IN his first interview since he was dragged into the loans-for-peerages
scandal, Rod Aldridge, outgoing chairman of Capita, chose his words
carefully.
Aldridge said last week: “I’m old enough and ugly enough to have made that
decision.
“It was a personal one and I stand by it.”
That decision — making a £1m loan “at commercial rates” to the Labour party —
pitched him into a spotlight he thought would never shine on him. It also
dragged him into one of the biggest, post-war political scandals that is now
the subject of a police investigation.
Aldridge said: “It hasn’t been easy. How it emerged is not something I can
have any influence on.”
He refuses to say whether he regrets it, but his friends say the events of the
past four months — since the loan was uncovered — sit uncomfortably with a
man who values his privacy above all else.
It ultimately forced his resignation from the company he co-founded.
Aldridge, a lifelong Labour supporter whose father was a union representative,
believes he has done nothing wrong. But the reason he annnounced in March
his decision to step down from executive to non- executive chairman and then
retire at the end of July was to ensure there was not a misconception that
his financial backing for Labour had compromised Capita and helped it win
government contracts.
He said: “Anybody who is around our business will know that it is complete
rubbish. But I felt the intregrity of the company, which I believe in
passionately, was the reason I had to make that statement.”
And there were plenty around who wanted to make mischief about the loan. Some
MPs demanded to know what meetings Cabinet Office ministers and other
officials had held with the company since the start of 2004.
Capita’s success has been built around taking over the running of government
back-office departments and in the process saving millions of pounds in
costs. This has since diversified to include handling administration for
private companies as well as managing the television licence, teachers’
pensions and the London congestion charge.
In the last two decades the firm has in effect invented outsourcing, a word
that was barely known until Capita’s arrival. The group’s businesses now
employ 26,000 people and touch the lives of 33m.
Capita’s contracts have made the group, which recently announced half-year
operating profits of £103m, very successful. Over the past 17 years since it
floated, its share price has soared from 3½p to 523p, valuing the company at
£3.3 billion. In fact, the half-year dividend of 2.7p was nearly as much as
the opening share price.
It has also made Aldridge and his executive team very rich. At the last count
he was worth £68m according to the Sunday Times rich list.
Tomorrow, the 58-year-old businessman will walk out of Capita’s London
headquarters for the last time as its chairman and head for his Spanish
villa outside Marbella for a month, planning to improve his golf handicap of
14. Then he will make his bi-annual pilgrimage to watch the Ryder Cup —
which this year is being staged outside Dublin — with his two sons.
There will be plenty of time for Aldridge to reflect on the extraordinary
events of the past four months, which have pitched him into the public eye
for all the reasons he doesn’t want.
It is for his achievement at Capita that Aldridge wants to be remembered. But
he is conscious that in the short term this could be eclipsed by the loan
scandal. However, while others were accused of lending money to secure a
peerage, Aldridge’s name was never put forward for a title.
Although it is easy to make a straight connection between the loan and his
decision to leave the company, Aldridge said he had been considering the
issue of when to quit for some months beforehand.
In February, before the loan was revealed, he drafted a resignation letter
that he showed to colleagues. He said he planned to put it out with the
full-year results but dropped the idea at the last minute.
He also sounded out 10 prominent businessmen, many of them entrepreneurs
running FTSE 100 companies, to gauge their opinion of what the best course
of action should be.
Aldridge, who is being succeeded as chairman by Eric Walters, said: “The
question of ‘when do you leave?’— no founder of a business gets it right.
The issue had been on my mind for some time. You love the job and in the 20
years I have been here I have never not wanted to come to work.
“When I went to see these people, 70% of them said don’t become a
non-executive chairman, just leave. At that point I didn’t want to hear
that, but as I sat back and looked at it, I realised it was the right thing
to do. I go out on a high after a great set of results. Nobody is
indispensable.”
Future activities for Aldridge will now centre on his charitable foundation
and other benevolent work.
He has set up an office in London’s Covent Garden and put £3m into the
foundation — of which £2m is being used to set up a city academy at Darwin,
near Blackburn, to encourage entrepreneurship, a theme he is passionate
about.
Aldridge, who had trials to play football for Brighton and cricket for Sussex,
describes himself as a late developer. He failed his 11-plus and went to a
secondary school, achieving five O-levels.
“My greatest claim to fame is that I studied French for two years and in the
oral examination the invigilator in the end said, ‘Can we please speak to
one another in English, because it seems much better than trying to do it in
French?’ ” That is why he is so keen to encourage entrepreneurship — to
ensure that pupils get the chance to develop at school. He will also
continue with his work on public-sector reform.
“There is a lot I want to do and it seems to me the time is right to do that,”
he said.
As regards the decision for the Labour loan, the explanation probably goes
back to the big influence his father had on him. A union representative for
sheet-metal workers, he was made redundant at 50 and died at 62, seeing none
of his son’s success.
“Had he lived, he would have been 90 the day after our last set of interim
results. My upbringing and my beliefs are all down to him,” Aldridge said.
When his father lost his job, it had a huge impact on the family, but he
didn’t sign on the dole and went on to set up a small decorating business.
“That is where my determination comes from,” he said. “As a family we never
suffered for it. He owned his home and he had values that I still admire.”
In September, when the holiday season has run its course, Capita will host a
party for Aldridge. Some 400 staff have been invited. It is a party to which
he is already looking forward.
Last week he went round saying farewell to staff in regional offices — and it
was an emotional time. Much of his life and passion has been tied up in
Capita, and a lot of close colleagues, such as Paul Pindar, his chief
executive, have travelled the same journey.
When they started, few — least of all Aldridge — believed that it would end up
creating a national champion in business outsourcing.
This weekend he is sending a circular to shareholders citing 22 of the best
moments during his Capita career. Those who have stayed the course have been
well rewarded, with £1,000 invested at the beginning now worth £167,000.
Those memorable moments include achieving an unbroken record of 35 reporting
periods of continuous growth, lifting revenue from £300,000 in 1984 to £1.4
billion in 2005, and receiving the 2003 company of the year prize at the
Royal Bank of Scotland and Sunday Times Business awards.
Aldridge’s critics say Capita was the product of new Labour and dub him
a “Tony crony”. In fact, Capita was a child of the Thatcher era that
blossomed under Labour.
Aldridge is a modest and thoughtful man who now sees his his mission as
ensuring the same opportunities that were open to him are available to
others. He hopes that the academy will go some way to achieving it and he
sees the task as a full-time job.
And when he gets his £1m loan back from Labour later this year, he may find a
less controversial way of spending it.
View from the City
Panmure Gordon: ‘We believe Rod Aldridge was instrumental in
shaping government thinking on many outsourcing projects and positioning
Capita to provide the solution. The publicity surrounding his loan to the
Labour party has called the group’s reputation into question.
Deutsche Bank: ‘The outgoing chairman is extremely well
connected and will undoubtedly be missed by the company.’
Bridgewell Securities: ‘Aldridge has focused mainly on
investor communication for Capita for some years now and we believe that the
strong team of chief executive Paul Pindar and financial director Gordon
Hurst should ensure no significant disruption.
Investec: ’Aldridge was chummy with local and government
officials and influenced opinion. How much business he personally brought in
we’ll never know.’
