Media: It's just not done at Broadcasting House: John Birt's tax avoidance has its roots in ITV practices going back more than 20 years, but it is damaging to the BBC, says Maggie Brown

FUNNELLING pay through a private company, the tax-saving device that this week has brought grief to John Birt, has a long history within ITV. What the affair shows is that no matter how successfully Mr Birt assumes the garb of a public service broadcaster, he has been fundamentally moulded by the culture of commercial television, and above all, LWT, from which he was recruited.

In Jeremy Potter's official history of Independent Television in Britain (Volume 4) there is a key reference to the practice, circa 1973, which makes it clear that devices such as payments to private companies had been going on for some time, even then. Brian Tesler, who unusually combined the attributes of light entertainment producer/impresario and an Oxford first in English, was offered the post of managing director of Thames Television, where he worked as director of programmes.

Mr Potter writes: 'Not unusually for senior executives in ITV, his services were supplied to Thames (where he had had worked since 1961) through his own company. When told that EMI (which owned Thames) insisted on the managing directors of its subsidiary companies being directly engaged . . . Thames did not support him.' The job was offered to someone else. It was not long before Mr Tesler left.

He became LWT's managing director in 1976. A quiet, shrewd and cultured man, he was one of the key personalities to shape ITV, and the comparatively small tower block world of LWT in particular, where Mr Birt was effortlessly ascending the chain of command as his talented protege and designated successor. It is worth noting that in LWT's current accounts for 1992, four directors' salaries were partly paid into private companies.

In contrast, the respected Robert Phillis, who joins the BBC next month as deputy director-general, has always been a PAYE member of staff, even though his career has included executive directorships at the far more substantial Central Television, Carlton Television and ITN. The BBC badly needs his quiet professionalism.

What seems to have happened as ITV matured into a free-spending monopoly during the Seventies is that some executives, engaged as they were in constant deals and negotiations with the stars, saw ways of adapting the benefits of show business to their more humdrum, but regular, work. But a lot depended on the culture, and tolerance, of the company for which they worked. Once again, it was the worldly LWT that attracted much comment in 1990 when it arranged 'golden handcuff' share-deals for 44 of its most prominent executives to prevent them being poached in the 1990-91 franchise round. As a quid pro quo, several will become millionaires.

It was this little world of share options and payments through private companies which Mr Birt quit in 1987 for the far broader uplands of the BBC, where top management basically operated on civil service lines. It could never match the opportunities for amassing capital that some ITV companies offered, and nor should it. But Mr Birt traded in the prospect of being a wealthy boss of a two-day a week broadcaster for huge power, the number two position in the world's most famous public service broadcaster, with the firm prospect of becoming its next director-general.

You could say that his swift capitulation, becoming a salaried staff member within 24 hours of his pay arrangements being revealed after six years as a consultant, marks his final assimilation into the BBC, the belated recognition, assisted by public outrage, that you can't have it both ways. But the truth is that this upset, stemming from behaviour at the top, is exactly the kind of thing the BBC could do without: it reopens yet again the deep divide between him and his staff. And it can only sour the licence-paying public's perception of the corporation: Mr Birt is the chief salesman for its new commitment to transparent dealings.

The BBC has spent much of the past 20 months in disarray, following the governers' bizarre decision to, in effect, have two director-generals working to different agendas. On 1 April it is introducing an entirely new system of quasi-market accounting, in which every internal service is priced and outside resources can be used if they are cheaper. Preparing for this has diverted huge amounts of creative time.

But since there lurks, beneath those Armani suits, a tough, pragmatic and clever man, Mr Birt may ride it out. He has done nothing illegal. Just something which shows that, though director-general, he had not fully grasped that he was supposed to embody the best public service traditions of British broadcasting. Will he now have another chance?

Letters, page 20