Stumbling in Spitzer's steps

IF ONLY Britain had an Eliot Spitzer. It has been two years since the Financial Services Authority launched its investigation into the split-capital trusts scandal.

The City watchdog boasts that this is the most thorough investigation it has ever undertaken - having reviewed 51,000 documents, listened to endless tapes, conducted 70 interviews and gobbled up to £10m of taxpayers' money in pursuit of wrongdoing.

It has plenty of evidence of collusion among the splits, which were engaged in a giant City-style Ponzi scheme.

The FSA is trying out the Spitzer strategy, which is to call the great and the good, including Lord (Leon) Brittan of UBS, together to tell them of the vast evidence and to threaten tough penalties if the firms do not come up with compensation - soon.

But the firms are dealing with FSA chief John Tiner, not Spitzer, and there were no dozens of state attorneys sitting in the next room threatening to join in legal action, as there might be in New York.

So most of the participants left the room as poker-faced as when they arrived. No numbers were formally mentioned, so the idea that the companies are going to come back with a compensation offer to the order of £500m needed looks unlikely.

The FSA is being too gentlemanly. Until it steps up the pressure, starts disciplinary action and demands specific sums, it is not going to force anyone to stump up the sums required to make good the losses to thousands of investors -including readers of these pages - who have seen their savings vanish into the ether.

Tiner must turn up the heat.

Philadelphia story

WHEN the fate of Mickey Mouse is at stake, you can bet your life that the world will be watching.

Today's annual general meeting of Walt Disney in Philadelphia has all the elements of a classic. Inside the hall chairman/chief executive Michael Eisner will be defending the company's record.

Standing against him will be Roy Disney, nephew of the founder, a line-up of big public sector pension funds and the Disney fanatics, who have been hitting the websites with increasing fury.

In much the same way as Howard Dean believed that he could capture the White House through the internet, so the Disney enthusiasts think they can retake the Magic Kingdom through the net.

Eisner and Roy Disney only have themselves to blame for the present strife. Their battle over the governance of the entertainment group allowed the barbarians to park their chariots on Disney's lawn.

Cable group Comcast saw an opening as a result of Eisner's long-running battle with the last of the Disney heirs, and struck with a hostile bid.

Those who wish to keep Disney as pure as Celebration, the model town it built in Florida, are more likely to side with Eisner than allow its culture to be destroyed.

In a letter to shareholders the Disney board backs Eisner without reservation, noting that earnings are expected to grow 30% this year and that their beleaguered boss has exercised 'business, financial and creative' leadership.

What is less admired is Disney's governance, which is why so many of the public sector pension funds are lining up with Roy Disney and his rebels.

The belief is that Eisner's grip on the board has become too tight, his remuneration is over-generous and his hogging the roles of chairman and chief executive is greedy. Eisner could end the danger to the company by giving up one of his roles and outlining a timetable to retirement.

But so far there is no sign of any humility. The danger is that the enemy will exploit the chink he has opened in the Disney armoury, and the barbarians will storm the gates.

Food for thought

IN financial terms ICI's sale of the food ingredients side of its troubled Quest division is no big deal. What it does show is that John McAdam, the new chief executive, is determined to come to grips with the problems at Quest that brought down his predecessor.

In cash terms the deal raises a net £197m, hardly a blockbuster given ICI's debt levels and pension fund deficit. But it will release cash and enable McAdam to push on with the reorganisation at Quest.

It makes sense for ICI to remove itself from a market where it is a bit player, without the finance to bolt on further acquisitions.

Clearly, the market likes the deal and marked the shares (which I hold) to a 12-month high. This is testimony to the faith in the new management, given the challenges of a strong dollar which could have a material effect on earnings repatriated from America.