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.
impressive progress; secondly, it is also necessary to disclose the
firm’s covert activities, given their crucial role in underpinning its expansion,
especially in the 1980s. Janus-faced, ISC managed to fool the financial establishment that it was a credible operation with a sound balance sheet; in
reality, much of its alleged progress was based on either illegal or fictitious
contracts that were negotiated or contrived by its founder, JamesGuerin. At
the same time, it is vital to stress that Guerin’s covert activities were
conducted with the permission of both the US and
. At the same time, Hoskyns’ advice
resonated with something Alun-Jones had himself said at a previous board
meeting,29 acting as a warning-sign in what was about to transpire.
In view of the conflicting hindsight views which cloud the debate over the
Ferranti-ISC merger, it is essential to address the reasons why Derek AlunJones and the board led the company into what proved to be a disastrous deal.
Of particular importance in all the negotiations was the enormous trust
placed in JamesGuerin by his future partners. As we saw in Chapter 2, Guerin
was a key figure in
examined at the end of the
last chapter, it is indicative of the scale and complicated nature of Guerin’s
fraud that as late as 2012 investigators were still searching for the money he
squirrelled away as a result of his covert trading and fraudulent activities.
Even though in 1991 JamesGuerin was jailed for a variety of crimes,
including money-laundering through front companies, the fine details of all
the fraudulent deals, arming embargoed nations and duping financiers and
business executives into supporting ISC will probably never emerge.
Furthermore, the trial of
This chapter unravels the fraud that had been perpetrated by James Guerin in compiling ISC’s accounts over many years. This requires a detailed analysis of the missile contracts that Guerin claimed to have secured in the Middle East, Pakistan and China. While Ferranti executives conducted extensive enquiries into the veracity of these contracts, it was almost two years after the merger before they realised the full extent of the fraud. The key theme will be the extent to which Ferranti executives continued to place considerable faith in Guerin’s claims, indicating the importance of trust in such relationships.
investments in Ferranti
International had fallen so drastically. Of course, considerable emphasis was
placed on the nature and scale of the fraud perpetrated by JamesGuerin, in
an attempt to deflect some of the criticism, with descriptions of non-existent
arms deals, the web of Swiss and Panamanian front companies, and cash
outflows to Guerin enlivening the atmosphere at that fraught meeting.
Shareholders were assured that legal proceedings would be initiated against
‘undisclosed parties’ to recoup some of the £215 million lost as a result of the
merger, although it was