King cleared by internal BA review

LORD KING, chairman of British Airways, and Sir Colin Marshall, his designated successor, have been cleared over the 'dirty tricks' campaign waged against Virgin Atlantic by an internal review carried out on the orders of the airline's non-executive directors.

Despite last week's humiliating High Court climbdown and the payment of pounds 610,000 in damages to Richard Branson and his airline, neither will be asked to step down from BA, nor are there likely to be any other board departures.

Sir Colin's appointment as executive chairman of BA when Lord King retires in June to become president is also expected to be confirmed when board members meet tomorrow to examine the review and decide what action to take in light of last week's debacle.

The outcome is certain to be attacked as a whitewash in some quarters and may prompt Virgin, which has maintained all along that the campaign was sanctioned at the most senior levels, to take fresh action against BA in the US or European courts.

The review, carried out by BA's solicitors, Linklaters and Paines, was delivered yesterday to the airline's non-executive directors, led by Sir Michael Angus, president of the Confederation of British Industry and chairman of the brewer Whitbread.

It was prompted by BA's apology to Mr Branson last week over a campaign that included tapping into Virgin's computer records, poaching passengers, shredding documents and spreading smear stories in the press.

The review is expected to result in the disciplining or departure of a small number of second-tier BA executives, a strengthened code of conduct for the board, and a more powerful role for the airline's non-executives.

But, contrary to reports elsewhere and despite evidence linking Sir Colin with aspects of the dirty tricks campaign, he will not be passed over for the chairmanship. Nor will Lord King be forced to retire early. The non-executives have received fresh assurances from both men that they were not involved in the campaign.

One senior source said: 'Sir Colin is one of the best chief executives in the world and we want to keep him. To do without Sir Colin would not be in the interests of the company or its shareholders. If one were looking for a symbolic hara kiri it would be Lord King, but that would be pointless - and anyway he is not under pressure to fall on his sword.'

Sir Colin is thought to have intimated that he would resign if he was denied the chairman's job. With Lord King's imminent elevation to the honorary post of president that would have deprived BA of the two men credited with its turnround and left the airline leaderless.

However, Sir Colin will not be allowed to combine the jobs of chairman and chief executive, a post that is likely to be left vacant. BA is expected instead to create a new post of managing director in charge of day-to-day operations.

At the same time, Sir Michael is likely to devote more time to his role as deputy chairman, and an additional UK-based non-executive director will be recruited. At present, two of BA's five non-executives - Charles Price, the former US ambassador to Britain, and Lord White, chairman of Hanson Industries - are based in the US.

One of the possible casualties among BA's executive management is Mervyn Walker, legal director, who conducted the first inquiry into Mr Branson's dirty tricks allegations. This concluded that they were groundless and that BA had nothing to fear from Virgin.

Question marks have also been raised over the future of David Burnside, BA's director of public affairs, who ran the press campaign against Virgin along with Brian Basham, an external public relations consultant. Mr Burnside was also involved with Operation Covent Garden, a counter-surveillance exercise mounted to establish whether Virgin was running a campaign against BA with the aid of a highly placed mole.