Chapter 5
It was true that a crisis had been reached. But the events leading up to it had not happened overnight.
In the seventies, the value of the pound had collapsed. What had begun as a downturn, grew into a recession and was ongoing at the start of the eighties. Many British companies had gone out of business. Millions were unemployed.
Jim Ashby had lots of clients in the United States. Usually, they were very profitable but became less so, after the pound hit bedrock against the dollar. After Rob went to Texas, the fallout from the currency depreciation hit Plantation hard.
In 1981, Ashby senior had been waiting for a large amount of money owed by some American companies. Clients can be fickle and can put off paying bills. To Plantation’s clients, business was business : they knew the pound was in a downward spiral and decided to sit it out ; in the end, they made huge savings on the exchange rate but their obstinacy blew a large hole in Plantation’s accounts.
The board debated the situation and the company secretary, Roger Grenville suggested merging with another company. A small insurer, Stirling Limited was looking for a tie-up with a larger outfit like Plantation. Grenville knew Stirling’s directors and it was likely they would recommend a merger to their shareholders.
Stirling had some interesting contacts around the world and had gone into markets previously considered off-limits. There had been state banquets in several communist countries and in the Soviet Union. Stirling interested the Soviets who had their own trading company in London. (It also secretly interested the Foreign Office and the Security Service.)
Aside from its overtures to the communists, Stirling was venturing into high risk areas.
There was a demand for covering exhibitions in the art world. Without it, valuable paintings couldn’t be loaned by British galleries to exhibitions abroad. While there were large profits insuring old masters, if one went missing, an insurer could be vaporized.
Stirling were also covering satellites and rocket launches. Until that time, American companies had the market to themselves. Unsurprisingly, their intelligence agencies were active behind the scenes. The early eighties were a flashpoint in the arms race between the US and the Russians. Anything to do with rockets, satellites and communists was investigated as a priority.
Ordinarily, Jim Ashby would have steered clear of a company like Stirling. But extreme times called for extreme measures : from the advice he’d received from Grenville who was also the finance director, Plantation had a clear choice – either replenish its capital or face liquidation. If it was to survive, Plantation had to find new business and new capital from somewhere and double-quick. Apart from Stirling, no-one wanted to merge. Everyone had problems.
At any other time, Ashby senior would have spent weeks going through Stirling’s accounts himself. But he was fire-fighting and battling a chaotic situation : there was no time to scrutinise Stirling closely as he was flying to different parts of the world to try and hang onto the clients he had. The merger proposal couldn’t have come at a worse moment. It was the middle of the renewals season – the time when most companies re-negotiate their policies for the next financial year. According to Grenville, Stirling wanted to press ahead with the merger or go elsewhere : Jim Ashby was backed into a corner. In the end, he was forced to ask Grenville to wrap things up as he was the main contact with the Stirling board. And that was a big mistake.
Plantation A Legal Thriller Page 5