Morgan Grenfell Executives Resign In Wake Of The Guinness Affair
Jan. 20, 1987
LONDON (AP) _ The chief executive and a member of the board of directors have resigned from investment bank Morgan Grenfell Group PLC in the wake of the scandal surrounding Guinness PLC, the bank announced Tuesday.
Christopher Reeves, the chief executive and deputy chairman of the board, and Graham Walsh, a board member and head of corporate finance, stepped down after an internal probe into the firm's role during the controversial Guinness bid for Distillers Co. last year.
The giant brewer admitted last week that it illegally repurchased its own stock, apparently to boost its price and improve its chances of beating out a rival bidder for Distillers, maker of Johnnie Walker Scotch whisky and Gordon's gin.
Morgan Grenfell said the latest resignations were ''in light of breaches of established procedures and policies which were identified in the course of... the international investigation.''
But Morgan Grenfell said the resignations ''in no way indicate any personal involvement with any of these breaches, but Mr. Reeves and Mr. Walsh accept that their management responsibility is such that in the best interests of Morgan Grenfell and the City they should now resign.''
The City is London's financial district.
The resignations, Morgan Grenfell said, ''have been accepted with considerable regret.''
A Morgan Grenfell takeover specialist, Roger Seelig, resigned Dec. 31. A member of a separate board of the unit Morgan Grenfell and Co., Seelig repesented Guinness during its $3.9 billion takeover of Distillers.
Morgan Grenfell said it had formed an executive committee to manage the firm under the direction of Sir Peter Carey, an executive director, pending the results of a review into its management structure.
Reeves and Walsh are the latest casualties of the Guinness scandal stemming from the Department of Trade and Industry investigation.
Other casualties included Guinness' chairman and chief executive, Ernest Saunders, who was fired last week.
In addition, Oliver Roux, a director for finance, has resigned along with another Saunders associate on the Guinness board, Arthur Fuerer. The Guinness board also asked another of its directors, Thomas Ward, to resign.
Meanwhile, the London Times reported Tuesday that the Department of Trade and Industry had been giving information to the U.S. Securities and Exchange Commission about arbitrager Ivan Boesky's stock trading through brokers here, including details of his involvement in the Guinness affair.
Boesky speculated in Guinness and Distillers stock during the takeover and Guinness invested $100 million dollars in a fund run by Boesky.
Boesky last November agreed to pay $100 million to settle SEC charges that he illegally traded stocks using inside information on companies involved in takeovers.
The SEC is investigating whether Boesky and a number of British and American firms formed a network to exchange information and profit from major takeovers, the Times said.
The department declined to comment on the Times report, and also refused to confirm or deny a separate Times report Tuesday that a secretary in the Office of Fair Trading may have leaked inside information to a brother who works in the City.
The department is conducting an internal investigation into such leaks.
The Times said the Office of Fair Trading secretary has been questioned twice by inspectors. The woman has not been suspended but has been moved to different department, the newspaper said.
The department began its internal investigation last month following allegations that civil servants have been using inside information on whether takeover deals would be cleared to make stock profits.