Takeover

by Brian Freemantle

  30

  The court seemed strangely insufficient for the drama to be played out in it, a sombre, dark-panelled rectangle of a place, the scarlet gown of Mr Justice Godber the only colour. The judge sat high above everyone, the wooden panelling extended to form a tiny canopy over his chair. Sir Henry Dray was to his right, black-gowned and white-wigged, appearing more skeletal than ever, like some cadaverous blackbird pecking and swooping among the junior counsel who flanked him, and the solicitor Berriman and his assistants who sat immediately behind. Buckland’s counsel, Sir Walter Blair, occupied the same bench as Dray, to the left. Blair was an indulgently fat, purple-faced man, a short barristers’ waistcoat corsetting his ample belly. Like Bray, he led two junior counsel. The jury-box to the right was utilized to accommodate the journalists overflowing from the press benches, and the public gallery, at the back of the court, was crowded with people, some of whom had begun queueing in Fleet Street and the Strand from early morning.

  Special seating had been arranged behind Blair for members of the Buckland family who were not being called upon to give evidence. Lady Buckland wore severe black, and made heavy use of her stick climbing the stairs and entering through the narrow doorway. Vanessa sat one side of her and Margaret the other. Both women wore grey, Vanessa a suit and Margaret a dress. Rudd had already been in the corridor outside when they arrived. He had looked hopefully towards them. He knew they’d seen him, Margaret first, but they’d given no sign of recognition. Behind the Buckland family sat Condway and the other Buckland House directors. Herbert Morrison and Walter Bunch were to the side, separated by court officials.

  Dray rose immediately the court clerk finished the formal calling of the case, but did not speak at once. Instead he erected a tiny podium, with collapsible supports, on the bench in front of him and theatrically arranged his papers and note ledger.

  “At your convenience, Mr Dray,” prompted the judge.

  Dray smiled up. “This case,” he began, in his arid, legal monotone, “is an unusual one to be brought under the provisions of the Act, as unusual as I shall attempt to show the construction of the holding company of Buckland House to be. While the articles of formation might be complicated, my case is not. I shall seek to show that the Buckland family exercises a wholly unwarranted control over a publicly quoted company and that the control is unsound in company law and unfair upon public shareholders.”

  Around him the court settled down after the immediate tension of opening. Blair sprawled back, legs askance, appearing intent upon some point on the ceiling. Dray started from the Glasgow beginning of Buckland House, and at once the paper-chase of documents started between him and the judge’s bench as the barrister took from his ready juniors the original articles of formation, Registrar of Company files and then a series of boardroom minutes, some dating back several years, which he claimed showed the way the company could be manipulated by the Initial shareholding. The technical, labyrinthine opening took an hour. Dray’s first witness was John Snaith.

  The merchant banker started his evidence uncomfortably, unused to his surroundings. He detailed his bank’s involvement with the company and their investment in it, and was then brought by Dray’s questioning to their growing concern about its running.

  “How did you express that concern?” asked Dray.

  “By seeking the chairman’s resignation.”

  “Why?”

  “Because we considered him unfit to continue.”

  “Why?”

  “Conduct involving a large sum of money and the use of a mews house in London.”

  “What was his response?”

  “He refused.”

  “What did you do then?”

  “Asked for a special shareholders’ meeting.”

  Dray paused, indicating the importance of his question. “The meeting was held?”

  “Yes.”

  “Just one? Or more than one?”

  “I’m afraid I don’t understand.”

  “According to the formation of the company, there should be two meetings, one of Initial shareholders, the other of Preferential and Ordinary.”

  “Just one meeting,” said Snaith.

  “Did you realize that by having just one meeting, the Buckland family was assured of a carrying vote?”

  “Not at the time, no.”

  “Do you consider the Buckland monopoly fair?”

  “No,” said Snaith.

  “Has anything happened to change your opinion about Sir Ian’s ability to remain chairman of Buckland House?”

  “Nothing,” said Snaith.

  “Hasn’t a substantial loss-making section of the group been disposed of? And by that disposal, an extreme overdraft position reversed?”

  “Yes,” agreed Snaith. “But I regard that only as a temporary improvement in the affairs of the company.”

  Dray sat and Blair got ponderously to his feet. He searched among his papers, appearing to have lost his notes, and then said sharply, so sharply that Snaith jumped, “As a result of the shareholders’ meeting, your bank stands a good chance of being fired, doesn’t it?”

  “It is a possibility,” agreed Snaith.

  “More than a possibility,” insisted Blair. “The implication was made at the shareholders’ meeting, was it not?”

  “Yes.”

  “How do you feel about that?”

  “Feel?”

  “You’re a merchant bank, selling money at an interest. To lose Buckland House will be to lose business, won’t it?”

  Snaith turned the question against the barrister. “Despite which,” he said, “I felt strongly enough to make the protest in an effort to protect the shareholders.”

  Blair’s face coloured further. “Are you aware of the voting figures at the shareholders’ meeting?”

  “Yes,” said Snaith.

  “Would you remind His Lordship?”

  “The voting was 3300 against the motion of dismissal, with 1100 supporting it.”

  “Would you interpret those figures for the court?”

  “Interpret them?”

  “Isn’t it a fact, Mr Snaith that the motion for Sir Ian’s dismissal as chairman of the board would have been defeated without the use of the Buckland-held Initial share issue?”

  “Yes,” said the merchant banker.

  “Which proves the overwhelming confidence in Sir Ian Buckland by shareholders whose interests are supposed to be in jeopardy.”

  “Yes,” conceded Snaith again.

  “Thank you,” said Blair, slumping heavily into his seat.

  “I call Harry Rudd,” announced Dray.

  Rudd’s pathway from the rear of the court to the witness-box took him immediately past Margaret. He was aware of her sitting rigidly next to her mother-in-law and was seized with the sudden desire to reach out and touch her. He kept his arms stiffly to his side, actually veering away when he reached her bench, carrying on to the raised box. He took the oath and followed Dray throughout the early questioning identifying himself with Best Rest and defining his involvement with Buckland House. Once more there was a procession of documents to the judge, showing the Best Rest share apportionment with the English company and the purchase contracts for the liners. Once he looked towards the Buckland women. Lady Buckland was sitting head bowed. Vanessa stared at him, the contempt showing in her face. Margaret was looking into the well of the court, away from the witness-box.

  “You are chairman of a multinational conglomerate, predominantly involved in leisure, with pre-tax profits in the current year of $123,000,000?” asked Dray.

  “Yes,” said Rudd.

  “How extensive is your experience of hotel administration and running?”

  “It is all I have ever done.”

  “You are an expert then?”

  “I suppose so.”

  “Do you consider the Buckland House company efficiently run?”

  “No,” said Rudd shortly. He was conscious of the flurry of activity from the press b
enches.

  “Why not?”

  “In England they are catering for a demand that no longer exists,” he said. “They are inefficient. There is no cost control or centralized administration. They are grossly overstaffed. The profits of some of the overseas divisions are entirely due to low labour costs, not efficiency.”

  “During your short period of time upon the Buckland House board, have you heard requests made for management improvements?”

  “Yes.”

  “What has been the response?”

  “Sir Ian considers that the liner sale is sufficient to resolve their problems.”

  “Do you?”

  “No.”

  “As the control of Buckland House is currently constructed, is there any way the directors or shareholders can insist upon changes?”

  “An attempt was made, at the shareholders’ meeting. It failed.”

  “A previous witness has forecast that the Buckland House deficit, under its current administration, will continue to increase. What is your opinion?”

  “Unless something is done to improve their running and their efficiency, increasing losses are inevitable,” said Rudd.

  Blair came eagerly to his feet, anxious to begin questioning the plaintiff American. Rudd was conscious of another movement just behind the barrister and realized Margaret was looking at him. Her face was completely empty, almost as if she were hypnotized and unaware of what was happening around her.

  “A multinational conglomerate with profits of $123,000,000?” began Blair.

  Rudd was conscious of sarcasm and guessed the barrister was attempting to undermine his temper. “Yes,” he said.

  “You are an expert, experienced businessman?”

  Rudd hesitated. Then he said, “I hope I am.”

  “A self-made millionaire?”

  “I am a millionaire, yes.”

  “Not a man to make mistakes in business then?”

  Rudd wondered at the direction of the questioning. “I try to avoid them,” he said cautiously.

  “Is Prince Tewfik Faysel, of the Saudi investment trust, a member of the board of Best Rest?”

  “Yes.”

  “And of Buckland House?”

  “Yes.”

  “Was it through Prince Tewfik Faysel that you were introduced to Buckland House and negotiated the purchase of the liner fleet?”

  “Yes,” said Rudd.

  “The original agreement, between yourself and Sir Ian Buckland, was for a cash purchase?”

  “It was.”

  “Why did it not remain a cash purchase?”

  “My board in New York decided to limit the cash purchase and negotiate part as a share exchange.”

  “Part as a share exchange,” echoed the barrister. “You had access to Buckland House balance sheets and knew their performance, did you not?”

  “Yes.”

  “And had the benefit of consultation with Prince Faysel, a long-time member of the Buckland House board?”

  “Yes.”

  “Tell me, Mr Rudd, why should you, an expert businessman, a self-made millionaire, a man who tries to avoid making business mistakes, fully able to assess in advance the ability of a company, allow yourself to become involved to the extent of £7,500,000 with …” Blair hesitated dramatically, appearing to consult his notes, “… a company you deride as inefficient, with no cost control or centralized administration and with gross overstaffing!”

  Rudd moved akwardly in the box. “As I have explained, my board decided to limit the cash purchase. We wanted to buy the fleet because we saw the possibility of turning it into an attractive, profit-making division. The share exchange was the way of achieving that.”

  “Wasn’t it also a way of achieving something else, Mr Rudd?”

  “Achieving something else?”

  “Wasn’t it a stalking manoeuvre, a way to gain a twelve per cent shareholding in Buckland House?”

  “It gave us a twelve per cent shareholding, yes,” agreed Rudd. He understood the point of the questioning now. Dray hadn’t thought it would be possible to keep it hidden.

  “If My Lord were to find in your favour and the Initial shareholding were determined unfair, what would your next action be, Mr Rudd?”

  Rudd decided there was no point in attempting to dodge. “I would make a takeover bid for Buckland House, on behalf of Best Rest,” he said.

  A stir went throughout the court, more obviously among the press but also throughout the spectators and the people in the well. Lady Buckland was staring up at him now, looking affronted at his presumption.

  “A stalking manoeuvre,” repeated Blair accusingly.

  Conscious that he was occupying a platform and could benefit from it, Rudd said, “I believe that with the resources and experience of my organization we could transform Buckland House from what it is now, a collapsing, decaying company, into one with a future, giving investors a proper, secure return upon their money.”

  “And you are seeking the assistance of this court to help you,” said Blair, his voice suddenly loud.

  Rudd was not overawed or nervous of the man. “I am asking this court to declare archaic and counter-productive the share structure of an organization being run in an archaic and counter-productive manner,” he said, conscious of Dray’s head nod of approval.

  “British company law was not created to aid entrepreneurial quick profit,” said Blair.

  “I would hope it was created to ensure the proper running of companies,” came back Rudd.

  “Don’t you think we are digressing into legal philosophy a little, Mr Blair,” interrupted the judge.

  “My apologies, my Lord,” said Blair. To Rudd he said, “There has been earlier evidence alleging inefficient running of the company by Sir Ian Buckland. Do you regard him as inefficient?”

  “I think there could be improvements in the running of the company.”

  “I didn’t ask you that, Mr Rudd,” said the barrister. “I asked your opinion of Sir Ian’s abilities.”

  “I think he has allowed things to become slack.”

  “Why then, Mr Rudd, did you compose a subsidiary board to manage the newly purchased liner fleet with Sir Ian as vice-chairman? Is that, too, part of your stalking manoeuvre?”

  “I invited Sir Ian on to the board to retain the Buckland House association with the ships, just as I invited another Buckland House director, Sir Richard Penhardy. Sir Ian will be vice-chairman and the company will be run as a board, not a fiefdom.”

  “Is that how you consider the present situation in Buckland House, a fiefdom?”

  “Yes,” said Rudd. “I do.” He regretted the word.

  “Were this action to succeed and were you also successful in your takeover, who would be chairman of the Buckland House board?”

  Rudd was aware again of concentration of attention, especially from the Buckland family. “The boards of my companies are democratically constituted and run,” said the American easily. “The chairmanship would be a board decision, not an arbitrary one.”

  Blair sat down, as abruptly as he had done after questioning the merchant banker. With the plans for the takeover disclosed, Dray took the American through the improvement plans he proposed for Buckland House until the judge adjourned for lunch. Because of its convenient closeness, Rudd ate at the Savoy with the prince, Bunch and Morrison. As an afterthought, as he was leaving the law courts into the glare of more photographs, he invited Penhardy to join them. The MP hesitated and then accepted, just as he accepted the invitation at the end of the meal to come that evening to Rudd’s apartment. There was another press melee when they returned. As they approached the court, they came up behind the Buckland family. Sir Ian, who still had to give evidence, broke away and stood by a corridor window, looking at them. The women ignored them and went into the courtroom. The afternoon was occupied with evidence from Faysel and Smallwood and immediately after the adjournment they walked across Fleet Street to Dray’s offices for a review of the da
y.

  “I didn’t think it went well,” said Rudd, as they seated themselves.

  Dray shook his head. “I expected the takeover to come out. It doesn’t harm our case. Don’t let Blair’s histrionics confuse you. I think you made a good impression upon the judge.”

  “How do you think the day ended on balance?” asked Bunch.

  Dray made a see-sawing motion with his hands. “Fifty-fifty,” he said. “Tomorrow we’ll do better. We’re going to win.”

  In the car detouring to drop Rudd off in Grosvenor Square before taking the Arab on to Ascot, Faysel said, “I’m going to have to go to Vienna next week, for the OPEC talks.”

  “How long will you be away?” asked Rudd.

  “Maybe a week,” said Faysel. “Perhaps a little longer.”

  “Will there be a definite barrel price?”

  Faysel nodded. “There’ll be a fight, but in the end it’ll come down to somewhere around $28 a barrel.”

  “That would justify the liner purchase at least,” said Rudd.

  Four pages were devoted to the hearing in the New Standard. The Haffaford group watched the early evening television coverage and when it ended Haffaford said, “Blair got it right. It’s been a stalking manoeuvre, right from the very first.”

  “Certainly looks that way,” agreed Pryke.

  “Cleverly done, too,” said White. “The bloody man let us set the pace all the time and padded gently along behind us.”

  “We’re advisers to other hotel groups,” reminded Haffaford quietly. “Groups who’d keep us as their bank if we devised a successful counter-bid.”

  There were smiles from the other men in the room. Snaith said, “How easy would it be?”

  “When was the last time there was any property or asset valuation of Buckland House?”

  “Ten years ago, at least,” said Snaith.

  “So those will be the figures upon which Rudd is making his bid,” said the merchant bank chairman. “In ten years the value of the hotels in London alone must have doubled. If we carry out a revaluation all we’ve got to do is wait until he submits his figures and then outprice him: we’ll start low and then top him, every time.”

  Snaith smiled. “There’d be a piquant justice in our following in his footsteps and beating him at the last minute.”