From the Economist today….
Since 2020 as many people have run bp as have run Britain. Sir Keir Starmer, the
fourth prime minister in as many years, promised to end the pantomime in
Westminster. Last year Albert Manifold was appointed as chairman of bp to do the
same thing in nearby St James’s Square. Sir Keir is still hanging on. Mr Manifold is
finished. On May 26th, after less than eight months in post, Mr Manifold was sacked in
a unanimous vote by the board, which includes Meg O’Neill, the oil company’s new
chief executive.
Mr Manifold inherited a neglected giant. The net-zero strategy of his predecessor
Helge Lund, a Norwegian, had made bp uninvestable. It is fitting, then, that Mr
Manifold’s dismissal should have the air of a Eurocratic initiative. The timing of the
directive announcing his departure could not have been better chosen to agitate
markets. It travelled down the wires just as traders in New York returned to their desks
after a bank-holiday weekend and were busy digesting news about a possible end to
America’s war in Iran. Shares in bp fell by nearly 10%.
But the real sin was the statement’s style. It was written in the worst literary tradition
of arrogant, managerial minimalism. Rather than elaborate on the reasons why bp must
now search for another chairman, the board o!ered just a few lines of cryptic lanyard-
speak. There are “serious concerns” about “important governance standards, oversight
and conduct”, the statement said. Trust us, he’s a wrong’un, pleaded a board which
shareholders have little reason to trust. Like Sir Keir, bp’s board appeals confidently to
an authority that has been spent twice over.
Thus began a guessing game: what did Mr Manifold do that was seemingly awful
enough to jeopardise bp’s turnaround? Plotting a coup in some faraway resource-rich
land? Not likely. Trying to sink Ed Miliband, Britain’s fanatical minister for net zero, in
the North Sea? If only. Predictably, initial speculation turned to sleaze. In its recent
history two bp chief executives have left their posts in bizarre circumstances related to
their private lives.
That wasn’t it, either. Instead, Mr Manifold was apparently exiled from clubland for
being a bad chap. The Financial Times reported allegations that he had been viewed by
some at bp as aggressive and that the board had received complaints from whistle-
blowers. Some reportedly called him a bully. On May 28th Mr Manifold responded. Yes,
he may have pushed people to accelerate cost-cutting and strengthen the balance-
sheet. But “at no point”, he wrote, “has anyone raised with me any issue about my
conduct...I dispute entirely this characterisation of my conduct.”
If Mr Manifold was truly intolerable, the board must explain to shareholders in more
detail. If he was merely disagreeable, that is probably proof of a job well done. As a
supposed City grandee herself, Dame Amanda Blanc, the bp director who led the
process to appoint Mr Manifold, would surely have known his City-wide reputation for
directness. Having (very) successfully run crh, an Irish building-materials firm, for a
decade, Mr Manifold could hardly have been expected to be a passive and detached
chairman.
Accusations of abrasiveness are, in the markets’ eyes at least, a less serious crime than
Accusations of abrasiveness are, in the markets’ eyes at least, a less serious crime than
the value destruction of which other members of the board are plainly guilty. Sure, bp
is in much better shape than it was a year ago. Profits from producing oil rise with the
price of the commodity, after all. The company’s traders are making a fortune. Last
year it made a huge discovery o! the coast of Brazil. Its corporate structure is in the
process of being simplified. But the job is not even half finished. Costs are out of
control, including at its headquarters in St James’s. It is the most indebted of the major
oil companies and still bears the weight of some of its worst misadventures in
renewable energy.
Must bp always be as ungovernable as Britain? Oil majors often reflect the politics of
their home countries. Exxon and Chevron are run by men who care little about the
separation of powers. Both run the board and manage the company. Together the firms
are worth $400bn more than a decade ago. The top job at TotalEnergies, the French oil
major, is held by a former civil servant; at Eni, by a colourful Italian. The two have
outperformed their British rival. bp, once in e!ect a branch of the British state in the
Middle East, now mirrors its decline. Whitehall talks about “delivering at pace”; bp,
about “moving at pace”. Neither goes anywhere.
Manifold destiny
The psychodrama at bp could not have been better designed to embarrass Britain’s
business elite. One view is that an outsider was appointed to shake things up at a
national champion before being pushed out unceremoniously by a club of grandees
who talk about change without really wanting it. An alternative reading of Mr
Manifold’s tenure is about as bad: an amateur with little experience in the industry
thought he knew better than the experts and came unstuck. The big American firms
would hardly hand such power to someone new to drilling.
The main problem with reforming Britain’s business elite is that it doesn’t really have
one. Those in America, Japan, France and Germany are all easily pictured. But Britain?
Its once-mighty merchant banks have disappeared. So have its fund managers. Its
biggest companies, like bp, have mostly become a global clearing house for mediocre
management talent.
The City nowadays is best viewed as a battleground between European collectivist
politics and American finance. Capitalist villains such as oil companies, tobacco giants
and banks make up much of Britain’s stockmarket. But the top investment banks and
funds fly the American flag. The saga at bp is a case in point. It threw itself zealously
into net zero. Now it is being disciplined, mostly by Elliott Management, an American
hedge fund. A very British shambles—and an international joke.