Examination of Witnesses (Questions 1
THURSDAY 11 JULY 2002
1. Good morning, Mr Gilbert. For the sake of
the shorthand writer could you identify yourselves, please?
(Mr Gilbert) I am Martin Gilbert, Chief Executive
of Aberdeen Asset Management.
(Mr Marshall) I am Gary Marshall, Managing
Director of Aberdeen Unit Trust Managers, which is the Group's
(Mr Currie) I am Piers Currie, Marketing
Director of Investment Trusts at Aberdeen.
2. Good morning. Could you tell me who is the
Executive Director responsible for each of your funds?
(Mr Gilbert) The structure of the company is I am
the Chief Executive and Chris Fishwick is the Executive Director
responsible globally for our closed end funds as we call them,
or investment trusts as they call them in this country. He has
overall responsibility for them. Then what happens is each individual
fund or each individual company has its own investment remit,
so the investment management of that part of the portfolio would
be delegated to a particular fund manager within the fund management
3. If he is in overall control can I ask why
he is not here this morning?
(Mr Gilbert) Two reasons. One, I was asked to come
Mr Fallon: By whom?
4. Our Clerk wrote to yourselves asking for
witnesses to come but there was no specific request. We would
have liked to have seen Mr Fishwick. Can you tell me why he is
(Mr Gilbert) He is attending a number of meetings
today with some of our funds because, as you are probably aware,
the markets are in a very, very bad condition at the moment and
we have a number of funds that are in difficulty and he is dealing
with those today. I apologise. If you had wanted him here specifically
we would have rearranged things and brought him here but I thought
it would be adequate to bring the two gentlemen I have brought.
5. I must say that my colleagues are a bit disappointed
that he is not here. Could you tell me on how many boards Chris
(Mr Gilbert) He sits on ten boards. I think we should
elaborate that he does not sit on a board as an independent non-executive
director, he sits on the board as a non-independent director.
All our boards tend to have a management representative on each
6. Okay. Could I ask did he earn salary and
benefits of £1.8 million in the year to September 2001?
(Mr Gilbert) Yes, that is correct.
7. And salary and benefits of £1.734 million
in the previous year to September 2000?
(Mr Gilbert) That is correct.
8. Did he officially exercise stock options
worth approximately £2.3 million in the year to September
(Mr Gilbert) I think he exercised the stock options
but he held on to the stock so I suspect of that £2.3 million
he would have probably lost about £2 million of it.
9. Has he been promised an additional £1.4
million deferred benefit if he remains in Aberdeen's employment
to 30 September 2002?
(Mr Gilbert) I think that is correct.
10. Is he the highest paid employee of Aberdeen
Asset Management plc?
(Mr Gilbert) Yes, he is.
11. Therefore, can you understand, Mr Gilbert,
why thousands of Aberdeen investors around the country who have
lost much of their life savings feel angry when they see the director
responsible receiving or being promised over £7 million in
a two year period during which the trusts he was managing have
collapsed almost totally in value?
(Mr Gilbert) I do see your point.
12. Thank you.
(Mr Gilbert) But there are a number of other points,
if you would not mind me making them. He is in charge of, as we
call it, the closed end fund division of Aberdeen which ranges
from Sydney right through to the US. It is one of our most successful
divisions. It has contributed over the last ten years substantial
profits to the group and he has been a very, very good profit
generator for the group. Those particular trusts that you were
speaking about for the three years before the last two were the
best performing investment trusts in the UK.
13. John Tiner of the Financial Services Authority
is quoted as recently saying "If you have a director of the
board of a series of trusts", and you mentioned Mr Fishwick
is on ten, "it must be difficult to manage the conflict of
interest that would emerge". Would you agree with that statement?
(Mr Gilbert) I do not agree with that statement. He
is not holding himself out to be independent on those boards,
he is non-independent. He is the senior representative from Aberdeen
management on those boards.
14. Lastly, a quote from Mr Tiner again in May
of this year when he said "Some splits borrowed heavily to
invest and buy securities in each other in a contagious cocktail".
Would you call it a contagious cocktail or a Molotov cocktail?
(Mr Gilbert) Much as I hate to disagree with the regulator,
which is a very dangerous thing to do, I do disagree with his
Chairman: We have the regulator later
in the morning so we will certainly be asking those specific points.
15. Can I ask what position Ms Shelley O'Donnell
has with Aberdeen Asset Management now or recently?
(Mr Currie) Shelley O'Donnell works with me on investment
trust sales and investor relations.
16. Is she the head of investment trust sales?
(Mr Currie) Yes.
17. Do you recall an article that she wrote
in July 2001 in Investment Adviser where she was commenting
on the likely performance of zero dividend preference shares?
(Mr Currie) There are a lot of articles on zero dividend
18. Do you recall hers?
(Mr Currie) Not specifically, but if you remind me
I will try to clarify it.
19. In it she describes the zero dividend preference
shares as low risk.
(Mr Currie) I think that is very true.
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