In the end, after a week when differences appeared intractable and
relationships seemed to have soured, a face-saving compromise was
hammered out. Camelot and the Government were suddenly looking like the
best of friends again.
In an exchange of fulsome letters between Camelot chairman Sir George
Russell and National Heritage Secretary Chris Smith, the latter lauded
the lottery operator for its ’outstanding’ performance.
The issue that had dominated the headlines - the substantial increase in
bonus payments to top executives (or ’fat cats’) at a time when lottery
turnover had fallen - was well and truly fudged. Although the fudge -
whereby the Camelot directors agreed to establish a joint fund from
their long-term bonuses without any obligation to reveal the size of
their contributions to said fund - certainly favours Camelot.
Last Friday’s accord was the product of some intensive behind-the-scenes
negotiation but the question is for how long had they been going on?
Were Labour’s ministerial sabre-rattling, and the Camelot directors’
ostensible brinkmanship in threatening resignation just public
posturing, while a deal was being settled behind closed doors?
One Camelot insider certainly hints that this was so. ’We are not as
surprised as many people that it’s turned out this way,’ he says,
’This was all about the politics of theatre. Wise heads within the
government have now decided they’ve got the best out of the situation
and that it’s time to take things forward.’
Others, however, dismiss the suggestion of a deal worked out long
beforehand.
One lobbyist who works in the area, suggests Camelot was so confident it
had squared things with the regulator Oflot that it failed to address
the likely reaction of the new Government. Certainly Camelot and its
array of PR advisers - The Communication Group, Brunswick, Harrison
Cowley - were caught off-guard by how the story leaked out.
’The way it came out was the worst possible scenario for Camelot in that
they weren’t able to put any gloss on the figures,’ says Express
consumer editor Paul Crosbie. ’I think they handled it appallingly.’
Once the figures were public, the Government, buoyed by its huge
majority and basking in public approbation, shamelessly milked the fat
cats publicity for all it was worth.
Camelot was a convenient target and Labour made sure it drew media fire
by briefing senior journalists about Tony Blair’s anger at the
directors’ greed and insensitivity.
The tabloids went to town on yet another fat cats story. There were even
signs in some of the reporting elsewhere, notably by the FT, that some
of the shareholder companies in Camelot were no longer singing from the
same song sheet and were in danger of falling out, although, now that
the dust has settled, a united front is being presented.
’Camelot has done a splendid job so yes we are happy with how it has
handled things,’ says Sarah Carmichael, PR director of Camelot
shareholder GTech. But how good a job did Camelot’s PR machine do? It
had done much to prepare the ground with the financial media in previous
months, with a mini-roadshow, introducing directors to City journalists,
organised by Brunswick and Camelot’s in-house team.
This does appear to have paid off with broadsheet City editors rushing
to Camelot’s defence. The message that the bonuses were in fact for the
previous year’s record results and that independent research had found
the UK lottery to be the most efficient in the world also filtered
through to the main news sections.
Yet coverage in the tabloids - the papers whose readers, as Labour well
understood, buy the majority of lottery tickets - was overwhelmingly
hostile.
What is impossible to know at this stage is how much damage the row has
caused the lottery in the long-term.
As for its relationship with the Government - it seems likely that
Camelot was saved more by Chris Smith’s miscalculation than its own
lobbying strategy.
One version of events has Minister without Portfolio Peter Mandelson
intervening and counselling compromise, fearing that Smith had painted
himself into a corner.
Whether he was involved or not, plainly Labour came to see that it had
gained the maximum capital it could out of the dispute. Not to have
given an inch would almost certainly have left Camelot’s senior
directors little option but to carry out their threat to resign.
Such an eventuality was not one Labour would have welcomed. It could
conceivably have sparked an exodus of top personnel from Camelot and
destabilised the National Lottery - an income source for public spending
Labour prizes every bit as much as the previous Government.
Moreover, as Camelot chief executive Tim Holley, communications director
David Rigg and finance director Peter Murphy all had their bonus
arrangements written into their original contracts - drawn up even
before Camelot secured the lottery franchise - they could conceivably
have launched legal action against the Government.
With Labour assiduously courting big business, a protracted and highly
prominent dispute with well-known businessmen was not a prospect which
Blair and his party managers would happily have countenanced.
Having hitherto made all the PR running, Labour decided there was more
to be gained from a swift conclusion to the affair. What will worry
public affairs practitioners elsewhere is the prospect that this is a
Government more concerned with playing to the masses than conducting a
sensible dialogue.
The evidence on this occasion is that neither side is a winner
