Ernest Saunders
Encyclopedia
Ernest Walter Saunders (born 21 October 1935) is a former British
business manager, best known as one of the "Guinness Four"
, a group of businessmen who attempted to fraudulently manipulate the share price of the Guinness
company. He was sentenced to five years' imprisonment, but released after 10 months as he was suffering with apparent Alzheimer's Disease
. Moments after leaving prison he fully recovered.
and moved to the United Kingdom
in 1938 when his parents emigrated to escape Nazi rule. He was educated at Emmanuel College, Cambridge
. He married Carole Ann Stephing in 1963, and has two sons and one daughter.
, Great Universal Stores
and Nestlé
before becoming Chief Executive of Guinness
plc (now a part of Diageo
plc) in 1981, remaining in the position until 1986. He was renowned for his ruthless cost-cutting efficiency, earning from his employees the sobriquet 'Deadly Ernest'.
Under his charge, early in 1986, Guinness plc launched a friendly takeover bid for Edinburgh-based United Distillers
plc, which was being stalked by a hostile bidder. This was effected by quietly boosting the Guinness share price. Subsequent to the bid, which resulted in success for Guinness, Saunders (along with Jack Lyons, Anthony Parnes
and Gerald Ronson
) was charged and convicted on 27 August 1990 of counts of conspiracy to contravene section 13(1)(a)(i) of the Prevention of Fraud (Investments) Act 1958, false accounting and theft, in relation to dishonest conduct in a share support operation (see Guinness share-trading fraud
). A series of appeals was finally dismissed in December 2002, although a ruling by the European Court of Human Rights
in Saunders v. the United Kingdom
declared that the defendants were denied a fair trial by being compelled to provide potentially self-incriminatory information to Department of Trade and Industry inspectors which was then used as primary evidence against them. This breached their right to silence.
While there was no suggestion that Saunders himself sought to or actually did profit from these offences in an immediate or direct manner, the allegation was that they were committed to increase the likelihood of their company's takeover bid succeeding. His board of directors at Guinness plc were not informed of, and had not sanctioned, his arrangements, which included indemnities for unknowable amounts. He had passed $100 million to the American Ivan Boesky
to invest shortly before Boesky's prosecution and imprisonment for insider trading
, and following that investigation Saunders' plans were revealed to the DTI in Britain.
, which is incurable. With full parole, Saunders was released from Ford Open Prison on 28 June 1991 having served only 10 months of his sentence.
A DTI report described him as a man who did "unjustifiable favours for friends and himself".
After release, he recovered from the symptoms which had led to the diagnosis. In an interview with The Times published in January 1992, Saunders said the symptoms were a result of a "cocktail of tranquilisers and sleeping tablets" he had been prescribed, and that he was making a good recovery. It is frequently asserted that Saunders procured his early release by pretending to have Alzheimer's; otherwise, he is the only known person to recover from the disease. Since then, Saunders has worked as a business consultant, including advising mobile phone retailer Carphone Warehouse from its early days until prior to its flotation. Charles Dunstone
, the Chief Executive of Carphone Warehouse, said: "We were young guys who didn’t know what we were doing. He made us think about the questions we ought to ask or the information we ought to look at."
He was later appointed chairman of the executive committee of a US-based multinational petrol credit-card company, Harpur-Gelco.
Saunders also acted as a consultant to Seed International Ltd, a company based in the Cayman Islands. Seed offered investments in a variety of fields including wine, property,oil and gas exploration through Ocean International Marketing, their sales subsidiary with offices in Rotterdam.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
business manager, best known as one of the "Guinness Four"
Guinness share-trading fraud
The Guinness share-trading fraud was a famous British business scandal of the 1980s. It involved an attempt to manipulate the stock market on a massive scale to inflate the price of Guinness shares and thereby assist a £2.7 billion take-over bid for the Scottish drinks company Distillers...
, a group of businessmen who attempted to fraudulently manipulate the share price of the Guinness
Guinness
Guinness is a popular Irish dry stout that originated in the brewery of Arthur Guinness at St. James's Gate, Dublin. Guinness is directly descended from the porter style that originated in London in the early 18th century and is one of the most successful beer brands worldwide, brewed in almost...
company. He was sentenced to five years' imprisonment, but released after 10 months as he was suffering with apparent Alzheimer's Disease
Alzheimer's disease
Alzheimer's disease also known in medical literature as Alzheimer disease is the most common form of dementia. There is no cure for the disease, which worsens as it progresses, and eventually leads to death...
. Moments after leaving prison he fully recovered.
Personal life
He was born Ernest Walter Schleyer in AustriaAustria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
and moved to the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
in 1938 when his parents emigrated to escape Nazi rule. He was educated at Emmanuel College, Cambridge
Emmanuel College, Cambridge
Emmanuel College is a constituent college of the University of Cambridge.The college was founded in 1584 by Sir Walter Mildmay on the site of a Dominican friary...
. He married Carole Ann Stephing in 1963, and has two sons and one daughter.
Professional life
He had a career in management with BeechamGlaxoSmithKline
GlaxoSmithKline plc is a global pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in London, United Kingdom...
, Great Universal Stores
GUS (retailer)
GUS plc was a FTSE 100 retailing group based in the United Kingdom. GUS is an abbreviation of Great Universal Stores, the company's former name before 2001...
and Nestlé
Nestlé
Nestlé S.A. is the world's largest food and nutrition company. Founded and headquartered in Vevey, Switzerland, Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri...
before becoming Chief Executive of Guinness
Guinness
Guinness is a popular Irish dry stout that originated in the brewery of Arthur Guinness at St. James's Gate, Dublin. Guinness is directly descended from the porter style that originated in London in the early 18th century and is one of the most successful beer brands worldwide, brewed in almost...
plc (now a part of Diageo
Diageo
Diageo plc is a global alcoholic beverages company headquartered in London, United Kingdom. It is the world's largest producer of spirits and a major producer of beer and wine....
plc) in 1981, remaining in the position until 1986. He was renowned for his ruthless cost-cutting efficiency, earning from his employees the sobriquet 'Deadly Ernest'.
Under his charge, early in 1986, Guinness plc launched a friendly takeover bid for Edinburgh-based United Distillers
United Distillers
United Distillers was a Scottish company formed in 1987 from combining the businesses of Distillers Company and Arthur Bell & Sons, both owned by Guinness. The company owned six Scotch whisky brands, which were relaunched as the Classic Malts range...
plc, which was being stalked by a hostile bidder. This was effected by quietly boosting the Guinness share price. Subsequent to the bid, which resulted in success for Guinness, Saunders (along with Jack Lyons, Anthony Parnes
Anthony Parnes
Anthony Keith Parnes is a millionaire stockbroker who was involved with Ernest Saunders, Gerald Ronson, and Jack Lyons in the Guinness share-trading fraud of the 1980s; they collectively became known as "the Guinness Four"....
and Gerald Ronson
Gerald Ronson
Gerald Maurice Ronson is a British business tycoon and philanthropist.-Career:Aged 15, Ronson left school and joined his father in the family furniture business, named Heron after his father Henry. The company expanded into other activities; in the mid-1960s Ronson brought the first self-service...
) was charged and convicted on 27 August 1990 of counts of conspiracy to contravene section 13(1)(a)(i) of the Prevention of Fraud (Investments) Act 1958, false accounting and theft, in relation to dishonest conduct in a share support operation (see Guinness share-trading fraud
Guinness share-trading fraud
The Guinness share-trading fraud was a famous British business scandal of the 1980s. It involved an attempt to manipulate the stock market on a massive scale to inflate the price of Guinness shares and thereby assist a £2.7 billion take-over bid for the Scottish drinks company Distillers...
). A series of appeals was finally dismissed in December 2002, although a ruling by the European Court of Human Rights
European Court of Human Rights
The European Court of Human Rights in Strasbourg is a supra-national court established by the European Convention on Human Rights and hears complaints that a contracting state has violated the human rights enshrined in the Convention and its protocols. Complaints can be brought by individuals or...
in Saunders v. the United Kingdom
Saunders v. the United Kingdom
Saunders v the United Kingdom was a legal case heard by the European Court of Human Rights regarding the right against self-incrimination and the presumption of innocence as included in the European Convention on Human Rights Article 6 paragraphs 1 and 2....
declared that the defendants were denied a fair trial by being compelled to provide potentially self-incriminatory information to Department of Trade and Industry inspectors which was then used as primary evidence against them. This breached their right to silence.
While there was no suggestion that Saunders himself sought to or actually did profit from these offences in an immediate or direct manner, the allegation was that they were committed to increase the likelihood of their company's takeover bid succeeding. His board of directors at Guinness plc were not informed of, and had not sanctioned, his arrangements, which included indemnities for unknowable amounts. He had passed $100 million to the American Ivan Boesky
Ivan Boesky
Ivan Frederick Boesky is an American stock trader who is notable for his prominent role in a Wall Street insider trading scandal that occurred in the United States in the mid-1980s.-Life and career:...
to invest shortly before Boesky's prosecution and imprisonment for insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
, and following that investigation Saunders' plans were revealed to the DTI in Britain.
Sentence and appeal
Saunders appealed against his sentence of five years in prison, and on 16 May 1991, the sentence was reduced to two and a half years. Lord Justice Neill said that he was satisfied that Saunders was suffering from pre-senile dementia associated with Alzheimer's diseaseAlzheimer's disease
Alzheimer's disease also known in medical literature as Alzheimer disease is the most common form of dementia. There is no cure for the disease, which worsens as it progresses, and eventually leads to death...
, which is incurable. With full parole, Saunders was released from Ford Open Prison on 28 June 1991 having served only 10 months of his sentence.
A DTI report described him as a man who did "unjustifiable favours for friends and himself".
After release, he recovered from the symptoms which had led to the diagnosis. In an interview with The Times published in January 1992, Saunders said the symptoms were a result of a "cocktail of tranquilisers and sleeping tablets" he had been prescribed, and that he was making a good recovery. It is frequently asserted that Saunders procured his early release by pretending to have Alzheimer's; otherwise, he is the only known person to recover from the disease. Since then, Saunders has worked as a business consultant, including advising mobile phone retailer Carphone Warehouse from its early days until prior to its flotation. Charles Dunstone
Charles Dunstone
Charles Dunstone is the CEO and co-founder, in 1989, of mobile phone retailer The Carphone Warehouse.-Education:...
, the Chief Executive of Carphone Warehouse, said: "We were young guys who didn’t know what we were doing. He made us think about the questions we ought to ask or the information we ought to look at."
He was later appointed chairman of the executive committee of a US-based multinational petrol credit-card company, Harpur-Gelco.
Saunders also acted as a consultant to Seed International Ltd, a company based in the Cayman Islands. Seed offered investments in a variety of fields including wine, property,oil and gas exploration through Ocean International Marketing, their sales subsidiary with offices in Rotterdam.
Further reading
- Nick Kochan and Hugh PymHugh PymHugh Pym is a British journalist and author. He is an instantly recognisable figure, standing at over two metres tall.-Early life and education:...
- The Guinness Affair: Anatomy of a Scandal (1987) ISBN 0-7470-2610-6 - Adrian Milne and James Long - Guinness Scandal: Biggest Story in the City's History (1990) ISBN 0-7181-3445-1
- James Saunders - Nightmare: Ernest Saunders and the Guinness Affair (Arrow Books, 1988) ISBN 0-09-974480-5
- Jonathan Guinness - Requiem for a Family Business (Macmillan 1997).
- "Life and high-flying times of four partners in crime", The ScotsmanThe ScotsmanThe Scotsman is a British newspaper, published in Edinburgh.As of August 2011 it had an audited circulation of 38,423, down from about 100,000 in the 1980s....
, 22 December 2001 - Guinness Four fail in fight for acquittal, BBC NewsBBC NewsBBC News is the department of the British Broadcasting Corporation responsible for the gathering and broadcasting of news and current affairs. The department is the world's largest broadcast news organisation and generates about 120 hours of radio and television output each day, as well as online...
, December 21, 2001. - Gerald Ronson and Jeffrey Robinson - Gerald Ronson - Leading from the Front: My Story: The Gerald Ronson Story (2009)