Under-fire Burford Capital directors held board meetings in luxury locales including Barbados with wives in tow

11 September 2019

Burford Capital, the litigation funding giant being heavily criticised over its corporate governance and finances, has been accused of feather-bedding its non-executive directors and their spouses by laying on quarterly meetings at luxury hotels in unnecessarily exotic locales from the Caribbean to South Africa.

The company, once valued at £3 billion, funds legal actions then shares in the profit if its side wins. In one of the most spectacular slumps of a company of its size, its share price crashed 60% last month when a US hedge fund called Muddy Waters declared the business “arguably insolvent” and ridiculed its management’s lack of accountability.

Criticisms centred around the claims, denied by the company, that it has been overvaluing its investments in lawsuits. The accusation of inadequate controls was lent added sting by the fact that its chief financial officer was married to the chief executive.

Non-executive directors are paid to keep top management under scrutiny, so news that the four at Burford have been sent on all-expenses paid to luxury destinations for their board meetings is likely to add to the concerns of investors.

The men, led by 85-year-old chairman Sir Peter Middleton, a former chair of Barclays, have held their quarterly board meetings at far-flung five-star hotels including Cobblers Cove in Barbados, the Four Seasons in Mexico City, the Cape Town Grace Hotel in South Africa and the Mumbai Taj Mahal, whose websites show rooms start at around £450 a night. Further destinations have included Toronto and Berlin.

On a typical trip, they would hold a long meeting and working dinner with chief executive Christopher Bogart. Directors Sir Peter, David Lowe, Hugh Steven Wilson and Charles Parkinson and their spouses fly out first or business class then stay, all expenses paid, for two to three nights, sometimes tagging extra nights onto the end at their own expense.

Records show the Middletons stayed at the resort in Barbados for a fortnight in February 2015 while the Wilsons had a week’s sojourn there.

Burford primarily operates from London, New York and other US cities.

While it is conventional in corporate life for a director’s board meeting flights and hotels to be funded by the company, they would usually be held in business cities where the firms are based.

Social occasions

A Burford employee who brought the trips to light claimed they were designed to make it unappealing for non-execs to “rock the boat”. They said: “Hardly shareholder value nor likely to encourage much of a challenge from the non-executives to the executive management.”

The spouses are pictured on social media sightseeing locally. On one occasion, a director’s son checked in to a room in Cape Town’s Grace hotel with them. Burford said he paid his own bill.

Public Facebook posts show the non-execs and Bogart enjoying boardroom dinners in holiday attire with their spouses and, on one occasion, drinking $80-a-bottle wine.

One partner writes: “Off to the sunny Caribbean tomorrow… Sunshine, sandy beaches and luxury” before later posting a snap of the board and their wives dining at Barbados’s Cobblers Cove resort restaurant. During the trip to Cape Town she adds: “Off to Stellenbosch wine region tomorrow then shark diving on Wednesday.” Two partners chat about their forthcoming trips as if they are part of a social club. As one posted in May last year: “Our last meal in Mexico City was special… looking forward to meeting up with everyone in Berlin in September.”

The travel came on top of salaries of $171,000 for Sir Peter, $112,000 for Wilson and $66,000 each for Lowe and Parkinson.

The case for the defence

Bogart said taking directors away for extended stays meant he could spend more time benefiting from their expertise than in a more conventional business setting.

“This is the best way to maximise the benefits to Burford of having an independent board,” he said. “To get this much of their time is a bargain.”

He denied the prospect of regular luxury trips may diminish the non-execs’ willingness to be critical, saying the meetings were always questioning and thorough. The non-execs agreed, with Wilson saying: “I have spent my entire professional career advising the world’s largest companies on... corporate governance... The suggestion I might have been bought off by some international travel is preposterous and insulting.”

Chairman Sir Peter added: “It is a fact of corporate life that directors of multinational businesses travel overseas to discharge their fiduciary duties and that these expenses are paid by the company. Any overseas costs outside the duration of board duties are met privately, as is fit and proper.”

When asked why it couldn’t hold them in more businesslike venues such as London or New York, Burford cited tax reasons. The company is domiciled in Guernsey and cannot have board meetings in the UK or US, it said. It holds one meeting a year on the island and one near the US, normally in Canada. That was why Barbados and Mexico were chosen, it said.

Burford said other longer meetings, covering business strategy and planning were held in places where it was looking to do business. Berlin, Cape Town and Mumbai (in 2018, 2017 and 2016) were chosen because is is currently “expanding in Germany, considering expanding into India and exploring the South African market”.

Burford admitted wives’ flights, hotels and food were paid for on longer trips but said the company spent less than £150,000 a year on board meetings.

Journeys’ end?

Burford has been making recent changes to the board. Chairman Sir Peter has announced he is standing down in May 2021 when he will be 87. Bogart’s wife Elizabeth O’Connell has quit from the CFO job and Lowe has said he will stand down by next May. Bogart has ended his position of being chief executive but not a main board director.

As for board meetings in glamorous locations, they too may become a thing of the past. Bogart said he would now be seeking shareholders’ views on whether they should continue.

The sun could be setting on Burford’s trips to the Caribbean.

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Under-fire Burford Capital directors held board meetings in luxury locales including Barbados with wives in tow

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