Sunday Telegraph: End of the affair

(Former colleagues say Lord Browne regarded his sexuality as a private matter and they never questioned him about it)

By Sylvia Pfeifer, Sunday Telegraph
Sunday 6 May 2007

He was the Sun King: the brightest star in British business, a global power and an adored confidant of prime ministers. Then, last week, he managed to lose both his job and his reputation. Sylvia Pfeifer tells the remarkable story of John Browne

On Monday evening Lord Browne of Madingley, then still chief executive of BP, gathered a few close friends for dinner at his home in Chelsea.

The mood was sombre; for John Browne, who had entertained Tony Blair and Gordon Brown at the same table, this was a humble last supper.

Earlier that day, Browne’s worst nightmare had come true. His desperate attempts to suppress a newspaper report about his relationship with another man had failed when a judge in the High Court ruled that he had lied about how he had met his former boyfriend, Jeff Chevalier: not, as Browne had claimed, while exercising in Battersea Park but through a homosexual escort agency.

By lunchtime on Tuesday, Browne had accepted the inevitable. He went to see Peter Sutherland, BP’s chairman. This was the end, he said. He would resign immediately, three months before his due departure date.

The decision cost Browne a hefty £15 million, his early resignation barring him from participation in a three-year executive share scheme. But the cash cost was dwarfed by the damage to his reputation.

Britain’s most glittering business career, a 41-year span that had transformed BP from an also-ran into one of the titans of the oil industry and had taken Browne from obscurity to undisputed possession of the title of the UK’s best businessman, was over.

The era of the “Sun King” of British industry had drawn to a close.

Dapper, diminutive and urbane, Browne has always seemed the antithesis of the Texan oilman portrayed in Hollywood films. But oil was in Browne’s blood: his father, a former Army officer, worked for the Anglo-Persian oil company, the forerunner of BP.

In 1966, at the age of 18, the young John started his working life at BP, as a university apprentice while studying physics at Cambridge. The BP Browne joined suited someone of his intellect and ambition. Formed as an adjunct of empire in 1909, it appeared more like a branch of the Foreign Office than a cut-throat commercial enterprise.

As Browne began to scale the executive ladder and his influence on the company grew, a new, slicker operation would start to emerge, one that could compete with the best in the world.

Former colleagues recall that he already possessed “an aura of a man moving through the ranks”. “There was no question at any time that he would not be a leader,” remembers one.

In 1989, at the age of 41, Browne was put in charge of BP’s exploration business. He revamped the organisation, giving it strategic direction and introducing commercial rigour for the first time. “John was on that tidal wave of a company that was changing,” says a former colleague.

Browne emerged even stronger from BP’s first big crisis in 1992. After an acquisition splurge in the late 1980s, including buying back shares owned by the Kuwait Investment Office, BP was geared up to the hilt.

Then the recession struck and the oil price dived. After a boardroom coup that saw the departure of Sir Robert Horton, Lord Simon was put in charge and Browne became his right-hand man in 1992.

Browne and Simon shared a belief in targets; targets helped Simon pull BP out of the doldrums in the early 1990s, when it had to halve its dividend.
 
Simon called his target 1-2-5, to cut costs by $1 billion, raise profits by $2 billion and prune capital expenditure by $5 billion And he achieved it before moving into government as trade and European competitiveness minister. The baton passed to Browne in 1995.

But at that stage, BP was still a medium-sized oil company. With oil trading at $10 a barrel, Browne went hunting. In 1998, he bought Amoco in a $62 billion deal that catapulted BP into the major league.

In the space of just six years, Browne had managed to turn BP from a £16 billion company into a goliath with a market value of £108 billion. Mergers with Arco of the US and Burmah Castrol followed and brought stunning financial results, with total shareholder returns of 90 per cent between 1995 and 2000, compared with less than 40 per cent for Shell.

BP was named one of the world’s most admired companies by America’s Fortune Magazine and almost at a stroke, Browne found himself one of the world’s most powerful businessmen, dining with leaders of the Middle East including Colonel Gaddafi of Libya.

The Sun King was born.

More was to follow. BP was the first major Western oil and gas company to invest in Russia and Browne cemented the investment with regular visits to President Putin.

In the late 1990s, BP was the first oil company to offer action on climate change, as Browne promised to go “beyond petroleum”.

Along the way he had become a favourite of both Margaret Thatcher and Tony Blair, and was knighted in 1998 before becoming a life peer six years ago.

The friendship with the Prime Minister is so close that some gave BP the nickname Blair Petroleum. Despite the close links with government, and unlike his former boss Lord Simon, Browne never showed an interest in politics and never voted in the House of Lords.

The higher profile led to inevitable questions over his private life. The confirmed bachelor seemed wedded to the job and dedicated to his mother, Paula, a Holocaust survivor who lived with him.

Former colleagues say Browne regarded his sexuality as a private matter and they never questioned him about it.

His mother’s death in 2000 marked a personal watershed. At the same time, Browne’s BP family was changing. The tight-knit group of formidable executives who had risen through the ranks with him all began to depart.

The elite club included Rodney Chase, BP’s former deputy chairman, who is now deputy chairman of Tesco, and Bryan Sanderson, former chairman of Bupa and Standard Chartered.

Others who overlapped with Browne included Dick Olver, chairman of BAE Systems, Chris Gibson-Smith of the London Stock Exchange and John Buchanan, chairman of Smith & Nephew.

Their departures changed the dynamics within BP. Some began to question whether Browne’s cult of personality had become too powerful. “He became too strong. Hubris took over,” says one long-term BP watcher.

Critics of Browne’s later years point to 2002 as a moment when things began to unravel. Browne was forced to concede that his production growth targets of seven per cent per year were unsustainable.

BP’s shares, which were trading in the 600p-650p range in 2000-01, collapsed to about 380p at the beginning of 2003.

But it was the explosion at BP’s Texas City refinery in 2005, which killed 15 people, that prompted serious questions about his management.

At the same time, Browne was on a collision course with his chairman, Peter Sutherland. Browne had been due to retire from BP when he turned 60 in February 2008, but speculation was rife in the City that he wanted to hang on.

After a bruising encounter with Sutherland, Browne agreed to leave at the end of 2008.

Then, on January 5 this year, Browne discovered that Mr Chevalier had contacted a tabloid to sell the story of their relationship. The scene was set for Tuesday’s denouement.

Had he stepped aside two years ago, he would have been remembered as the most admired British business leader of his generation. Instead, he is now leaving with his reputation in tatters.

He has paid a terrible price for his poor judgment but it would be a far greater tragedy if recent events were allowed to overshadow his legacy.

Like the original Sun King, Louis XIV, Browne proved to be human after all.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/05/06/nrbrowne06.xml&page=1

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