On her fourth day of testimony, the co-chairman of Merrill Lynch Investment Managers revealed that she told Anglo-Dutch consumer goods giant Unilever about the removal of its pension fund manager Alistair Lennard 24 hours before he was informed.
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Carol Galley, known in city circles as the Ice Queen, told London’s High Court that she had coolly informed Unilever’s chief investment officer, Wendy Mayall, in May 1997 that Lennard was to be axed from his position, just three months after a review of his performance was initiated in February.
On 13 May, Lennard even attended a high level meeting with Unilever and was the only person present unaware of his fate.
The £130m (US$190m) negligence claim bought by Unilever against Merrill’s UK fund unit, formerly Mercury Asset Management, hinges on whether the money manager was negligent while running a portion of the company’s Superannuation Fund, worth more than £600m, between in 1997 and early 1998.
Unilever alleges that the funds were 8% lower than a mutually agreed performance benchmark, and that the relatively inexperienced “wildcard” Lennard was taking excessive risks in his management of the fund.
Merrill meanwhile argues that that benchmark was a goal, and not a guarantee. Galley acknowledged that Lennard’s portfolios were “at the top end of our agreed risk range”, but blamed market changes for the underperformance of Unilever’s funds.
Representing Unilever, Jonathan Sumption QC suggested to Galley that she removed Lennard in a bid to retain the confidence of the company, a reason that she allegedly later gave to Lennard himself.
