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Lessons from history

No Free Lunch

Lessons from history

Quality of management is critical for sound investments. But what happens when it goes wrong? Asil Nadir and Robert Maxwell were two strong business leaders who, thirty years ago, inadvertently set in train what has become a series of corporate governance changes. One was charismatic, the other domineering. Both exuded confidence in public and attracted investors. But behind their stable facades, things began to derail. The sudden collapse of Nadir’s Polly Peck International, a FTSE 100 constituent, in 1990 was a shock. This was followed a year later by Maxwell’s publishing companies, and by a separate scandal, the forced closure of the Bank of Credit and Commerce International. As one prime minister said: “unlimited power is apt to corrupt the minds of those who possess it”, and it was in response to these three failures that Sir Adrian Cadbury was asked to chair a committee to see what lessons could be learned.

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