Minutes of EMAG committee
meeting, 27th December 2000
Held at the
home of Paul Braithwaite, London
Attendance: Michael Lister, Adrian Howard-Jones, David Browning, Paul Braithwaite,
John Gardner (EMAG committee members), Jeremy Lever, Alex Henney, Donald McLeod
(EMAG members)
Apologies for absence: Vincent Nolan, Tom Lake
- Progress on independent
Counsel's opinion
JL and AHJ summarised recent legal developments. JL has just written to ELAS
solicitors (DWS) to provide the assurance that was sought in their letter
of 15th December.
AHJ is in e-mail correspondence with Jennie Page to resolve further ELAS reservations.
PB believed that these extra arduous requirements (including that JL rewrite
his submission) had originated at the ELAS board meeting of 20th December.
AHJ to progress.
JL to write and circulate rationale of why prospect of new litigation will
help to bring about a contractual settlement with compromise by both GARS
and non-GARS.
- Parliament and Regulators
AHJ praised the excellent non-partisan speech by Richard Ottaway MP (Opposition
Treasury spokesman) in the adjournment debate that he sponsored in Westminster
Hall on Dec 19th. Richard Ottaway's assertion that taking independent Counsel's
opinion was ``the least that Equitable could do'' was noted with approval.
He had been briefed by AHJ, PB and Ron Bullen (EPHAG).
AHJ has since notified Ottaway of the delays in ELAS funding independent Counsel
's opinion as suggested by JL. AHJ to keep Ottaway appraised.
AHJ to write to Giles Radice, Labour chair of Treasury Select Committee, because
they intend to consider Equitable in January.
PB will now write to Rt Hon Stephen Byers at DTI, who had not yet become involved.
David Browning will continue to liase with Vincent Cable, his local Lib Dem
MP.
PB notified the meeting that EPHAG will meet with the FSA on Jan 5 and will
ask any questions submitted on EMAG's behalf.
- Treasurer's Report
Michael Lister reported Bank balance at £ 10,700 with membership at
660 and rising very rapidly. ML will liase admin handover with Tom Lake.
ML reported that 20,000 more ELAS members' names and addresses have been purchased
(on peelback labels). Charge from ELAS £ 217.
A discussion took place at DB's prompting, that no membership fee should be
charged by EMAG, but a voluntary contribution made. The point was agreed but
later placed in abeyance owing to the absence of the Membership Secretary
at the discussion. [TL as Membership Secretary notified the committee after
the meeting that he was much opposed to the change as current arrangements
supported a mass mailing to ELAS members].
ML will immediately pursue Peter Wilmott at ELAS for full database on CDROM,
per request made through Jennie Page 13 and 20 December.
A new member solicitation letter will be drafted by ML [in absence of EH letter]
and refined by TL prior to being produced in TL's name, as Membership Secretary.
DB to be commissioned, plus volunteers, to despatch all names to hand (20,000)
early in January with a view to building critical mass membership.
- Discussion of EMAG's
Objectives
AHJ read out Vincent Nolan's suggestion to:
"persuade ELAS to allow participation of member representatives in the process
of selecting a new Chairman and developing a process for appointing new non-execs
which will give power to members over the choices"
(in addition persuading ELAS to fund JL independent Leading Counsel's opinion).
ML reported that EMAG's extensive mail from members expresses huge concern
and the hope that EMAG will co-ordinate ACTION. There is widespread anxiety
as to ELAS's solvency. Don MacLeod (ex ELAS) assured the meeting that this
cannot be a problem.
EMAG needs to restate and convey aims in new solicitation letter. The original
objectives [seek information for all member classes to aid informed opinion
and to influence ELAS for members] where still felt to be entirely appropriate.
DB floated the need for an over-arching long term unifying objective, which
he suggested should be the re-opening of the Equitable to new business. The
concept was accepted but not the suggestion.
- ELAS's Current Actions
JL and Alex Henney both expressed grave concerns at reports that ELAS are
trying to sell not only the Permanent subsidiary and sales force but also
the investment management. In a closed fund the core activity to benefit members
is maximising investment returns for minimal admin.
There was concern at the appearance of a "fire sale" and suspicion that ELAS
has no plan. As such, rushed sale at low realisation for the core business
could have disastrous long term consequences in giving away control and/or
creating hostages to fortune. JL to write, with help of AHJ, a letter for
urgent dispatch to ELAS.
Th 10% MVA penalty was discussed and renamed by David Browning as Behaviour
Control Mechanism [BCM]. PB state that Jennie Page had assured EMAG that FSA
was not applying any pressure to lower the MVA. DB expressed disapproval of
any penalty arbitrarily depriving members of their funds. DM said that MVA
of 10% was both reasonable and normal.
AHJ highlighted the current difficulty in establishing what final transfer
values should be, pending legal clarification. He suggested ELAS should only
distribute guaranteed value and retain the non-guaranteed, pending definitive
resolution of issues of ownership apportionment.
- EMAG's View of Current
Situation
PB observed that with non-execs now committed to resigning there will be a
vaccuum at board level. Unless we act swiftly and successfully, the inexperienced
Mr Headdon will be left in sole charge until the May AGM exacerbating members'
crisis of confidence.
Meeting greed: PB should try to ensure Jonathan Dawson, chair of the selection
committee, attend next EMAG/ELAS meeting with Chris Headdon in very early
Jan.
There was widespread concern that the current drive to sell was being pursued
as a "knee-jerk reaction" and without the framework of a strategic plan. AHJ
reiterated his suggestion of 13 Dec meeting with non-execs that the plan be
forged from a white paper through a members' consultation exercise.
There is a risk that if the current modus operandi is unchanged, the crisis
of confidence will lead to large scale fund withdrawals in 2001, as financial
advisers feed on the uncertainty.
Meeting agreed the paramount importance of the selection of the new chairman/president.
John Gardner said it was vital to agree the criteria. JG expressed the view
that the new board shoud each be top experts. But in theory, this is what
we have had up to date. This view was emphatically opposed. It is the committee's
view that the board must have at least three lay members without specialist
briefs. AH suggested that the Memoranda and Articles of Association be varied
to guarantee three board places not in the gift of the board, but for self-nomination
by members.
JG was endorsed as EMAG's nominated representative for the selection committee
for president/chairman, because of his very extensive industry experience
at the highest level.
The consensus was that Chris Headdon's background and lack of experience outside
of Equitable made him an unsuitable choice as CEO other than in caretaker
capacity.
The committee believes, despite Chris Headdon's resistance, that there is
an immediate need to co-opt three member directors to the board from action
groups EMAG and EPHAG as caretaker representatives until the AGM, when they
would stand down or offer themselves for election.
- Co-operation and Co-ordination
with Other Groups
The divergence of objectives with EPHAG, BAR/AnnuityDirect and Equitable-Life-Members
were discussed but felt to be addressable.
The concept of a "coalition of common causes" emerged. All groups would benefit
from influence on behalf of members for an immediate radical overhaul of the
board and a transformation of the culture to one of transparency. To cause
a step-change in quality of stewardship and accountability to members was
the target.
PB to explore this with EPHAG. Agreement to try to work towards common objectives
and be inclusive rather than competitive.
- Other Matters
The idea of an EMAG open general meeting was approved but deferred until EMAG
clarifies its own views and prepares an agreed framework more detailed than
the current tactics.
Tom Lake's discussion paper was aired. There was not support for either the
use of prospective threat by EMAG to call for an EGM at this time or for acting
as a focal point for claims of mis-selling. But the idea of specialist sub-groups
met with approval.
ML said EMAG needs a method of communicating with members to keep them appraised
of the actions we are taken. While the website is well run by Tom Lake a significant
number of members do not use the Internet.
Meeting adjourned with thanks to PB for his hospitality.
PB
30 December 2000
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