A pariah - but why should Walker care?

A HEARTY welcome back into the limelight for our old friend Malcolm Walker, who last year pocketed £13.5m from the timely sale of Iceland shares and now finds himself on the wrong end of a Department of Trade and Industry insider dealing investigation.

Two days ago, we saw the fascinating findings of a separate report into the way Iceland conducted itself while Walker was at the helm.

The story is simply told. In mid-December 2000, Iceland issued a statement that 'management remain positive on the Group's future prospects'. In a nutshell, then, everything was tickety-boo. In fact, as last week's Financial Services Authority's report spells out, Iceland's profits were running 52% below budget. Hence the FSA's rebuke for Iceland: the December 2000 statement was misleading. The 52% figure is stunning. No one outside Iceland had realised things were quite that bad.

But of course, what really interests us is what the FSA report doesn't explore - because it wasn't within its remit to investigate such matters. At exactly the time that Iceland (chairman, M. Walker) was issuing a misleadingly upbeat statement, that same M. Walker was instructing broker Charterhouse to find buyers for a goodly proportion of his shares.

This curious coincidence of events is currently being pored over by barrister Ronald Lindsay and accountant Pete Thornton, the DTI inspectors looking to see if there was insider dealing in Iceland shares. There is absolutely no indication of how long it will be before they draw any conclusions from their findings. We will have to wait a little longer, or perhaps much longer, before we see any results - if, indeed, there are any.

Meanwhile, reflect on a couple of things. First, the December 2000 statement condemned by the FSA was put out by Iceland in conjunction with Charterhouse, one of its corporate stockbrokers at the time. It was Charterhouse that handled the sale of Walker's £13.5m of shares. No one, of course, is suggesting that Charterhouse knew Iceland's profits were slipping so far behind when it cheerily offered its clients the chance to buy shares in the company.

And second, has any of this done any harm to Walker? Judging by the comments of fund managers this weekend, he is now a pariah. He would not be welcome as an addition to any quoted company's board.

But why should he care? He has a loving wife, a huge house near Wrexham, a holiday home in Majorca - where, it seems, he was enjoying himself on Friday - and he has just paid £1.45m for a brand new and terribly swish fourbedroom flat in central London.

Of course, he can afford all this. So could you, if you had managed to offload a shareholding for £13.5m - a shareholding that would now fetch nearer £4m. No, Malcolm Walker is now free to enjoy life to the full. Unless his comfortable retirement is disturbed by Messrs Lindsay and Thornton.

Time to sell
JUST coincidence? On Friday, David Komansky, head of investment bank Merrill Lynch, apologised to clients about e-mails by analysts that privately rubbished companies while urging investors to buy shares in those companies. He was referring to comments from Merrill's team of internet analysts at the peak of the dotcom boom. They described companies as 'crap' while telling punters they would make a splendid investment.

Just as Komansky was saying sorry, Merrill issued 'sell' notes on three tech stocks. Wall Street dealers cannot remember when Merrill Lynch last issued a 'sell' on a tech stock.

In fact, the three shares Merrill Lynch flagged as suddenly unworthy had already collapsed. Any client still holding them having bought on Merrill's advice would scarcely have been giddy with joy at parting with shares that had lost as much as 92% of their value.

The sell notes were issued just as the Securities and Exchange Commission announced that it was joining the New York District Attorney's investigation into conflicts of interest by Wall Street brokers. The cost to Merrill of these investigations, and the projected associated settlements and fines, could be as much as $2bn (£1.4bn). Little wonder that Merrill has suddenly found religion and decided occasionally to advise clients to sell.

Quietly competent
FINALLY, a quiet hurrah for Mustapha Omar, the Collins Stewart analyst who last week said mm02 shares could be worthless. It was he who said in July 2000 that Marconi was overvalued. How right he was. A year later, everyone else agreed.

Whether Omar is right about mm02 is not the issue. What is commendable is that Omar seeks no profile. He refuses to be photographed. 'I don't want to be recognised as I walk about the City,' he says. He just wants to be right.