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Last Updated: Wednesday, 9 June, 2004, 09:28 GMT 10:28 UK
The men who broke Marconi
Marconi was once the jewel in the crown of British manufacturing. But disastrous investments have seen some of the worst losses in UK corporate history - over 5bn. The Money Programme investigates how a cautious company with billions in the bank set off on a rollercoaster ride to ruin.

Marconi was once Britain's biggest and best known manufacturing concern. Until last year it was cheered by the City and its shares soared in value. Today Marconi has become notorious as one of the worst disasters of British corporate history.

Money Programme reporter Michael Robinson set out on the trail of the men who broke Marconi. He found out how a cautious company with billions stashed away in the bank against rainy days - the sort of company whose shares were safely bought for widows and orphans - was transformed into the heavily-indebted, high risk, rollercoaster ride to ruin Marconi became.

City greed

On his journey, he learns how City greed for deals in the booming 1990s encouraged Lord Simpson and John Mayo down their fateful path. As the dotcom bubble boomed at the end of the 1990's, he investigates how Marconi risked it all on precarious new technology investments. But as the storm clouds gathered over the telecom sector, and profits plunged, the nightmare for Marconi began.

Finally, Michael Robinson sets our to ask Simpson and Mayo whether they believe, after the catastrophe over which they presided, they deserve the huge payoffs they demanded and got from the company they brought so low.

huge losses

Monday September 3rd 2001 was a dark day for Marconi's shareholders and employees. On that day, after months of reassurance that things would get better, Marconi's Chief Executive, Lord Simpson, was forced to admit that Marconi had lost hundreds of millions of pounds in just three months and that thousands of jobs would have to go.

Until two years ago, Marconi was called GEC. Former GEC deputy chairman Sir Ronald Grierson told "The Money Programme": "As destruction's of share holder value go, I cannot think of another case that even approaches this in dreadfulness."

George Simpson was one of New Labour's favourite industrialists, raised to the peerage in 1997 by the incoming Tony Blair. Now Lord Simpson resigned in disgrace. Marconi's Chairman Sir Roger Hurn - famous in the City as head of the Prudential insurance giant - also left. Marconi's self-confident finance Director, City high-flyer John Mayo, had already departed a month before.

investor shock

Marconi's shareholders were aghast. Just a year earlier their shares had been worth over 12 apiece. Now they were falling fast, at one stage losing nearly 99% of their former value. But for angry shareholders who demanded an explanation, no answers were forthcoming from the men who presided over Marconi's decline. Having left the company, they went to ground.

Marconi's new managers have promised to pay back some of the vast debt Simpson and Mayo's catastrophic gamble created.

They have until March to meet their bankers' demands. They've made a modest start, but it's a daunting task - made far more so by the looming world recession.

For Britain's once proudest manufacturing company the future is now in the balance.

This programme was first transmitted on Wednesday 14th November 2001.

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