View from City Road: Question time for MGN directors

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Andrew Feinberg

White House Correspondent

DEAR shareholder in Mirror Group Newspapers. May we offer our commiserations. You bought shares on the basis of a prospectus that is now the subject of a Department of Trade and Industry inquiry. You have seen the value of your shares fall from 125p to 77.5p by the time Robert Maxwell died, only to rise again and be suspended when they reached the issue price in December. When trading restarts tomorrow they are unlikely to rise above half their previous level.

Since then you have seen a series of revelations about your company. It is now on its fourth chairman in 14 months and has just posted a loss of pounds 388m. The group is controlled by Arthur Andersen, the administrators of the Maxwell private empire, holding 54.8 per cent of the shares. It is beholden to the banks, some of which have also lent money to the group in a deal that prevents it from paying dividends.

Revelations in this paper, the Independent on Sunday and in the chairman's statement have shown that many of your directors knew about problems with the finances of the company before Maxwell's death. More than half the board, including the chairman, Sir Robert Clark, knew of millions missing from the pension fund two weeks before the shares were suspended in December. So what do you do?

You cannot vote the directors off the board. For a start, only two are up for re- election and Arthur Andersen has given its proxy votes to the board anyway. But you can register a protest in questions at today's annual meeting. What should you ask?

Many of the questions are obvious. There are the who-knew-what-and-when questions. Most pointedly, you should ask why Ernest Burrington, the chairman from December to June, should have been forced to resign, while Vic Horwood, chief executive, should be promoted when it is now clear he knew as much about the scandal as Mr Burrington. Then you should ask the non- executive directors, one by one, what they did before Maxwell's death to justify their pounds 30,000-a-year salaries. How many meetings did they attend? What questions did they ask at them?

Then you might ask if any of the directors have links with potential purchasers for MGN. And, as an aside, you might wonder why the company is spending pounds 113m on a new printing plant for the Scottish Daily Record. At today's meeting, MGN's minority shareholders will be powerless. But they should make their voices heard.

(Photograph omitted)