Bob Diamond To Receive "Only" £2M

"Good" news everybody, Barclays has agreed a payoff for Bob Diamond.

Diamond has agreed to waive his share awards (worth around £20M) and will walk away with "only" £2M, being 12 months' salary, pension allowance and other benefits.

Diamond is estimated to have earned well over £100m during his career at Barclays.

Here is a statement released by Barclays to confirm Bob Diamond's pay-off arrangements:

"Mr Diamond has voluntarily offered to waive all of his unvested deferred bonus awards and long term incentive share awards.This is in addition to his previous decision to forgo any consideration for an annual bonus this year. The Board has accepted this offer, and all of Mr Diamond's outstanding unvested deferred bonus awards and long-term incentives will lapse, with no compensation made in respect of the lapsed awards.

The Board has asked Mr Diamond to support the transition to the new Chief Executive as necessary, and he has agreed. Consistent with his contract of employment, Mr Diamond will receive up to 12 months' salary, pension allowance and other benefits; and he has agreed to forgo his contractual entitlement to tax equalisation going forward. The Board has agreed with Mr Diamond that he will not receive any future bonus or incentive awards; nor will he receive any further compensation payment in connection with the termination of his employment.

Marcus Agius, Chairman, said: "The Board deeply regrets the circumstances that led to Bob resigning his positions at Barclays. Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that. These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much."

Bob Diamond said: "For the past 16 years I've had the honour of working at Barclays. The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world. It is my hope that my decision to step down and today's agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper."

In other news, Farepak savers after a six year wait have been advised that they will receive 50p for every £1 they saved with the company.

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Deal Agreed For Farepak Victims

The long suffering victims of the Farepak debacle (the Christmas savings club that collapsed in 2006) have finally had some reasonably "good" news.

They will end up receiving a total of 50p for every £1 that they saved with the company. Final payments will be made in August.

Suzy Hall, national campaign co-ordinator of victim group Unfairpak, is quoted in the Guardian:

"This is a much better outcome than we expected – to get 50p overall when we started with nothing in the pot, and then [were offered] just 4p for every £1. 

I'm extremely happy."

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The Farepak Debacle V

Regular readers may well recall that I have written several articles (some years ago) about the collapse of the Christmas savings company Farepak.

To add insult to injury of those who were robbed of their savings by its collapse, it now transpires that the cost of administering Farepak now stands at £8.2M in fees paid to BDO the administrator, lawyers and various others.

As for the 120,000 people who lost money (an average of £400 per person) the most they can expect to receive in compensation is £5.5M, most are still waiting, which equates to roughly £45 per head!

It is sad and ironic to see accountants and lawyers doing better than those who can least afford to lose money.

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Bright Future For Ex Farepak Director?

William Rollason has joined Bright Futures (a holding company focussed on providing specialist contract catering services within the corporate business, local authority and independent schools sectors) as a non-executive director.

However, his tenure as NED may be short lived, Rollason was chief executive of European Home Retail, the parent company of Farepak (the Christmas hamper business that went bust in 2006) and moves are afoot in the High Court by the Insolvency Service to disqualify the 9 directors of Farepak and its parent from holding a directorship again.

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The Farepak Debacle IV

Those of you with long memories may recall that I wrote several articles about the demise of Farepak (the Christmas hamper business) in 2006.

The wheels of justice in Britain grind slowly and, over fours years later, moves are afoot in the High Court by the Insolvency Service to disqualify the 9 directors of Farepak and its parent from holding a directorship again.

The ex directors intend to fight this action against them.

Farepak had more than 100,000 who (unusually for many British people) actually tried to plan ahead for their Christmas, and put some money away to cover the cost. When Farepak collapsed they lost on their money (on average £400 each).

The Insolvency Service said "the conduct of each director in relation to the relevant company or companies makes him or her unfit to be a director".

Farepak was not regulated by the Financial Services Authority at the time, it was quite outrageous that it acted as a saving bank yet was outwith the control of the FSA!

Its victims received only about 17.5p in the pound from a government-backed response fund set up after the company's collapse.

Last year they heard they would receive a further 15p in the pound after Farepak's joint liquidators, BDO Stoy Hayward, announced that an action against the directors of Farepak had been settled for £4M, with no admission of liability by the directors.

Post Farepak the government finally took action and announced that payments to Christmas Hamper schemes would be ring-fenced, so that savers will be protected from suffering the same fate as the victims of the Farepak collapse.

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Hamper Schemes Ring-Fenced

Following on from the collapse of Farepak, the Christmas hamper company, last year the government has finally got its act together.

It has been announced that payments to Christmas Hamper schemes will be ring-fenced, so that savers will be protected from suffering the same fate as the victims of the Farepak collapse.

Consumer minister, Ian McCartney, said that payments to similar schemes should now be placed in separate accounts, run by independent trustees on behalf of the customers.

The money would only be released to pay for the customers' orders for Christmas hampers and vouchers, not for other business activities.

This of course, in any well run business, should have been happening already.

Quote:

"The companies are now working to introduce these accounts over the coming weeks.

We think that effective safeguards of this type will provide the reassurance consumers are looking for in this industry".

This action was in response to one of the recommendations of a review into Christmas hamper savings schemes collapse by Brian Pomeroy, chairman of the Financial Inclusion Taskforce.

Pomeroy has also called for more to be done to offer consumers better choice within the market, and to educate people about the best options available to them.

Quote:

"This is a market which has operated for many years and provides as many as 700,000 families with a useful way of saving.

However it is vital that more is done to protect its customers and ensure genuine choice for those who want to save for Christmas."

The government's response, whilst being welcome, is somewhat late in the day for the victims of Farepak.

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The Farepak Debacle III

The Farepak debacle is a story that simply won't go away, especially in the run up to Christmas.

The rival Christmas savings specialist Park Group Plc, which now that Farepak has collapsed is the UK's largest Christmas savings club, is claiming that they could have saved Farepak from collapse.

Managing Director, Chris Houghton, is quoted as saying:

"We made four (approaches) in 18 months. All at different times with different prices. We felt we'd made full offers for the business, and for some reason they did not want to take it."

Adding:

"We were bending over backwards to try to avoid the situation we've got now, but it ended up going into administration before we were able to get it done."

However, this claim is disputed; a spokesman for HBOS, bankers to Farepak's parent company European Home Retail (EHR) Plc, are claiming that EHR received no serious offers for the business.

Quote:

"The truth is that no realistic, viable deal was ever tabled.

If it had, EHR is a listed company it would have to be a matter of public record."

All very well, but none of this helps the victims of Farepak's collapse.

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The Farepak Debacle II

A very small measure of good news has been delivered to the hapless victims of the Farepak collapse. Roy Martin QC, one of Scotland's leading lawyers, is to represent Farepak victims for free in their fight to recover their money.

Roy Martin QC is dean of the Faculty of Advocates, and has agreed to waive his £5K per day fee to take up the case of the Farepak victims.

He will meet with campaigner Louise McDade, of the Farepak Victims Committee, to see if Farepak's victims have any grounds for legal action.

Mr Martin will examine the case on behalf of the 150,000 victims across the UK who lost £45M when Farepak's parent company, European Home Retail, went bust in October.

In other news The Office of Fair Trading and the Financial Services Authority are considering whether to introduce new regulations for the industry after the Farepak collapse, I would venture to suggest that this seems to be a tad late for the Farepak victims.

Meanwhile Park Group, the largest Christmas savings club in the UK, has unveiled measures to ring-fence £210M of savers' cash; in an attempt to maintain confidence following the collapse of Farepak (which was in fact a larger company).

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The Farepak Debacle

The hapless victims of the Farepak collapse have had their hopes dashed of a pre Christmas settlement of the monies owed to them. Mr Justice Mann, a High Court judge, said yesterday that there were too many issues that were not fully resolved for him to be able to agree to a distribution of about £1M.

The £1M being the figure suggested by the administrators of the collapsed saving club company.

Mr Justice Mann said:

"It will doubtless seem to some that the points which currently seem to stand in the way . . . are technical and unmeritorious... They are real points, I fear, and they arise out of the way that this company conducted its business. They must be disposed of properly and on the basis of law, not purely on the basis of sympathy and Christmas."

The contentious point is the fact that money was paid into Farepak, between October 11 and October 13. The directors had internally decided to cease trading on 11 October. However, the company was not formally put into administration until October 13.

To add to the complexity of the case is the fact that people paid monies to around 26,000 agents, who would in turn would pass the money to the company at a later date.

Overall it is estimated that Farepak customers, many of whom are low income families, have lost around £40M.

In other Farepak news, PricewaterhouseCoopers have decided to go ahead with creditors' meetings for EHR (the parent company of Farepak) despite concerns that they will be swamped by Farepak customers.

PwC's meetings are not expected before Christmas.

As if to add to the misery of the Farepak customers, it is also reported that loan sharks are now targeting them; offering them financially suicidal loans.

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