The Telegraph Newspaper
06 Jan 2001
Obituary: Lord Spens
Merchant banker who was cleared of dishonest dealing in connection with a share-support scheme during the Guinness takeover of Distillers
THE 3rd LORD SPENS, who has died aged 58, was acquitted of charges of dishonest dealing during the controversial Guinness takeover of Distillers, and spent the rest of his life seeking redress for the damage done to his reputation.
Patrick Spens was a City maverick, an outspoken, ebullient, cigar-smoking merchant banker who relished the buccaneering tactics which often win takeover battles. He provoked loyalty and admiration on his own side, but often made enemies of his opponents.
He was managing director of the small banking house of Henry Ansbacher when, in January 1986, Guinness’s chief executive Ernest Saunders launched a £2.2 billion bid for Distillers, makers of Johnnie Walker whisky and Gordon’s Gin. Another banker, Roger Seelig, of Morgan Grenfell, asked Spens to help set up a scheme to support Guinness’s share price, in order to make the offer to Distillers’ shareholders look more attractive than a rival bid from the supermarket group Argyll.
This involved rewarding a number of investors, including the property tycoons Gerald Ronson and Sir Jack Lyons, for buying and holding Guinness shares, while indemnifying them against any losses they might incur. Ansbacher ended up holding a block of shares, funded by money from Guinness – tantamount to Guinness buying its own shares, which would have been illegal.
By general consensus these manoeuvres crossed the line of City propriety, but the law was unclear about such a scheme, which was by no means an unusual one in the City. In 1988 a tribunal chaired by Lord Grantchester examined six similar schemes, all involving Spens. Among the clients he had acted for was Robert Maxwell.
Argyll’s directors considered themselves cheated of the bid, and a DTI investigation began with a raid on Guinness’s offices in December 1986. A month later, the Bank of England forced Ansbacher’s chairman to dismiss Spens. The Bank had earlier warned Spens about his modus operandi, but had received a somewhat high-handed answer: “I told them ‘Fine – that’s your opinion, but that is what Ansbacher and I do well, and I intend to carry on doing it.’ ”
Throughout all the proceedings that followed, he stoutly denied that there was anything inappropriate in what he had done; and indeed the City’s Takeover Code did not specifically preclude indemnified share-support schemes until it was amended in 1987. The Government, however, was determined that examples should be made which would persuade the City to clean up its act. At 6.45am on March 10 1988, Fraud Squad detectives arrived to arrest Spens at his house in Kent on charges under the Theft Act and the Companies Act.
Ernest Saunders, Gerald Ronson, Jack Lyons and a fourth defendant, the stockbroker Anthony Parnes, were all convicted in the first Guinness trial in 1990. Seelig and Spens finally appeared in court in September 1991, by which time Spens had suffered a heart attack followed by bypass surgery, and Seelig was suffering severe depression.
In February 1992 the trial was abandoned because of Seelig’s state of health, but the judge refused to give Spens a formal verdict of not guilty or to allow him the £400,000 of costs he had incurred before being granted legal aid, on the grounds that he had “brought the prosecution on himself”. On appeal, however, Spens was formally acquitted, and Seelig was also cleared.
Spens continued to speak out robustly in defence of his name, and criticised the judicial processes and the DTI report on Guinness which finally appeared in 1997. He also turned his attention to suing the Bank of England for “abuse of power”, claiming that the Bank had threatened to revoke Ansbacher’s banking licence if he was not sacked. This was to have come to court in 1999, but at the last moment the Legal Aid Board refused Spens further funding, obliging him to abandon the case. It was still in the hands of the ombudsman when he died.
Patrick Michael Rex Spens was born on July 22 1942 and educated at Rugby and Corpus Christi College, Cambridge, where he read Law. He went on to take articles in accountancy with the firm of Fuller Wise Fisher – the Fisher in question being his wife’s grandfather – qualifying in 1967. Two years later he joined the corporate finance department of Morgan Grenfell, where he became a director in 1972 and a close colleague of Roger Seelig. He moved to Ansbacher as managing director in 1983. He was also a director of London & Midland Industries and of Arlington Securities.
After leaving Ansbacher he set up a corporate finance consultancy, Castlecrest, and in later years he re-established himself as a chartered accountant, with his own firm based in the West End of London. He reckoned to have had a hand in 350 takeovers and share issues during his career. He had succeeded as the 3rd Lord Spens in 1984. The barony had been created for his grandfather, Sir Patrick Spens, who was Chief Justice of India from 1943 to 1947, and sat as a Conservative MP, first for Ashford in Kent and later for South Kensington.
The 2nd Lord Spens, Patrick’s father, was the founder and director of the Federation of British Carpet Manufacturers. He was also a compulsive gambler and in 1974 was jailed for two years for stealing from the federation. In one of several tribulations in his personal life, Patrick had to raise substantial sums of money to cover his father’s debts.
By way of relaxation, Patrick Spens collected stamps. He was a fellow and a medal-winner of the Royal Philatelic Society, to which he presented a paper on “Queen Elizabeth II Waterlow High Values”. But in 1990 he was forced to sell his collection to help cover his legal costs. He married, in 1966, Barbara Fisher, daughter of Rear-Admiral Ralph Lindsay Fisher. She stood by him resolutely through all his difficulties. They had a daughter and a son, also Patrick, who was born in 1968 and succeeds to the peerage.