An interventionist regime at heart

PETER MANDELSON has attracted even more newspaper column inches this week than usual. It began with the Secretary of State for Trade and Industry's outburst over the "gut wrenching" General Pinochet.

Having limbered up on a Chilean dictator, he then trained his sights on the workforce at Rover's Longbridge car plant, telling them to "sharpen up" their act if they wanted to keep their jobs.

Mr Mandelson's week ended with a sadly confused story in the Guardian proclaiming that he intended to back the sale of Manchester United to Rupert Murdoch by, er, referring the deal to the Monopolies and Mergers Commission.

His department chose to issue a denial. But it is still not clear what they were disputing, the Guardian's assertion that he would block the deal or its assertion that he would allow it through.

Now, the fate of BSkyB's bid for Manchester United is not one that Mr Mandelson can dodge. He has to listen to the advice of the Office of Fair Trading but he does not have to act on it. I

In his quasi-judicial capacity as Secretary of State, it falls to him and him alone to sit in solemn judgement and decide whether to refer the bid or not.

General Pinochet and Longbridge, on the other hand, fall into a slightly different category. Both are subjects on which the Secretary of State chose to intervene, although he did not need to.

Indeed, in the case of Longbridge, the management and unions had been making rather good progress towards stitching up a deal until Mr Mandelson chose to drive up to the Birmingham Motor Show with his two-pennies-worth.

Mr Mandelson then proceeded to hold meetings first with the top brass from Rover and its parent company BMW, then with the unions, during which the big stick was brought out again. His officials said Mr Mandelson was acting in "a facilitating role". But to the outside world it looked like good old government intervention.

Is there anything wrong with this? Well, on the plus side Rover is a large and important company and a major employer and the fate of one of the country's biggest car plants ought to be a proper concern of the Government.

On the other hand, as Mr Mandelson himself was at pains to stress: "The salvation for Rover lies in its own hands - in the hands of its executive, management and entire workforce." If that is indeed the case, then what was a Cabinet minister doing poking his nose in?

The truth is that the Government is desperate to be seen to have brokered the deal that defuses the Rover crisis - particularly when it is on the defensive over the economy on so many other fronts.

The extraordinary thing was how happy the Government was to weigh in on the side of the BMW chairman, Bernd Pischetsrieder, blithely accepting his assertion that German car plants were 30 per cent more productive than Longbridge.

No evidence was adduced to support this claim. In fact, the statistics provided by BMW, such as they are, tend to undermine the Pischetsrieder/Mandelson argument.

Nevertheless, it must have been music to the Government's ears to hear BMW blaming Rover's problems on productivity, not the pound, for once. The payback will surely come. Once Mr Mandelson is a safe distance from the current Rover crisis, do not be surprised to hear the DTI announce that it will provide funding to make sure the next Mini is built at Longbridge.

As interventions go, this is much preferable to the Government's meddling in the energy market or, worse still, its crass attempts to interfere in the pay arrangements of Camelot's directors.

But it does rather set the trend. For all its support for the free market and its Third Way philosophy, Tony Blair's administration is interventionist at heart. Stand by for more, is the message.

Ionica

SHAREHOLDER ACTIVISM is at a tragically low ebb, if the Ionica annual general meeting is anything to go by.

Yesterday's meeting, at the Glaziers Hall next to London Bridge, was attended by just 41 souls and passed off in 48 minutes. And yet just consider what was at stake.

Here is a board that has presided over the destruction of shareholder value on a truly heroic scale. Anyone who bought shares at the flotation in July last year will have seen 97 per cent of their investment wiped away.

The company did not have any penalty clauses built into the agreement with its main equipment supplier Nortel. And yet it was because of delays in supplies of software from Nortel that Ionica finds itself in its present pickle, just 12 weeks away from calling in the receivers.

To add insult to injury, the board decided to award itself pounds 75,000 in bonus payments last year. Admittedly, the bonuses relate to the company's performance in the year before its public listing, but did none of the directors feel it would have been appropriate to waive their entitlements in the circumstances?

Normally, this would be meat and drink to shareholders who have been treated in such shocking fashion.

And yet the board only had to field one question about its arrangements with Nortel and none on the subject of executive pay.

Indeed, the only time the meeting became what might vaguely be described as animated was when one shareholder complained that the start time of 10.30 in the morning had prevented her from buying a cheap day-return ticket.

Perhaps Ionica's shareholders are past caring. Or perhaps they have got the board they deserve.