Guinness Chairman, Two Other Directors Ousted Amid Scandal
Jan. 14, 1987
LONDON (AP) _ Guinness PLC, the British brewing giant involved in a stock-trading scandal, said Wednesday it fired Ernest Saunders as its chairman and chief executive.
The company said two other Guinness directors who are associates of Saunders also were asked to resign.
They are Thomas Ward, an American lawyer, and Arthur Fuerer, chairman of Bank Leu AG of Switzerland. Fuerer formerly was chairman of Nestle S.A., the Swiss food company, where Saunders previously worked.
A fourth director, Oliver Roux, who was Guinness' top financial strategist, resigned Sunday.
The latest actions, which came during an emergency meeting of Guinness' remaining directors, followed new allegations that Guinness set up a $300 million fund to illegally support its $3.8 billion acquisition of Distillers Co. Ltd. last April.
The allegations, contained in a report in the London newspaper The Independent, also implicated Bank Leu in the purported plan.
The controversy surrounding Guinness first surfaced last month when the British government launched an investigation into possible securities violations by Guinness in connection with the Distillers bid.
The scandal, and a subsequent plunge in the price of Guinness' stock, already had forced Saunders, 51, to announce last Friday that he would temporarily step down as chairman until the government finished its probe.
But the company said its board decided Wednesday ''that all connections with Mr. Saunders and the company should be severed forthwith.''
Guinness has appointed Scottish industrialist Sir Norman Macfarlane as acting chairman and set up a three-man executive team to assume Saunders' responsibilities.
Guinness' best-known drink is its thick, molasses-colored stout, which is sold in 140 countries. In purchasing Distillers, the company also acquired two top-selling Scotch whiskys, Dewar's and Johnnie Walker.
Jonathan Guinness, a descendant of the company's founding family and one of Guinness' remaining directors, said after the meeting: ''I'm very happy with the way events have gone today. We've hit bottom and we're going up now.''
He declined to elaborate on the meeting, but promised that the ''full facts about everything are going to be disclosed.''
Lord Iveagh, a former chairman of Guinness who brought in Saunders in 1980 to bolster the then-struggling company, said late in the day: ''Once a friend, always a friend. But I do feel let down.''
Iveagh, another Guinness family member who remains a director, said he also had ''every confidence'' in the ability of current management to rebuild the company's reputation.
The Independent reported that Guinness last year illegally set up the $300 million fund for use by parties in various cities to secretly buy Guinness stock and thus lift the stock's price.
Guinness competed for Distillers with Argyll Foods PLC, a supermarket chain, and a rise in Guinness' stock price would have made Guinness' cash-and- stock proposal more attractive to Distillers' shareholders.
''The company made loans and deposits to investors to buy their loyalty and prevent them selling'' to Argyll, even though the plan cost Guinnness millions of dollars in trading losses, the newspaper said.
Bank Leu bought the most Guinness stock, $148.8 million worth, The Independent said.
Bank Leu said Wednesday it wanted to make ''a full disclosure of its role in the Guinness affair,'' and said it would call a news conference as soon as it had a go-ahead from the Guinness board.
However, Bank Leu's chief executive, Hans Knopfli, said any disclosures would be subject to Switzerland's banking laws, which provide strict confidentiality to bank customers.
The statement by Guinness' board did not address The Independent's report, and Guinness spokesman Christopher Davison declined comment on the allegations.