BSKYB’S non-executive directors lashed out at Britain’s leading corporate governance bodies last night, describing them as “misguided” in their opposition to a controversial share buyback.

The accusation, in a letter sent out by Lord Rothschild and Sky’s other non-executives, was made hours after the company narrowly won approval of the buyback at its annual meeting yesterday.

The letter directly criticises the Association of British Insurers (ABI) and the National Association of Pension Funds, plus “certain instutional shareholders”. It says that they “seemed to us to believe that circumstances relating to another company, News Corp, in another jurisidiction with a different system of corporate governance were relevant.

“We believe that this was misguided,” the letter signed by eight non-executives says, adding, “but our only interest now is moving forward positively”. The other signatories include Allan Leighton, chairman of Royal Mail, and Gail Rebuck, chairman of Random House, the publisher.

The dispute stems from a disagreement about whether BSkyB should continue with share buybacks. News Corporation, parent company of The Times, owns 37.2 per cent of BSkyB, and once the agreed 5 per cent buyback concludes, its holding will rise to 39.1 per cent. In an attempt to placate investors, BSkyB and News Corp reached agreement to cap News Corp’s voting interest at 37.2 per cent.

This concession was not enough for some shareholders, who were concerned about a dispute involving News Corp, which has agreed to extend a “poison pill” takeover defence without putting it to a shareholder vote. News Corp originally suggested that it would hold a vote but changed its policy amid concerns about stake-building by Liberty Media.

At the annual meeting, Daniel Summerfield, an investment officer with the Universities Superannuation Scheme, challenged Rupert Murdoch, Sky’s chairman. He said that he was “concerned about the erosion of trust” in BSkyB and News Corporation and the “potential for creeping control”, asking: “What assurances can you give shareholders that the voting agreement is a binding one?”

Mr Murdoch stated that the “situation with News Corporation has nothing to do with Sky”, and said that the agreement was “legally binding” and policed by the company’s non-executives. “We have one of the most distinguished boards in Britain; if you are alleging they should not be trusted, then that’s your opinion.”

Lord Rothschild also promised that the buyback plan would be dropped next year, to avert a similar row. Stating that the board is “not immutably wedded to buybacks”, the peer said that “we will not be proposing to renew the authority next year”.

Peter Montagnon, ABI director of investment affairs, said: “We made the decision on the advice of and with the support of our members. It was based on the principle of their opposition to creeping control and not specifically a reflection of events elsewhere.”

The board won the buyback vote, with just 54 per cent in favour, excluding absentions, and 46 per cent against. News Corp was unable to vote its shares on that resolution, which exempted News Corp from having to make a bid for the company.

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