The Guardian from London, Greater London, England • 14

FINANCIAL GUARDIAN Thursday June 17 1982 Anyone with any sensitivity will look forward to 'After I was seventy five' created a business empire told in the title of his memoirs "After I was Sixty." It is difficult seeing it being like that now for Lord Grade, but it is equally hard not seeing him turning up to an office somewhere at 5.30 every morning. made. For example the Swiss have bent their famous rules of banking secrecy slightly so that, in theory at least, fraud is not protected. But evading other countries' taxes is not a fraud as far as Switzerland is concerned which suggests that though the CSI is quite right to call for an investigation of procedures, the rest of us will have a right to remain cynical for a while yet. reliable, solid performer will take at best five years and at worst, the group will stagnate.

Up to now that view is the one that has held sway, and is reflected by the share rating vis-a-vis rival Sains-bury. The other view which deserves an airing today is that had it not been for the superstart existence of Sains-bury and one wrong decision Tesco would be widely admired. That wrong decision was to expand very rapidly at a time when interest rates happened to shoot skywards, and it is apparent that getting interest charges down is the thing that has turned the figures of the group. There can be no definitive answer as to which view ultimately will prevail. Maybe neither will.

The most sensible thing to do is to be aware of the worries, and applaud when those worries seem lo recede. Yesterday was a day for applause, even if Tesco still have to smart from thefact that it is not as good a retailer as Sainsbury. inevitably ask himself whether with the wisdom of hindsight, he would not have been better passing his life's work on to Mr Gerald Ron-son. We do not know the details of the original agreement between Mr Holmes a'Court and Lord Grade, but the latter could hardly have so willingly chosen Mr Holmes a'Court as his successor had he fully envisaged how his own relationship with the company would so shortly end. And, as we have asked in this column before, it is still unclear whether ACC's new proprietor can achieve that blend of creative and financial people upon which successful media businesses are built.

Getting the elephants into the ring is one part of this you also have to make, them dance. And the departing elephant, if that is not too discourteous a term for a genius that stands just over five feet tall in his stockinged feet Well, he says he feels 25. and the late Lord Thomson the investigation stage. Partly this is a question of training and qualifications of investigating officers In some other countries police have accountancy qualifications. But even better-qualified investigators would find themselves hampered by difficulties in getting hold of documents and bank accounts.

The proceedures in civil law that provide for disclosure of documents do not apply in criminal law under which, of course, fraud cases are tackled. There is an overwhelming case for judges being given powers to impose orders requiring production of such documents. This would help enormously in UK cases. Inevitably though, much of the most serious fraud now is international, with the well-known tax havens naturally attracting their share of wrong-uns. So we do need greater international cooperation, something that is going to take a great deal of time, patience and political will.

Some progress is being particularly on one larger-than-life human being, hav a life-cycle that corresponds to the lives of those people that lead it. Any company built up by one person has a problem of succession. Sometimes that is solved by the company itself changing its nature becoming a mature, institutional structure, one that can bo run by competent professional managers. Just occasionally it can retain its entrepreneurial flair by discovering somewhere within itself someone else who can take on the mantle of the founder-figure. But most usually the problem is "solved" if that is the word, by defeat and decay toy falling into the arms of a predator, quite often at a knock-down price.

In this instance, had it not been for what, for shareholders, turned out to be a happy accident in the shape of an alternative bidder, ACC would have gone for a song. And Lord Grade, still fiercely loyal to Mr Robert Holmes a'Court, must now Fraud focus PERHAPS the most interesting bit of the CSI's rebuttal of the Gower proposals is the chunk on handling of fraud. The CSI is absolutely right to focus on this, as fraud has become so complicated that it. is frequently impossible for professional examiners to work out exactly how some fraud has been perpetrated, let alone the 12 members of a jury. Further, there have been cases where a trial has proceeded for several months, people have been convicted, and then had that decision overturned on appeal because of some technicality.

But the key problem is at I Final curtain as 'McDonald's needs properties Big Mac may Woolworth has too many' slim Woolies Lord Grade resigns at ACC By Margareta Pagano F. W. Woolworth, Britain's largest retail chain with 1.000 stores, has been talking to prospective buyers about selling off a large number of properties in addition to those already up for sale. Among these is McDonald's the fast-food hamburger group, which has held preliminary discussions over the sale or leasing of sites. Mr Bob Rhea, managing director of the United Kingdom McDonald's Golden Arches chain, said yesterday "McDonald's needs properties, Woolworth has too many, and there is value in us talking more." Subsidy row threatens EEC steel peace Mr Rhea said discussions had taken place with the Wool-worth management and a feasibility study on a number of properties has been carried out.

Four high street sites had been earmarked for a pilot study, but Mr Rhea added that he could be interested in buying, or leasing, more. He was not willing to say how many. "We are still waiting to hear from Woolworth after the talks. These were just preliminary discussions," he said. "Many people believe we could have 1,000 restaurants in Britain, and make money, others think only 500 But we are certainly expanding." McDonald's now has 76 res way the word subsidy is interpreted.

BSC is horrified at the American judgment of its subsidy level, and the UK government will pressure other EEC governments to fight for the British industry as a special case in negotiations over the judgment in Washington. The other EEC steel producers and Italy in particular is pleased to have got off so lightly are unlikely to want to do this, and would prefer to keep the argument general. But the British are prepared to argue that unless their case is fought independently, they will have to break the EEC price cartel and start a price war by selling cheap steel in the European market. British Steel Corporation has lead the way by cutting its capacity by six million tonnes in keeping with EEC require By Maggie Brown Seventy-five-year-old Lord Grade yesterday resigned from Associated Communications Corporation, the company he founded and ran for 27 years. His decision comes two months after he was relieved of his directorship of ACC.

in an abrupt board room reshuffle when new owner Mr Robert Holmes a Court assumed total control, Lord Grade insisted yesterday that he was on the best of terms with the Australian entrepreneur he helped install at the head of the company. But he was left without a real role at ACC. despite building it up into one of Britain's major television, film and entertainment groups. Earlier this week Mr Abe Mandell. the President of ITC Entertainments Inc.

the US film company, was made an ACC executive board director. Lord Grade now intends to devote himself to making feature and television films. and expects to make a more detailed announcement shortly. ACC. will assess each of his proposals and decide, on merit, whether to put up some backing.

No financing deal has been signed, and no collaborative deal has been reached on paper. Lord Grade will receive a 46,000 a year pension from ACC, and is buying his Belgra-via penthouse in Cheval Place for 125,000, under an agree ment he had with tne com-pany, although its current market value is two.wu. He is receiving no other compensation, although he had two service contracts, worth 127,000 a year, which ran until 1984. Further, he earned a total of 241.000 last year, including a $200,000 commission Beware bumps WE SHOULD of course have known that once everyone starts saying something exactly the opposite will happen. A few short weeks ago the received wisdom on, the exchanges was that the dollar would fall once US interest rate weakened, and that these would weaken once the US deficit seemed under control.

And of course now that the US budget does indeed seem, under better contrDl, exactly the reverse has happened. Equally, a few weeks ago a Falklands victory would havq appeared the signal for a buying spree on the markets, a view which, er, um, we reflected here. So now what is conventional wisdom predicting? Another fall in interest rates? Sooner or later, given things like those earnings figures yesterday, that is inevitable. But beware bumps on the way. Lord Grade from ACC's American film subsidiary.

ITC Entertainment Inc. He said yesterday: "I have asked to be released from my contract. If you do that you do not ask for compensation." Mr Holmes a Court's TVW Enterprises is expected to post cheques on Friday to ACC's shareholders, putting the final seal on the takeover deal turning ACC into a privately-controlled company. That is the last day possible, under the offer terms. TVW has yet to finalise and push through rationalisations required by the loss-making company, though its UK.

filmmaking ITC side has made no films in the past six months. One major asset whose future is unclear is Shepperton Studios, due to he replaced by newly-built Nottingham studios, to service Central Television. It is just conceivable that Lord Grade might try to reestablish himself as a television film-maker from such a base. man, described the experience as, a very high price to pay for our financial performance, both for our own staff and our customers." Staff and customers will also pay the price in 1982, although to a much lesser extent. Lord Shepherd said yesterday that the position this year would be relatively stable with perhaps 3 per cent being taken off routes and job losses restricted to natural wastage.

The most attractive proposition in terms of private capita or even privatisation would be the fast growing National Express motorway coach operation, which last year raised its passengers by almost 50 per cent to 14 million and along with the National Holidays offshoot contributed 4.5 million of the group's 5.4 million profit. UK boost for IBM By Michael Smith The US computer giant. IBM has earned well over 100 million from its UK operations in the past two years. IBM UK raised profits from 153 million in 1980 to 161 million in 1981, and repatriated 56 million each year in dividends to the US parent. The outflow to the US was made possible b.v steadv growth in the UK division's business.

Sales in the past six years have more than doubled to over 1 billion a year, with export turnover rising from 250 million to over 400 million. At the same time. IBM UK has maintained a heavy programme of captial investment. The outlay last year was 118 million. The UK chairman.

Mr Eddie Nixon said in London yesterday that IBM ww in pretty good shape for fresh growth in 1982. The computer industry is stiJl growing," said Mr Nixon and we expect to gain a continued increase in our reve nue." 33 Testy Tesco EVERYONE in the. financial markets has been so beastly about poor Tesco that it served the analysts right when the company managed to defy their collective gloom and produce perfectly respectable results. There are really two opposing views of the company. The first holds that at the end of the day Tesco has management and image weaknesses that will show up in the figures whenever trading is particularly tough that turning the group into a Dollar returns to glory days From Alex Brummer in Washington AFTER over a decade of successive devaluations and humiliations the once almighty dollar has been restored to its former glory.

Late on Tuesday the value of the dollar, as measured against a basket of 15 leading currencies, was above the level of June 1970 for the first time in 12 years. That was the date when Canada put an end to the Bretton Woods system of fixed exchange rates and floated the Canadian, dollar on the foreign exchange markets. Its decision set in train a series of international financial moves which culminated in President Nixon's dramatic announcement on August 15, 1971 which ended the link between gold and the dollar. The Nixon move ushered in the present era of floating exchange rates. As expected the dollar came under pressure against other major currencies.

But few economists predicted at the time the years of successive devaluations which put American economic and financial policy at the mercy of its trading partners. In the 1970s the dollar was continuously a victim. In 1971 the then Treasury Secretary John Connally and his master Richard Nixon set in motion a 7 per cent devaluation of the US currency. The markets went through a period of unprecedented adjustment and turmoil which led to an additional 10 per cent devaluation in 1973. By 1977, when President Jimmy Carter arrived at the White House, Americans were becoming used to the idea that the greenback was no longer the world power it had been in the post-war era.

High inflation in the US and relative strength in the West German and Japanese economies continued to put the US currency under pressure. By the summer of 1979, Jimmy Carter's economic policy was in disarray. A Treasury Secretary Mr Michael Bluementhal was sacked after tne international markets had lost confidence in his words. Mr Paul Volcker, an avowed monetarist, arrived at the Federal Reserve and the Long period of building a sound dollar began. By the time of the Versailles summit earlier this month events had almost come full circle.

The dollar was no longer the sickly child but the bully boy of the currency markets. Its strength was exporting recession and unemployment across the Atlantic. The Europeans were demanding action to bring the dollar down exchange market intervention and lower interest rates. Morgan Guaranty, which keeps track of the US currency's movements, described the recent performance as "amazing." A foreign exchange expert said In two short years we've completely reversed 12 years of dollar decline." With US interest rates still firming yesterday experts like Mr Fritz Leutwller of the Swiss Central Bank see the trend as irreversible for the time being. It may not be long before the dollar has managed to creep up on the currencies of Switzerland, West Germany and Japan which alone still outpace its value in the era of floating rates.

The rise of the dollar knocked the pound 1.1 cents back to $1.75 at the close, and at one point it dipped to $1.7490, with the Bank of England intervening in a minor way. The closing level was not quite down to the low point of April. Sterling is nevertheless showing a good performance against most other currenics European central banks as a whole appeared to be doing little to stop the soaring dollar, in spite of pleas from the Bank for International Settlements on Monday for coordinated actios to stabilise the exchanges. NOTEBOOK HamishMcRae IT WAS easy to predict, and indeed widely predicted. But it is hard not to feel a twinge of sadness at the way Lord Grade's involvement with the company he built up has ended.

In a way it points up the sad truth that companies that rely on the talents of a handful of individuals, and most Flexi-rate for Third World The World Bank said last night that it will borrow $1.5 billions on the US capital markets starting in July in the form of a variable interest rate issues. The move, foreshadowed in the Guardian last week, marks a sharp change of direction for the Bank which has historically raised funds at fixed rates in the form of medium and long-term bonds. The Bank's deputy-treasurer Mr Hans Hittmair said that if and When the Bank goes to variable-rate funding it will lead to major changes in its lending operations to the Third World. New credits to the developing countries would be granted on a variable-rate basis, under which interest rates would be adjusted evrry six months to reflect changes in market conditions. The change in the Bank's borrowing operations sun requires the formal approval of the Bank's executive directors before the new market operation gets underway.

But Bank officials predict little difficulty in persuading the board of the wisdom of the change. Mr Hittmair said that the World Bank's borrowing needs were expected to increase to around $9 billions in its new financial year which begins in July. This compares with $8 billions raised in the 1981-82 financial year and $5 billions a year earlier. He said that initially the new type of variable-rate borrowing would account for 11 per cent of the Bank's borrowings and said that it regards the move as an experimental type of financing." The move is expected to raise difficulties in the Third World, which is likely to resist efforts to put their borrowing on a more commercial basis. Although concessional loans through the International Development Association will be unaffected.

NEWS IN BRIEF Portugal devalues PORTUGAL yesterday announced a big devaluation, which will make holidays cheaper for British tourists this summer. The central bank devalued the cscudos by nearly 11 per cent against the dollar when the exchanges reopened after a public holiday. At commercial rates a pound sterling bought 144 escudos yesterday compared with 130 on Tuesday, a 10.7 per cent improvement. The cscudo had already fallen significantly earlier in the month. THE professional accountants joint disciplinary committee warned yesterday that there is a serious danger that some small building societies do not have systems adequate to prevent or detect fraud.

The accountants concluded that there is little to stop other small building societies suffering the same fate as the tiny one-office Alfreton Building Society which collapsed at the end of 1980 THE BLACK economy may amount to between five and eight per cent of national income, according to new estimates presented to the Treasury committee yesterday by Professor Cedric Sandford and Mr Michael O'Higgins of the University of They say that larger estimates are implausibly high and add that the relative size of the hidden economy grew during the first half of the 1970s but has stabilised or even dropped back a little since then. SHORT Brothers, the Belfast planemakers, have won an order worth $8 million (4.5 million) for two Shorts 360 commuter jet aircraft. The order from Simmons Air of Michigan is the fifth US customer for the state-owned firm Petrol prices to go up by 9p National Bus makes hefty turn-round By Jane McLoughlin, Business Correspondent A potentially dangerous rift between the British Government and other EEC steel producing countries threatens to start another price war for steel products unless it is settled quickly. The problem is over the level of subsidy which the US has judged each EEC steel producer receives from government. Britain's nationalised industry was judged by the US Department of Commerce to receive a 40 per cent subsidy, and action taken there over countervailing claims means that BSC imports into the US will be subject to a comparable duty.

At the same time, France, Italy and Germany were judged to have received far less substantial subsidies, and the row has arisen over the Talks on fibres fail By Rod Chapman Negotiations between the EEC and Hong Kong on restricting textile and clothing imports into Europe have broken down. The talks in Brussels failed this week following the adjournment of par allel discussions between the EEC and India and the EEC has warned that, unless it concludes satisfactory bilateral agreements with individual suppliers, it will pull out of the Multi-Fibre Arrangement which governs much of world trade in textiles. The new MFA, the third such agreement between leading textile producing and importing countries, came into being at the beginning of the year, after often acrimonious wrangling between the leading trading nations in Geneva. But the bilateral agreements with main suppliers under MFA Two are not due to expire until the end of this year. The EEC position is that the growth in the overall level of textile imports from the Third World should be limited to 1 per cent per annum.

But Brussels is calling for cuts in the exports of certain sensitive items produced by dominant suppliers like Hong Kong, South Korea and Macao. The EEC asked Hong Kong for a 12 per cent cut quotas on five categories of clothing: T-shirts, trousers, sweaters, blouses and shirts. the red in the first quarter, losing 2.3 million. Since March it has had 28 properties up for sale, many in the northwest, hopong to raise some 90 million cash. Only the Bromley branch is believed to be under offer.

Just last month Woolworth's parent in the United States announced two new board appointments, with Mr John Sullivan from the States due to take over as chairman next March. There have also been rumours that Woolworth's. which employed 54,900 people in the United Kingdom last year, might be wrested away from US control and turned into a private company. the GATT agreement, there is a footnote agreement to continue work on a calculation of what this is, so there is no clear definition of what constitutes subsidy. The British have always believed that under GATT, general regional aid is excluded from the calculation, because it is available to industry in general, not just to steel.

The US has counted this in its calculation of British subsidy. On the other hand, the French brought in a general subsidy, but gave discretion to civil servants about where this was put and though it ended largely in the steel district of Lorraine, the US appears not to have counted this in assessing the French subsidy element as about 30 per cent. by $1.50 a barrel to $35 in early February. The two sides now offer widely differing interpretations ot trends in tne on mantel. The companies feel that conditions do not merit the BNOC rise and that a second increase would make North Sea oil uncompetitive on world markets.

But BNOC sees prices firming North Sea crudes have been selling at $35 a barrel on the spot mar ket recent weeks. The reluctant acceptance by Shell and BP yesterday will give OPEC a new fillip. The OPEC summit decided in Quito last month to continue production ceilings, aimed at defending its marker price of $34 a barrel. actually deprive such bodies of their principal virtues. There would be less flexibility, loss of authority, less energy and less innovation.

"Tidiness in itself is not worth achieving if it is secured at the price of less over-all effectiveness." But the CSI does reflect that the greatest weakness of the present scheme of regulation is the failure to deal effectively with commercial and financial frauds. Indeed it claims that anyone who commits an elaborate fraud knows that he will either not be prosecuted or will escape the main charge. lations with Latin America Sir Campbell Fraser, the CBI's new president, has written to Mrs Thatcher emphasising that the employers' organisation will be playing its part to reestablish links as quickly as possible. Sir Campbell said in his letter to the Prime Minister that an open trading system depended ultimately on the maintenance of the rule of law and on clear demonstration that aggression does not pay. The CBI is likely to step up its efforts through a series of trade missions to Latin American countries to promote increased trade.

CBI officials are anxious to market UK goods and services more vigorously. taurants, another 30 are planned to open this year, and an annual increase of 30 sites is considered "normal." Mr Rhea added that some of the Woolworth sites were too large, but if they were split into smaller units they could be interesting. There are no plans, however, to operate in-house franchise take-aways, although the experimental Bristol Woolworth store, to be called 2lst Century Ltd, has just announced fast-food as a possible service. Several other groups are understood to be interested in working) out various deals with Woolworth, which traded in ments, and it is known to feel now that the other EEC producers should be seen to take action in the same direction. If the EEC will not support Britain, breaking the price cartel could be the only argument with sufficient clout to forme support for the British case because of the dire implications a price war holds for the European producers in general.

It is not a solution BSC would take lightly but the Corporation did reputedly threaten the Germans two years ago that unless they fell into line on the prices issue, BSC would put an additional million tonnes of steel into the European market. The US has hit BSC particularly hard on an interpretation of what is or is not a subsidy. Under the last Tokyo round of sibility of another BNOC price rise in the third quarter would help raise pump price further. Both Shell and BP had been holding out on the BNOC proposal to add $2.50 to its North Sea price of $31.50 from the beginning of the month. But Shell telexed its acceptance to BNOC yesterday morning, with BP following suit later in the day.

The two majors had been pressing for guarantees that BNOC would not raise its price by another $1.50 in the third quarter to bring it back to the $35 mark from which it was cut four months ago. Pressure from the oil companies forced BNOC to drop its price Noting that the Professor described the present system as untidy, the Council says it is against the Gower philosophy that self-regulation should be compulsory throughout the securities industry and be overlaid by statute and government supervision. It states The Council does not consider that this approach is practicable or desirable." It adds that the Gower proposals would reduce the effectiveness of self-regulation by weakening the self-regulatory body's authority, and that government supervision would will continue to press other banks to hand over the British share of repayments, which Buenos Aires has stopped. British banks want the freeze on $1 billion Argentine assets in London lifted rapidly, but Whitehall sources indicated this was unlikely. Bank of America said that Venezuela, whose attempt to raise a $2 billion loan foundered last week, is asking six North American and Japanese banks including the Midland subsidiary Crocker to raise $315 million in a syndicated loan for the Venezuelan development agency.

The Confederation of British Industry wants to increase efforts to restore normal and growing trade re Energy Correspondent Petrol prices are to rise by 7p to 9p a gallon at the end of the week following yesterday's acceptance by Shell and BP of the British National Oil Corporation's increase in North Sea oil prices. The new rise, the second of rouehlv the same amount In two weeks, will take pump prices to a record level of 1.76 to 1.77 a gallon and some oil industry sources foresee a peak of 2 by the end of the year if crude oil prices continue to firm up. The companies say that the increases stem mainly from the fact that they are still losing money on retailing rather than from the BNOC move. The pos CSI rejects Gower remedies By Michael Smith, Industrial Editor A big turn-round from losses to profits was achieved last year at the National Bus Company, the state-owned regional bus to motorway coach operators. But the price of the transformation was a reduction in NBC services and a further prunning of the workforce.

NBC earned a profit of 5.5 million from total revenue of 618 million in 1981, compared with losses of 11.3 million on sales of 581 million in 1980. However, the company shed some 5,000 jobs at a cost of 6.5 million and services were slashed by 43 million bus miles. The service cuts, equal to one mile in nine, meant that NBC carried 8 per cent fewer passengers in 1981. Lord Shepherd, NBC's chair Perkins agreement By Jane McLoughlin, Business Correspondent BL's Land Rover division and Perkins diesel engine companysubsidiary of the troubled Canadian earthmover giant Massey Ferguson have signed a 20-year agreement for the joint development of a new diesel car engine. For Perkins this is a move into car engines which could extend its export range of marine and light industrial vehicle engines Land Rover, which will modify a production line at Acocks Green, Solihull, to cope with production by thp end of next year, sees a diesel Land and Range Rover as boostine the vehicles' appeal in Europe, the Middle East and Australia.

Perkins Engines and Land Rover Ltd have spent some thing less than 10 million developing the engine, which is based on the 3.5 litre V8 engine used in Land Rover, Range Rover and Rover saloons. Work on the new engine started last month, Banks nervous over Argentina By Margaret Pagano The Council for the Securities Industry responded with predictable disagreement yesterday to Professor Jim Gower's recent recommendations for an overhaul of investment controls governing the City's financial institutions. The CSI declares it neither wholly accepts the validity of his annlvsis nnr anrnoc with his proposed remedies but does admit to having been impressed by Professor Gower's view of the nroblems facinz the industry. tinued to renew short-term facilities as they ran out. The Falklands surrender has left a large number of unanswered questions about Argentina's political and economic situation, which are likely to make the resumption of new lending on a large scale difficult.

A $200 million loan for the Buenos Aires utility Segba, which was postponed when the crisis broke in April, was for the second time put on ice yesterday with a 30-day postponement, said Gulf International Bank. Some bankers are expecting Argentina to need a debt rescheduling in the next three months. The big four British banks are meeting today to consider their attitude to Argentine loans and By Peter Rodgers and Michael Smith UNCERTAINTY over the future of the Galtieri regime has become the main factor in banks' reluctance to consider lending to Argentina again, in the wake of the ceasefire and surrender. This was the view of senior American bankers, whose keenness to maintain financial links with Argentina is tempered by nervousness about the character of any regime that replaces Galtieri. One banker said Until we know whether the Government stays and the tenor of any new regime, nobody is even thinking about going down there." New loans to Argentina dried up when the Falklands crisis broke, but bankers con.