It’s not every day that a chief executive with a criminal conviction for embezzlement delivers his company’s results to the City, let alone the head of a FTSE 100 company.
But that's the unenviable position Sainsbury's new boss Mike Coupe finds himself in today as he presents the latest results for Britain's third-largest supermarkets group.
The bizarre case of his criminal conviction in an Egyptian court – and two-year prison sentence – emerged out of the blue last week, and was greeted with astonishment in the City. It dates back to the supermarket group's ill-fated attempt to move into Egypt in 1999, a venture that was abandoned after just 18 months.
Legal wrangling
The business was sold back to its former owner, an Egyptian businessman, who then launched legal claims against the British supermarket group.
The tangled affair ended up with Coupe, who only joined Sainsbury’s in 2004 and has been chief executive for less than a year, being convicted in his absence by an Egyptian court last September.
Coupe has since travelled to Egypt to appeal what Sainsbury’s has robustly dismissed as “groundless” claims. However, the legal wranglings look set to dog the group and its CEO for some time, as a hearing set for last week was adjourned for the second time.
It’s the sort of distraction the supermarket boss could well do without as he delivers his first set of full year results as chief executive of the group. Today’s figures from Sainsbury’s won’t be as bad as those from Tesco, which recently reported one of Britain’s biggest-ever corporate losses, but they will still make pretty grim reading.
Analysts expect Sainsbury’s to report its first loss in a decade, after being hammered by hefty property writedowns, a legacy of the ill-advised “race for space” embarked on by the group when the supermarket sector was riding high.
At the pre-tax level, excluding the property losses, the City is expecting profits to drop by some 20 per cent, to around £660 million (€896 million), reflecting the impact of the costly price war.
Given the recent Egyptian revelations, the focus will not be entirely on the figures. The group has come under fire for not disclosing the situation in Egypt sooner, no matter how groundless the case might be. Although the conviction was made in September, Sainsbury’s apparently found out about it in December.
There was some support for Coupe last week, though, from a somewhat unexpected source. In one of the accusations against him, it was said that he had been in Egypt on July 15th last year, "seizing cheques". But the business editor of ITV News, Joel Hills, revealed via Twitter that Coupe was not in Cairo on that date but in London – "having breakfast with me. And he paid".
HSBC move
It may have been a coincidence that
Stuart Gulliver
was in
Hong Kong
when he delivered HSBC’s results to the City yesterday, but it may also have been meant as a message to UK politicians as Gulliver stepped up the rhetoric on the row over the bank’s domicile.
A decision on whether Britain – and Europe’s – biggest bank will quit London in favour of an overseas location will be made “in months not years”, Gulliver said. He took the opportunity of the bank’s first-quarter figures to complain about the banking levy, which he said made it difficult to pay competitive salaries, and would make it impossible for the bank to stick to its pledge of progressively raising dividend payments to shareholders. Last year, HSBC paid out more than £700 million (€950 million) in the levy, more than any of its rivals.
HSBC was founded in Hong Kong in 1865 but has been headquartered in London since 1992, when it took over the Midland Bank. Although it has not given any clues about a potential new base, a return to Hong Kong is widely thought to be the most likely outcome.
There have been questions over whether HSBC might be too big for the Hong Kong authorities to regulate, although these have been dismissed by the bank and in Hong Kong, which already oversees almost 80 per cent of the bank’s earnings.
Further details of the potential relocation are to be given by the bank on June 9th, and Gulliver said shareholders would be given the opportunity to vote on any change of domicile plans.
However, given that he made quite clear yesterday that dividends would suffer if the bank stays in London, it’s not too hard to imagine which way any vote will go.
Fiona Walsh is business editor of theguardian.com
