Source: http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article6797709.ece published on 16 Dec 2008
John Waples and Tom Lyons
Richard Burrows, a former governor of the Bank of Ireland, is to take on one of the most powerful roles in British business.
He is to become chairman of British American Tobacco, which is among the top 10 quoted companies in the FTSE 100 and the world’s second-largest cigarette maker, worth £38 billion. His appointment at the group — whose top brands include Dunhill, Kent and Lucky Strike — is expected to be confirmed this week.
However, it could cause controversy due to his prior role at Bank of Ireland (BoI). The bank was badly hit during the financial crisis and had to seek fresh capital from the state. Burrows was forced to apologise to the bank’s investors at its last annual meeting for “the loss in value of their stock and for the cancellation of dividends”.
Burrows, who joined the court of the BoI in 2000 before becoming governor in July 2005, stepped down to be replaced by Pat Molloy, a former chief executive of the bank.
BAT’s big investors, though, have accepted that despite the controversy at Bank of Ireland, Burrows, 63, is an experienced boardroom operator. He was a former chief executive of Pernod Ricard, the drinks giant, and now holds board positions at Carlsberg and Rentokil Initial, the pest control group.
Virginia Bottomley, the former Conservative minister turned headhunter, led the search for a new chairman. Burrows will fill the vacancy left by Jan du Plessis, the non-smoking South African who announced in April that he was stepping down after taking up the chairmanship of Rio Tinto, the mining giant.
The attraction to BAT of its incoming chairman is his international experience and knowledge of marketing and branding. BAT employs 56,000 workers and has 49 factories in 41 countries. It operates in 180 markets and is the most international of all the tobacco companies.
Burrows takes over at a time when BAT has enjoyed a highly profitable five years under the stewardship of Du Plessis and Paul Adams, its chief executive. During that period the share price has risen by 130%.
BAT reported a 16% rise in first-half profits at the end of July driven by continuing price rises and recent acquisitions. Pre-tax profits in the first half of the year rose from £1.8 billion to £2.1 billion and revenue was up by 24%, from £5.5 billion to £6.8 billion.
In Ireland, Burrows is best-known as the former chief executive of Irish Distillers, a position he held for 22 years, during which time he pioneered the global expansion of Jameson whiskey. A competitive yachtsman, Burrows was a member of the syndicate that funded Green Dragon, Ireland’s entry for the Volvo Ocean Race being run at present.
A number of senior City figures have seen their reputations damaged after serving on the boards of banks that have had to be rescued by the taxpayer. Some investors are reluctant to see them join the boards of other companies.
Andy Hornby, former chief executive of HBOS, has made a comeback. But rather than face the wrath of investors running another public company he is now heading privately-owned Alliance Boots.
Burrows was not the only former bank chief who was considered for the top role at BAT. It is believed that Peter Sutherland, previously a board director at Royal Bank of Scotland and outgoing chairman of BP, the oil group, was also considered for the role.