How Martin Gilbert CA handled a PR crisis
ICAS Conference speaker Martin Gilbert CA presides over one of the most successful asset management companies in the country.
Aberdeen Asset Management has 2,800 employees and £302.6bn in assets under management (as of 31 December 2016).
Aberdeen’s policy of managing emerging market funds with locally-based specialists has made it one of the strongest performers in that sector.
With a merger with Standard Life in the wings, the company is riding high. But that hasn’t always been the case.
The split capital trusts scandal
In the early 2000s, Aberdeen became embroiled in a financial scandal involving split capital trusts.
These are investment trusts issuing different classes of capital for investors with different risk appetites. The problem was that some investors, it appeared, had gone into high-risk capital on the understanding that it was low- or no-risk, and at the end of the 1990s a number of people lost a lot of money.
Aberdeen was the biggest name involved in the controversy and came in for heavy criticism from the regulator, the media and the House of Commons Treasury Select Committee, before which Martin was called to appear in 2002.
The scandal cost Aberdeen a considerable sum in compensation and the collapse of its market capitalisation, not to mention the resignation of Chris Fishwick, the director heading that part of the business.
Martin recalls: “That was one of the great learning curves we had as a company. It’s easy to manage in the good times, but it’s incredibly hard in the bad times.
"We almost went bust: we went from market cap of £1bn to £50, and then back up to where we are today [more than £4bn]. It was a pretty tough time and, when you are CEO, you are in the firing line.”
Aberdeen sold off what it could and Martin and his team began to rebuild the business. Martin said two factors were critical: the loyalty of the firm’s staff and clients, who stuck with the business, and the determination to be open and honest about the situation.
He adds that not much now bothers him, having lived through that experience. As he puts it: “You are never as good as the press say you are, and you are never as bad as they say you are.”
Another lesson, he adds, was: “Make sure that you know the right people before the proverbial hits the fan.”
He did not know John McFall, then-chair of the Treasury Select Committee, before he appeared in front of the committee; now, they have a good relationship and, said Martin, McFall refers to him as “his best pupil… I learned my lesson!”