Groenink accused of mismanagement at ABN
3 August 2007, AMSTERDAM (AP) - ABN AMRO's chief executive was back in court Thursday as a group of shareholders who lost a bid to halt the USD 21 billion (EUR 15.5 billion) sale of the company's U.S. arm kept up their fight, pushing for an investigation into alleged mismanagement.
3 August 2007
AMSTERDAM (AP) - ABN AMRO's chief executive was back in court Thursday as a group of shareholders who lost a bid to halt the USD 21 billion (EUR 15.5 billion) sale of the company's U.S. arm kept up their fight, pushing for an investigation into alleged mismanagement.
Given that the sale of Chicago-based LaSalle Corp. to Bank of America Corp. was settled by a Dutch Supreme Court ruling that found it was legal - without commenting on whether it was wise, or in the best interests of shareholders - the case cannot halt the deal.
It also will not affect the wider takeover battle for ABN AMRO Holding NV, in which a consortium of banks led by Royal Bank of Scotland PLC has bid EUR 70.7 billion, mostly in cash - around 10 percent higher than a mostly share offer by Barclays PLC. Either offer, if successful, would be the largest in the history of the financial industry.
But the reputation of Chairman of the Managing Board Rijkman Groenink and other members of ABN's boards are at stake in the suit filed by the Dutch shareholders' rights union VEB, and the ruling could determine the influence shareholders will have over decisions made by managers of Dutch companies.
The VEB argued in opening statements that the LaSalle sale and other actions taken by ABN AMRO's managing board improperly preferred Barclays over the RBS consortium, potentially harming the interests of the Dutch bank's own shareholders.
"ABN AMRO did everything it could to prevent a level playing field, to influence the market's preference for Barclays and to show its distaste for the consortium," VEB lawyer Jurjen Lemstra said.
The company was expected to argue that the Supreme Court ruling determined it had done nothing wrong and no investigation is warranted.
"These are very strong steps that the VEB is taking," Groenink told Dutch RTL television before walking into the courthouse. As recently as Monday, he said he personally prefers the Barclays merger, though ABN AMRO no longer officially endorses it in the face of the higher RBS offer.
The court, which has generally been sympathetic to VEB complaints, hasn't set a date for its ruling.
The alleged mismanagement centres on pair of hectic weeks in April.
ABN was in exclusive merger talks with Barclays, but had been informed in writing by the RBS consortium on April 13 of its interest in making a potentially higher bid. RBS said it wanted LaSalle.
On April 23, before talking to RBS, ABN unveiled a management-backed agreement to be acquired by Barclays. At the same time, it announced it had negotiated the surprise sale of LaSalle to BofA in four days time, a poison pill designed to frustrate RBS.
The Supreme Court ruling later said that under Dutch law, such a defensive measure is within the range of tools management has at its discretion to fend off unwanted advances.
But shareholders were furious, fearing the move would cause RBS to drop out of the bidding, potentially costing investors billions of euros. At the company's annual meeting on April 27, they accused Groenink of being too hasty in sealing the BofA deal.
Groenink responded that any recklessness was on the part of BofA: As owner of LaSalle, ABN knew its value and felt USD 21 billion was a "world-class price."
That argument is reinforced by the fact that neither RBS nor any other bidder was willing to come forward to pay that amount for LaSalle. On the other hand, they were only given 10 days to do so.
In a strange alliance, ABN's labour unions joined the shareholders' suit Thursday, saying their interests couldn't possibly have been taken into account in a four-day negotiation period.
Groenink said in April that he was considering the interests of all stakeholders, as required by Dutch law. It later emerged that more jobs will be lost or outsourced in a Barclays merger than a RBS takeover.
Groenink, who has ABN stock holdings, stood to gain slightly more financially from the RBS deal - but his reputation would have suffered more, as it would have amounted to a greater censure of his leadership and strategy at the helm of the Netherlands' largest retail bank.
ABN's independence was doomed in either scenario. However, RBS and its partners Fortis NV of Belgium and Banco Santander Central Hispano SA of Spain plan to dice up the company into constituent parts, while Barclays says it wants to keep it mostly intact.
Some ABN managers and directors stand to receive highly paid positions within a merged Barclays-ABN, while RBS and its partners will probably purge those who attempted to stymie them if they win the bidding war.
CFO Hugh Scott-Barrett resigned May 10, saying he didn't plan to accept a job at Barclays-ABN. "This is an opportune moment for me to look at my future," he said.
[Copyright AP 2007]
Subject: Dutch news