City & Corporate: When to bow out and when to stay

When is it right to resign an account?

Years ago at FD we acted for a company called Amber Day where the boss - a little-known businessman called Philip Green - had been ousted and a new management team assembled. Story after story appeared in The Sunday Times about developments at the company, all correct and none on which we had been briefed.

One Friday the paper's Jeff Randall, a close confidant of Green's, rang me and said: 'Nick, we're running a story this weekend that you've resigned the account.' 'But we haven't,' I said. 'Well, you flippin' well should,' he replied, 'because I know more about what's going on there than you do.'

So I did resign and in truth we had been badly misled by our client. But I got a more-in-sorrow-than-in-anger-call from Sir Laurie Magnus, then the company's adviser at investment bank Montagu, who said: 'It's a shame you chose to bow out when the company is in such a mess.'

Fast forward to Sibir Energy, which we have represented for five years. The oil and gas company saw share prices collapse and investor dismay as it announced it was buying hotels and office buildings to bail out one of its major (Russian) shareholders. Then further consternation ... the monies involved were far higher than announced, there were (unproven) allegations of fraud and shares were suspended until further notice. The Telegraph and the FT asked me whether we should resign the account.

So I called Sibir's lead financial adviser, the redoubtable Richard Fenhalls of Strand Partners. His strongly expressed view was that the advisers should stick around and act for the interests of the minority shareholders rather than head for the exit.

A few days ago it was announced Gazprom Neft had agreed to buy out the minorities for 500p (shares had been suspended at 174p). Fenhalls and the new Sibir chief executive officer Stuard Detmer have played a blinder and shareholders are over the moon.

Did we do the right thing by not resigning? Your call, dear reader.

- Nick Miles is co-founder of M: Communications

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