Tuesday, 11 August 2009

The great scandal of corporate life

It used to be said that it was top public servants who were impossible to sack, while in the harsh world of private enterprise CEOs lost their job when things stuffed up.

Clearly, that is another of the fictions about business life, especially at Rio Tinto, where Tom Albanese is still the Chief Executive. If ever the boss of a company has presided over a disaster then it is he. Rio under Albanese wasted tens of billions of dollars buying the aluminium company Alcan for no good reason other than keeping his company out of the clutches of BHP Billiton. Then, Albanese knocked off another lot of shareholders’ wealth, also measured in tens of billions, by fighting the takeover when it nevertheless came.

Desperate for a way of saving Rio Tinto from the gurgler after these Albanese-inspired losses, the company turned to the Chinese Government-owned Chinalco as a potential saviour, only to unceremoniously dump them when market conditions improved. The price paid for this particular commercial double cross is the complete alienation of the company’s major iron ore customer. Not that Mr Albanese has to worry yet. He’s not the one languishing in a Chinese prison but surely his day of reckoning must soon come. The only reason I can see to keep him in his job is to have him available as the necessary sacrifice when peace with the Chinese if finally restored.

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