The Observer: A new conflict in an old rivalry

Oliver Morgan

Sunday April 25, 2004

Business relations with the Dutch have long been fraught, and occasionally rather bloody

Commercial relations between Britain and Holland have never been entirely cordial. While British investors had to wait for 1718 to lose their shirts in London's first stock market bubble, the Dutch had perfected the genre a century earlier in the form of Tulipmania, which sucked in many a gullible English speculator.

Things went from bad to worse. Amid all the bloodshed of religious conflicts and wars of succession in seventeenth and eighteenth century Europe, the Continent's two leading traders came up with an entirely new reason to kill each other. The three Anglo-Dutch wars, fought in the reign of Charles II for dominance of the seas, can lay claim to be the first truly commercial conflict in modern history.

Things have progressed less than smoothly. True, the Dutch helped out when British Whigs required a non-Catholic King to replace Charles's brother, James II, lending them William of Orange. But his heirs are now among the lethargic Netherlander shareholders in Royal Dutch Petroleum Co, currently blamed by their English counterparts for failing to demand a shake-up at the Hague end of the crisis-wracked oil group.

The 97-year old joint venture is not the only example of North Sea froideur. There was a loud gnashing of teeth a year ago, when plans hatched by the UK board of Corus (formed by the 1999 merger of British Steel and Dutch Hoogovens) to sell the company's aluminium business were vetoed by the supervisory board in Holland.

The Dutch had never trusted the British, believing their efficient Ijmuiden plant supported the whole group while UK executives called the shots. The veto changed all that. The Dutch thought the British were selling the aluminium interest to prop up their inefficient loss-making plants.

The British could not believe they were being vetoed and chairman Sir Brian Moffatt confessed at the time to not realising that the Dutch chairman, Leo Berndsen, had the power to do it.

Berndsen, incidentally, is a former chairman of P&O Nedlloyd, a joint venture formed in 1996 that has not always gone swimmingly.

Tempers have worn thin elsewhere. At publisher Reed Elsevier, there was warfare throughout the Nineties between the UK and Dutch directors, each of whom had their own top man. In 1999 one of the company's heads was lopped off, a single CEO (the Briton, Crispin Davis) appointed, and a unified structure created that has seen performance improve.

Problems are not simply the result of atavistic commercial rivalry. Modern corporate governance requires clearer accountability, more unified and less cumbersome management structures and reconciliation of the European 'consensus' culture with the value-driven Anglo Saxon one. There is willingness to admit this, but less agreement on how fast to proceed.

Shell's current boss (or one of them), Jeroen Van der Veer, admits there is a need for change. As a director of Unilever, he should know. As Shell's discomfort has been played out in public, investors in the consumer brands group cheered to the rafters the company's move to a unitary structure, driven through by departed chairman Niall Fitzgerald.

Van der Veer agrees that Shell has lessons to learn from Unilever, although he maintains that the companies are not similar. This seems to be code for 'wait a year and we will report back'.

But there remain examples that demonstrate a lack of common ground between the British and the Dutch. British Airways and KLM discussed a merger that would have created a super-powerful global airline. But the Dutch said the British haughtily imposed unacceptable conditions. The Brits said the Dutch wanted a greater share than the value of KLM merited. The talks fell apart, and KLM is now in bed with Air France, having constructed a uniquely European holding company structure for the new company. And the reaction from London? 'Good riddance.' Some things will never change.

http://observer.guardian.co.uk/business/story/0,6903,1202516,00.html