and persuading them that they should include Brexit in the list of key risks. All public companies are required to set out in their annual report an analysis of key risks.”
In February 2016 Serco was one of 200 businesses to sign a public letter in support of EU membership.
The timing of Soames letter to Cameron had significance since it was written days after Cameron had delivered a speech calling for sweeping prison reforms. Part of the content contained a Soames argument that the private sector had only around 15% of the UK prison’s market and this did not represent value for money for the taxpayer.
Brexiteer’s were furious and demanded to know how many other businesses Cameron had hatched secret deals with and what promises had been made. Tory MP Steve Baker said: “This is proof that big corporates are being asked to gang up on hard-working British families to try to bully them into staying in the EU. There is a coordinated attempt to use company reports as campaigning documents.” And Labour Leave campaigner Gisela Stuart said: “Today George Osborne accused the Leave campaign of inventing conspiracies. Now we see that David Cameron is knee deep in one.” Serco denied there was any link between support for the EU and trying to secure state contracts.
Rupert Soames 8 February 2016 Letter to David Cameron
“Thank you for a very useful meeting last week. There were two points I thought I might follow up on. The first is how to mobilise corporates to look carefully at the risks Brexit represents. I am d Stuart Rose (the head of Britain Stronger in Europe) with a view to contacting FTSE 500 companies who have annual reports due for publication before June and persuading them that they should include Brexit in the list of key risks…
“During the Scottish referendum campaign we managed to garner a lot of publicity as a series of companies formally stated in their annual reports that independence for Scotland was a major risk.”
So there we have it. The tactic worked against the Scots in the 2014 referendum. Worth another outing.
2016: The CBI Gets Involved seeking to influence the outcome of yet another referendum
Just as it did in 2014 at the time of the Scottish Independence referendum the CBI flexes its muscles in support of Cameron and the anti – brexiteers
The CBI chief said bosses should explain to employees the adverse implications of Brexit on their businesses. The organisation, representing around 200,000 firms, backed staying in the European Union and insisted the move was; “not about telling people how to vote” but rather about responsible business leaders explaining the impact a Brexit would have on company growth, their jobs and their communities. We believe that if Britain left the EU, it would be more difficult for us to win EU government contracts, and we regard this as a risk to the business.
Vote Leave blasted the CBI’s advice and said it was ‘highly regrettable’ to see “bosses gang up on staff” in an anti-democratic abuse of power by the EU-funded CBI which supported the ERM and the single currency.”
Microsoft followed CBI advice and wrote to all 5000 of its staff in the UK advising while the decision was one “for individual voters to make” Microsoft’s view “was that the UK should remain in the EU.”
Soames, grandson of Winston Churchill, said he would argue “‘ferociously” for the UK to remain in the EU whatever the result of the PM’s renegotiation. In recent years, Serco has secured contracts worth £3.2billion to run private prisons in England and Wales. It has also won contracts with the Home Office worth £704million to run immigration removal centres and accommodation for asylum seekers. Since joining the company in 2014, former Eton pupil Soames has been entitled to a salary and pension worth more than £1.1million a year. He can also pocket an annual bonus of up to £1.275million.