High noon for the World Gold Council?
By: Ken Gooding
Posted: 2002/05/12 Sun 18:06 ZE2 | © Miningweb 1997-2002
LONDON - There is an old trick used by public relations people in London when they want to "hide" an announcement. They stick it out late on a Friday, preferably on a day when other things are going on. So it is no wonder there is some deep suspicion here about the departure of Haruko Fukuda as chief executive of the World Gold Council. The news came late on Friday at a time when those with an interest in the mining industry were either at Anglo American's annual meeting or searching for enlightenment in the comments made there by Anglo's chief executive, Tony Trahar.
According to the Gold Council there was no attempt to obscure the announcement. It explained that Chris Thompson, the new chairman, was tied up all week launching his company, Gold Fields, where he is also chairman, on the New York Stock Exchange. It also had proved difficult to contact all the members to explain what was going on. Also, Fukuda always intended to leave when here three year contract ended.
Nevertheless, there are enough clues in the announcement to indicate that Fukuda's decision to leave was a sudden one. The Gold Council statement said that Fukuda had reached the end of her three-year contract at the end of March but would be leaving at the end of June. It seems that the search for a successor is only just about to begin because the statement also suggested Fukuda would remain "an adviser" until a new chief executive was appointed. That hardly suggests that she was expecting to go because her past performance indicates she would have organised a more orderly hand-over.
But then her predecessor was roughly ousted at what seemed to be a moment's notice, with hardly a word of thanks.
We are left to guess the reasons for this latest shake-up at the top of the industry's promotional organisation. One of Fukuda's last initiatives was to bring in consultants to try to answer the question: What is the World Gold Council for? That's a good question because, since it emerged from the old South African gold promotional organisation, Intergold, in the mid-1980s the Council never seems to have had a strategic plan, or to have a clear idea about its role in the world.
At present it has a split personality, chasing two objectives that don't sit easily together. On the one hand it has to promote the glamour side of gold, jewellery sales, with all the razzmatazz and, yes, phoniness. On the other it has to present a serious face, wanting to be taken seriously by central bankers and wealthy investors.
Cynics would point to the fact that Fukuda took personal credit for the US$55m Glow With Gold promotional campaign launched in 2001 to improve the image of the precious metal. Gold Fields Minerals Services' estimates, recently published, show there was the biggest drop in gold jewellery demand on record last year. So much for Glow With Gold. Of course there were extenuating circumstances, not the least September 11 coming just before the peak buying season in the US. But one can't help wondering if the Council members are as keen as they first appeared to be about the campaign. After all, membership fees doubled to US$2 an ounce of gold produced to help pay for it. Some members had so much faith in the Council's effort that they set up a separate Gold Marketing Initiative, aimed at raising about US$200m a year to promote jewellery sales. That Initiative came out of the blue in November and it cannot have pleased Fukuda.
There is some speculation that Fukuda's departure might have something to do with the appointment of a new Council chairman. Thompson is going non-executive at the Gold Fields and will have more time to give to the Council than Anglo's Bobby Godsell, who has had much else on his plate during his last year in office as chairman of the Gold Council. In this context, it is worth considering just how amiable recent Council meetings have been with Godsell and Wayne Murdy of Newmont in the same room after all the brickbats hurled during the battle between their companies for control of Normandy.
That has been another of the big problems with the Council. The members, as you might expect of captains of the industry, tend to have substantial egos. They like to get their own ways. So they cannot be expected to reach agreement easily when trying to decide what the Council should be focusing on. To take just one example, the membership includes both passionate hedgers and anti-hedgers.
These captains of the industry decided to bring in an outsider, one unconnected with the gold industry, before appointing Fukuda. They also wanted someone to raise the profile of the Council and for the new chief executive to be more of a figurehead. The upshot, as one observer told me, "was that she has spent the past three years hand bagging them." (Hand bagging is a term invented during the Margaret Thatcher era in Britain because she had the reputation for bashing her cabinet ministers into submission with this useful accessory.)
Fukuda has certainly been sure of herself and one complaint from the City – analysts and London Bullion Market people in London – is that she never asked them for advice.
Only one thing seems clear: Chris Thompson will have to take the reigns at the Council for most of this year. Firstly, the "What should the Gold Council Be Doing?" inquiry has to be finished by the consultant, Bain & Co (the Johannesburg office is involved rather than one in London). The result should be with members by the end of July. The debate should be fun but, with so many different and hard-held opinions, it will take some time for a compromise between the members to be reached. Judging by what Miningweb has been told by some of those who have taken part in Bain's questioning exercise, the Council is unlikely to survive in its present form. Thompson said in his farewell to Fukukda statement: "The Council will soon be entering a new phase in its existence and is looking to restructure and remodel itself."
In the normal course of events an organisation would wait until the new strategy had been decided before finding a chief executive (or possibly chief executives) to implement it. But then, the Gold Council, to say the least, is not a normal organisation.
mips1.net |
