The Guardian: A year that went from turbulent to terminal

EXTRACT: While there were rumours in the past that Lord Browne was looking for his own final coup – a takeover of Shell – in recent months analysts have been musing over the reverse: a weakened BP potentially falling victim to a takeover by Shell.

THE ARTICLE

· Reign of the ‘Sun King’ of financial world ends
· Browne lied in attempt to shield private life

Terry Macalister
Wednesday May 2, 2007

John Browne, the chief executive of Britain’s biggest company, was lauded just days ago by his chairman as the “greatest businessman of his generation” after building BP into Britain’s biggest company with a series of calculated business risks. But yesterday’s revelations also show he was willing to gamble in his private life.

Lord Browne was given a hero’s sendoff two weeks ago at BP’s annual general meeting in London by his peers on the BP board along with a massive payoff judged by some to be worth as much as £72m.

But not everyone saw the Sun King – as the financial press dubbed him – in such hallowed terms, with an army of environmentalists, corporate responsibility experts and even investors turning against him despite wideranging attempts to position BP as a corporate champion of all their causes.

Small shareholders vented their frustration at the AGM at the man who might have been voted best industrialist for six out of seven years but who had led BP through what even the chairman, Peter Sutherland, admitted was a “turbulent” final year.

Yesterday that year turned from turbulent to terminal as it was revealed that the 58-year-old chief executive had lied to the high court in his attempts to explain how he had met his former partner, Jeff Chevalier, exercising in Battersea Park near his Chelsea home. Lord Browne stood down from his job with immediate effect rather than hanging on until July as initially intended.

In recent years Lord Browne has developed close relations with senior politicians around the globe and particularly with New Labour figures. He was knighted in 1998 and counted Tony Blair, Gordon Brown and Peter Mandelson as dining companions. His hiring of the No 10 aide Anji Hunter prompted jibes from critics that BP stood for Blair Petroleum, something which openly angered BP officials.

The oil magnate with a penchant for cigars and Colombian artefacts was a keen supporter of the arts and enjoyed the company of people such as the Tate director, Nicholas Serota, as well as television stars such as Rory Bremner.

Despite being the son of a foreign-based BP manager and a lifelong company employee, the highly articulate and Cambridge-educated Browne has cut an unusual figure in the rough, tough world of oil. His relatively small stature and soft-spoken delivery might have been seen as a weakness by opponents but he seemed to use them as a cogent weapon against his rivals who seemed to underestimate his resolve and power.

When Browne crossed swords with the Russians over their alleged seizure of assets belonging to the Sidanco oil company, in which BP held shares, he enlisted the help of No 10 to put pressure on the Kremlin to sort the problem out.

Emotionally unfulfilled

The size of his pay packet has always attracted attention. It fell last year due to the Texas City accident but he still managed to earn £4.5m and has since announced plans to move into private equity, a part of the business famed for high salaries and ruthless behaviour.

He lived the most exotic lifestyle, buying a flat in Venice to complement his homes in London and Cambridge while travelling around the globe in a private jet to meet heads of state such as Colonel Gadafy, accompanied by a current or former secret service agent.

But like the original Sun King – Louis XIV – Lord Browne might have had a fulfilling working life and been surrounded by adoring courtiers but he appeared somewhat lonely and emotionally unfulfilled.

His father died many years ago and he lived with his mother until she died.

Lord Browne used to say that his family was the company, which explained why he used to become openly angry when the word “retirement” was mentioned.

However, more recently, he had announced he would exit the company 18 months earlier than he had planned after 12 years at the top. Some believed the decision stemmed from the court case, which could not be reported by the media due to an injunction Lord Browne had obtained, while BP said it was as a result of the operational difficulties that had left the group in a state of siege.

The most serious problem was an explosion and fire at the Texas City refinery in the US in which 15 workers were killed and 150 injured. It led to a deluge of legal cases against BP from families of the deceased and a report from a panel of expects led by the former US secretary of state James Baker which laid out a long list of safety failures taking the blame right to the top.

It was one of a series of PR disasters that tarnished the reputations of Lord Browne and BP and led to a fall in the share price.

Over the last 24 months BP has seen its giant Alaskan oil field, Prudhoe Bay, forced to halt production because of leaks in the pipeline system and threats to the local environment. There have been inquiries by federal regulators into “irregularities” in the company’s propane trading business plus setbacks to its attempts to bring on stream the Thunderhorse and Atlantis fields in US Gulf fields.

The problems have widened with speculation that the Kremlin wants to buy part of its key Siberian oil field, Kovykta, and take a 50% stake in its Russian arm, TNK-BP.

While there were rumours in the past that Lord Browne was looking for his own final coup – a takeover of Shell – in recent months analysts have been musing over the reverse: a weakened BP potentially falling victim to a takeover by Shell.

Acquisitions have been a key part of Lord Browne’s success. He took the reins of a depleted former state owned oil company in 1995 which was heavily indebted and far too dependent on a couple of oil fields: Prudhoe Bay and the massive Forties field in the UK North Sea.

But with oil prices reducing the value of some rivals, he embarked on a series of daring mergers with Western competitors

But just as others were catching up with Lord Browne, he unveiled a new strategy in 2003 when he created the first – and probably the last – really large scale joint venture in Russia: TNK-BP.

Disappointment

All of these moves showed a man happy to take enormous risks as the best businessmen are, but the problems in America raised questions about whether he was a man to take a risk too far.

Since then he has largely made a name for himself by adopting a “green” image – if not agenda – for BP with a high-profile advertising campaign boasting that BP had gone “beyond petroleum”.

Lord Browne’s characteristic – unusual for a highly astute businessman – of often wearing his heart on his sleeve was in evidence again yesterday as he expressed “deep disappointment” that tabloid newspapers had forced him to go public on an aspect of his private life that he would have preferred under wraps.

It is a coincidence that a man seen as a moderniser in the business world should ultimately fall in such an old-fashioned way. In his support one fund manager in the City described his need to depart last night as “outrageous” but the man who lived professionally by risk had effectively been slain in the same way.

Timeline

1948 Born in Hamburg, Germany

1966 Joins BP while studying physics at St John’s College, Cambridge

1969-1983 Exploration and production in Anchorage, New York, San Francisco, London, and Canada

1984 Group treasurer and chief executive of BP Finance International

1986 Executive vice-president of Standard Oil in Ohio

1987 BP and Standard merge, and is made exec VP of BP America, and chief exec officer (CEO) of Standard

1989 CEO of BP Exploration

1991 Joins BP board as a managing director

1995 Made group chief executive

http://business.guardian.co.uk/story/0,,2070188,00.html

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