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Volume 3 Management, mergers and fraud 1987–1993
Author: John Wilson

The final volume of this detailed history of Ferranti covers the last seven years of its operating existence, starting with the 1987 merger with ISC and culminating in a humiliating demise consequent upon GEC’s 1993 decision to withdraw its bid for what by then was an unprofitable rump. Extensive attention is paid to the way in which ISC evolved under James Guerin’s stewardship, providing insights into the shady world of international covert arms dealing. While in 1987 Ferranti purchased what was regarded as a highly profitable defence electronics business, by 1989 it was apparent that ISC’s net worth was marginal, creating an accounting hole in what by then was Ferranti International from which it never recovered, in spite of highly imaginative strategies enacted by a new chief executive, Eugene Anderson. The book provides detailed insights into international mergers, corporate governance issues and defence electronics that highlight the dangers associated with competing in one of the fastest-moving industries of that era.

John Wilson

February 1990 also signalled that the board was confident of effecting a Phoenix-like recovery that in September 1989 had seemed impossible to many. This new chief executive, Eugene Anderson, would also go on to perform a series of minor miracles, not least in sustaining good relations with the firm’s bankers, thereby keeping the firm afloat longer than some had anticipated. Nevertheless, not only had the balance sheet been fatally holed by Guerin’s fraud, but Sir Derek AlunJones had also been obliged by the MoD to sell off the most profitable division, Ferranti Defence

in Ferranti: A History
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John Wilson

While the court cases were taking place in the States, Ferranti management was assessing how the fraud could be accommodated in the accounts, and especially the extent of bank borrowing required to prevent bankruptcy. It will become clear that while a bank syndicate provided extensive loans, the conditions placed on these funds resulted in an extensive disposal programme that left Ferranti bereft of profitable activities, and especially the hugely successful Scottish division. Another condition was the replacement of Derek Alun-Jones as chief executive with Eugene Anderson, an American with extensive experience of corporate turnarounds. These developments marked a dramatic change in both the nature and size of the business, as well as the corporate culture that had flourished for over 100 years.

in Ferranti: A History
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John Wilson

, the chief executive who had been hired to salvage Ferranti International after the September 1989 revelations. When the group was placed in the hands of receivers this represented ‘a devastating blow to Eugene Anderson, the chairman, who has staked his reputation on the GEC offer’.94 Indeed, over the course of the previous month he had worked hard to persuade shareholders to accept the GEC penny, while during his tenure as chairman and chief executive he had ‘done as much as any mere mortal could . . . to try to save [the group]’.95 Of course, it is important to

in Ferranti: A History