WHEN RHODRI Talfan Davies takes his leave as Director of BBC Wales in the years ahead, will he once again follow in his father’s footsteps?
It’s become the practice of departing Directors to take up one of the best paid part-time jobs in Wales — a directorship in Glas Cymru.
Glas Cymru owns Welsh Water and claims to be a “not-for-profit” business with customers as its “sole” concern.
But a forthcoming Rebecca Television investigation will claim consumers have been cheated of £100 million.
It’s the board of directors who really benefit.
When Geraint Talfan Davies left BBC Wales in 1999, he helped set up Glas Cymru — and soaked up more than £450,000 in fees in his decade with the company.
He was still there when his friend Menna Richards, who succeeded him as BBC Wales Director, was appointed to the Glas Cymru board in November 2010.
She currently gets £57,000 a year for her part-time role.
Talfan Davies and Richards are part of the tight-knit group which controls Welsh broadcasting.
Rebecca Television continues its investigation of this media clique — and asks if the axing of a controversial series in the late 1990s was part of a strategy to secure the succession at BBC Wales …
WHEN GERAINT Talfan Davies left the BBC at the end of 1999 he was only 56 years old.
“I have always been clear that I wanted to retire from the BBC while I still have the energy and the appetite to pursue new avenues,” he said at the time.
Within months he’d been recruited to become the Welsh face of a dramatic take-over of the Welsh water industry.
At the time, Welsh Water had swallowed South Wales Electricity and become Hyder plc.
THE MAN FROM UNCLE
A MEMBER of the powerful Talfan Davies clan, the former head of BBC Wales became one of the highest paid non-executives in Welsh corporate history when he joined the board of Glas Cymru, the company that owns Welsh Water. He was later joined by Menna Richards, the friend who succeeded him at BBC Wales. It was his son, Rhodri, who took over BBC Wales after Menna Richards departed — a saga explored in the Rebecca Television article The Son Of The Man From Uncle. Photo: Seren Books
But the two privatised utilities made huge profits and in 1997 the new Labour government hit Hyder with a massive combined £282 million “windfall tax” on its excess electricity and water profits.
The water regulator Ofwat, stung by accusations that it had been too lenient on the sector, also waded in with what looked like draconian new price caps.
This “double whammy” left Hyder sinking under a wave of debt.
Its share price sank and predators closed in.
It came down to a battle between the Japanese investment bank Nomura and the US power conglomerate Western Power Distribution.
The Americans won.
But they only wanted the electricity business — and quickly agreed to sell Welsh Water to a new company called Glas Cymru.
Glas Cymru, a company limited by guarantee, agreed to take over Welsh Water’s massive debt burden.
It did so by borrowing the money from the bond market.
The idea was the brainchild of two senior executives who worked for Welsh Water — former merchant banker Nigel Annett and ex-Treasury official Chris Jones.
They brought in former Treasury Permanent Secretary Terry Burns to chair the outfit.
And Geraint Talfan Davies was recruited to become the Welsh face of the enterprise.
Glas Cymru has always presented itself as a people’s company — with no shareholders, it claims, “our only purpose is to deliver the best outcomes for our customers.”
It points to £150 million worth of “customer dividends” — £139 for every customer — paid out since 2001.
(However, a forthcoming Rebecca Television investigation will reveal that consumers should have done far better.
An article entitled The Great Welsh Water Robbery argues that consumers have been cheated of £100 million in the last four years alone.
The final tally could run into hundreds of millions of pounds.
See the note at the end of this article.)
While Welsh Water’s more than one million domestic customers have been short-changed, the directors have done exceedingly well.
By the time he resigned as a part-time non-executive director in March 2011, Geraint Talfan Davies was earning £54,000 a year.
In the ten years he was on the board, his total haul from the company was £452,500.
Unlike Geraint Talfan Davies, Menna Richards was appointed a non-executive director at Glas Cymru while she was still Director of BBC Wales.
She took up the Glas Cymru role in November 2010 — two weeks after she announced her intention to leave BBC Wales.
She didn’t leave the Corporation until February 2011.
Her appointment is understood to have caused concern at the BBC.
MENNA RICHARDS has taken the two-step — BBC Wales to Glas Cymru — routine pioneered by her friend and mentor Geraint Talfan Davies and given it another twist. She’s turned it into a conga by also becoming a non-executive director of the Principality Building Society — following in the footsteps of Glas Cymru chief executive Chris Jones. The post adds another £45,000 a year to her annual bank balance and increases her clout as one of the “great and the good” of Welsh public life.
In its accounts, Glas Cymru states that Menna Richards did not receive any fees until 1 March 2011.
This was after she had finally left BBC Wales.
She’s already one of the most trusted non-executive directors on the Glas Cymru board — for six months in 2013 she was the acting senior non-executive director at an annual rate of £67,500.
By March 2014 she had received total fees of £177,750.
WE ASKED Glas Cymru to explain the high levels of fees it awards non-executive directors.
Compared to a company like Cardiff-based Admiral Insurance, a successful business operating in one of the most competitive markets in British capitalism, Glas Cymru’s fees appear excessive.
With a turnover of £2.2 billion, Admiral has to fight for every customer‚ unlike Welsh Water whose £717 million income in 2013 came almost entirely from captive customers paying fixed prices.
Back in 2001, a Glas Cymru press release was clear — Welsh Water “… a monopoly providing an essential public service, is a very low risk business.”
Admiral made a pre-tax profit of nearly £350 million in 2012 — but still managed to pay two of its non-executive directors less than Menna Richards.
It took three rounds of questions before Glas Cymru finally came up with a justification for the pay of non-executive directors:
“Regardless of our ‘not-for-profit’ model, we must attract the highest calibre of directors to ensure that the company continues to perform to the highest levels,” a spokesman said.
“Our business provides essential public services and so is heavily regulated by numerous independent bodies, which means we need a high quality board which can provide a credible commitment to good governance for our regulators and bond investors.”
It said that non-executive fees are “reviewed annually” with independent advice from outside consultants.
And it added that the “members” of Glas Cymru — the 59 people appointed to act as the owners of the company — “vote annually on directors’ remuneration.”
The need to attract the “highest calibre” people to run the board doesn’t seem to apply to the “members” who actually control the company.
They’re paid nothing.
THERE’S ANOTHER UK business which is directly comparable to Glas Cymru — Scottish Water, owned by the Scottish Government.
Water was never privatised in Scotland.
Scottish Water, the result of the merger of three local authorities in 2002, is much bigger than Welsh Water.
Its revenue of £1.1 billion outstrips Glas Cymru’s £717 million.
So you might expect its non-executive directors to be paid more.
Not a bit of it.
Scottish Water’s non-executive salaries are decided by First Minister Alex Salmond and his cabinet.
The average basic fee for a non-executive director in 2013 was £22,000.
That’s less than half of the £57,000 Menna Richards currently receives at Glas Cymru.
And Scottish Water doesn’t seem to have any trouble finding “high calibre” people to take these jobs.
After Menna Richards took up the Glas Cymru post, the Western Mail newspaper published a letter from a Glynneath reader called Jack Kearns:
“She follows Geraint Talfan Davies who preceded her as controller of BBC Wales,” he wrote, “so could it be whoever replaces Menna Richards will be assured of a long and high-salary future with BBC Wales and then Welsh Water?”
THE SON OF THE MAM FROM UNCLE
THERE’S ALREADY speculation that the current BBC Wales Director, Rhodri Talfan Davies, will follow in the footsteps of both his father and Menna Richards and join the board of Glas Cymru in the years to come. We asked him if this was on the cards — he did not reply.
Photo: BBC Wales
Kearns’ letter was published before it was announced that Rhodri Talfan Davies would replace Menna Richards as BBC Wales Director.
We asked Rhodri Talfan Davies if he had any plans to follow his father onto the Glas Cymru board.
This was one of a raft of questions we put to the BBC Wales press office on June 2.
No answers were forthcoming.
We emailed Geraint Talfan Davies for a response.
We also asked Menna Richards to comment.
Neither replied by the time this article was posted.
THE TALFAN Davies clan aren’t the only family to have prospered at the BBC.
Relatives of Menna Richards have also done well.
In the period she was Director of BBC Wales, her sister Ceri Wyn Richards won more than a million pounds worth of commissions from the broadcaster.
Ceri Wyn Richards is a former BBC Wales staffer who once held the post of Editor, Radio Cymru.
In the early 2000s she and her husband, producer Mark Jones, set up an independent company called Torpedo Limited.
For eight years the company waxed prosperous on the back of commissions from BBC Wales.
As a small company, Torpedo did not have to declare the salaries of its two directors in its annual accounts.
But its balance sheet was healthy — and the company, which was paid in advance by BBC Wales, always reported “cash in hand and at the bank” of between £100,000 and £260,000 throughout the decade.
For the first four years of her time as Director, the BBC did not declare Menna Richards’ interest in Torpedo or the amount of work the Corporation was awarding her sister’s company.
In 2005-06, however, the BBC’s annual report and accounts began listing the amount of work the company was being awarded.
The figures were surprisingly high:
— in 2005-06, Torpedo received £324,000 worth of work
— in 2006-07, the figure rose to £360,000
— in 2007-08, contracts dipped to £321,000
— in 2008-09, the amount declined to £147,000.
The reason the figure fell in that year was that there was a crisis at Torpedo at the end of 2008.
The marriage between Ceri Wyn Richards and Mark Jones hit the rocks — and the partnership that created Torpedo foundered.
In the four-year period 2005-9, the company earned £1,153,000 — making it one of the most successful Welsh broadcasting independents.
We asked BBC Wales for the figures for the period 2001 to 2004.
There was no response.
In December 2008 a new company, Parrog Limited, was registered at an address in Whitchurch, Cardiff.
This was the home of Menna Richards and her husband Patrick Hannan.
A widely respected BBC journalist, Hannan signed the documents which set up the company.
For the first six months of 2009, he was the sole director and holder of the company’s only share.
In June 2009, Ceri Wyn Richards also became a director of the company.
The following month, Patrick Hannan resigned.
(Diagnosed with cancer, he was to die in October 2009 at the age of 68).
In the summer of 2009, an anonymous letter was sent to national newspapers in London drawing attention to the links between Menna Richards and her sister’s companies.
ON THE surface, the Parrog affair caused hardly any ripples at the BBC. Behind the scenes, however, there were reports of considerable unease in London about the Director’s close ties with the company. Some observers believe the issue may have played a part in Menna Richards’ ultimate decision to leave the Corporation in 2010…
It also pointed out that Menna Richards’ husband was a director of Parrog and that the company’s registered office was their home.
In August 2009 Jenny Rathbone, a Labour Parliamentary candidate for one of the Cardiff constituencies, learnt of the allegations.
Rathbone, a former producer of the BBC 2 Money Programme and a Labour councillor in the London borough of Islington, wrote to BBC Trust chairman Sir Michael Lyons.
Four days later, he wrote back to say the matter was an “operational” issue — he’d passed her letter on to deputy Director-General Mark Byford.
The next day Rathbone received a reply from the BBC’s Chief Operating Officer, Caroline Thomson.
“I can reassure you that Menna Richards has declared all business relationships between the BBC and members of her family in line with … stringent conflict of interest policies.”
“I am satisfied that she has had no involvement in the management of either Torpedo Ltd or Parrog Ltd, and has no role in the commissioning of any independent production companies.
Thomson added that the “BBC will be responding to your letter more fully in due course.”
Rathbone — currently a Labour member of the National Assembly in Cardiff — doesn’t remember receiving a second letter.
The BBC’s accounts for the year 2009-2010 carried no declaration from Menna Richards — who served throughout the year — about the value of any commissions obtained by Parrog.
In November 2010 Menna Richards announced that she was stepping down as Director and eventually left in February 2011.
Again, the BBC accounts for 2010-2011 did not include a declaration of her connection with Parrog.
Parrog’s own accounts indicate that, in the four years between 2009 and 2013, the amount of work does not seem to have reached the levels Torpedo achieved.
The company’s cash balances ranged from £67,000 to £100,000.
We asked BBC Wales for details of commissions the company received from the Corporation.
Once again, the press office failed to provide a response.
THE PROFESSIONAL relationship between Menna Richards and Geraint Talfan Davies began at HTV Wales in the 1980s.
After eight years at BBC Wales, Menna Richards moved to HTV Wales in 1983 to become a journalist and presenter on the Welsh language current affairs programme Y Byd Ar Bedwar.
At the time Geraint Talfan Davies was HTV Wales’ Assistant Controller of Programmes.
His uncle Sir Alun Talfan Davies was coming to the end of his term as chairman of HTV’s Welsh board.
Menna Richards’ managerial career did not begin until Geraint Talfan Davies had left HTV.
In 1987 Talfan Davies moved to Newcastle to take up the post of Director of Programmes at Tyne Tees TV.
By 1990, he was back in Cardiff 1990 as Director — at the time the title was Controller — of BBC Wales.
A year later Menna Richards began to climb the managerial ladder at HTV Wales.
First she was appointed Controller of Factual and General programmes, then in 1993 she became Director of Programmes.
By the mid 1990s she was emerging as a powerful figure in Welsh broadcasting — and a potential successor to Geraint Talfan Davies as head of BBC Wales.
In 1996 there was a revealing internal argument at HTV Wales which suggests she may have begun positioning herself as a candidate for the top job at BBC Wales.
Bruce Kennedy, a former editor of the channel’s Wales This Week current affairs series, was in charge of commissioning programmes from the independent sector.
He decided to make a series about the scandal-torn Welsh Development Agency (WDA) to coincide with its 21st anniversary in 1997.
From 1988 to 1993, the Agency’s chairman had been the charismatic but controversial self-made businessman, Dr Gwyn Jones.
In the late 1980s Jones outflanked the traditional Welsh establishment by persuading Welsh Secretary Peter Walker to appoint him to head the Agency.
Within months, he increased the number of days he was working from two and a half to four days a week.
He became a favourite of Margaret Thatcher — when she made one of her few visits to Wales in 1989, she extolled Jones’ virtues:
“I just want to say what a marvellous chap they’ve got at the Welsh Development Agency.”
DR GWYN JONES
WHEN THE self-proclaimed millionaire was appointed chairman of the Welsh Development Agency in 1988, he was in need of some hard cash. He persuaded the Agency to buy his Jaguar for £26,000 and later lied to Parliament about the reasons why it was a good deal for the quango. In the 2000s his career declined — he’s now Director of Essex University’s Business School.
Photo: Essex University
By 1992, he had been appointed the BBC’s National Governor for Wales.
He also used the patronage of senior Tories as a springboard to more powerful posts.
One of his contacts was the merchant banker and freemason Sir Michael Richardson, a personal friend of Margaret Thatcher.
Vice-chairman of the powerful N M Rothschild merchant bank, Richardson secured Jones a series of profitable directorships.
In 1992 Jones also became a director of Tesco — and stayed until 1998.
But as he was beginning his rise through the ranks of corporate Britain, turmoil erupted at the WDA.
Jones’ abrasive style provoked conflict with senior staff — one was paid off with a controversial payoff.
He also made jaw-dropping appointments — one of them a conman who Jones hired as the agency’s marketing director without checking his CV.
The crook was later gaoled.
There were also scandals about unauthorised perks and Jones was accused of obtaining an Agency grant for one scheme and then using it for another.
In December 1992 the House of Commons Public Accounts Committee (PAC) called in Jones and other officials.
Days before the hearing, Jones announced he would leave the Agency in 1993.
The PAC report was damning of the Agency and its political masters at the Welsh Office — it was:
“.. unacceptable that the Welsh Office took no action against anyone in the top echelons of the Agency who presided over a catalogue of serious and inexcusable breaches of expected standards …”
It was this back story which persuaded Bruce Kennedy that a series about the history of the Agency would be a worthwhile project.
He asked Paddy French, then an independent TV producer and currently the editor of Rebecca Television, to carry out the research.
At the time, French did not realise the series would itself become a pawn in a political intrigue …
THE RESEARCH for the series began at the end of 1995.
French spent several weeks going through the history of the WDA.
Concerned that the series would be stale and academic, he felt it needed a dramatic revelation to bring it alive.
He decided that the most promising line of attack lay in the curious affair of Dr Jones’ Jaguar.
The WDA had authorised a dealer to buy the Jaguar off Jones in March 1989 for £26,000 — the market rate.
The Agency then signed a new lease with the dealer for the Jaguar to become the chairman’s car.
All costs were paid by the Agency.
Jones insisted the deal was a good one for the WDA.
When the Public Affairs Committee grilled him about it, in 1996, he made a remarkable claim.
He insisted that it was cheaper for the Agency to buy the car than to continue paying him mileage.
He told the Committee:
” … when it became clear how many days and how much travel I was doing — and that was working out something like 60,000 miles a year, which I have maintained for the period of my chairmanship — in a discussion it was put to me that it would be financially beneficial to the Agency if I went on to a different car scheme.”
Committee member Alan Williams, MP for Swansea West, was not persuaded:
“Really, it was an act of generosity on your part to the WDA rather than the other way around. Is that it?”
THE LABOUR MP for Swansea West didn’t believe Dr Gwyn Jones was telling the truth when the WDA chairman appeared before the Public Accounts Committee in 1992. Photo: PA
“The arithmetic was such that it would be a lesser cost to the Agency than paying me for 60,000 miles per year at 34.4 pence a mile.”
French was also sceptical.
“Actually, Jones’ arithmetic completely undermined his own argument,” he said.
“He was claiming he travelled 60,000 miles a year on Agency business.”
“Given the quality of the road system in Wales, the average speed can’t have been more than 50 miles an hour.”
“Divide 60,000 by 50 miles an hour and you get 1,200 hours behind the wheel.”
“Assume a 7 hour day and Jones would have been on the road for 171 days a year — at a time when he was only paid for two and a half days a week.”
“It was a commonly held view in Wales at the time,” noted French, “that this level of mileage was physically impossible.”
“I felt that Jones’ claim was a serious hostage to fortune.”
“If the Jaguar could be located, its records were likely to show that he had lied to Parliament — a very serious offence.”
IT TOOK several months to track down the Jaguar.
It had been bought by a relative of BBC presenter Vincent Kane.
The service log showed that in June 1989 — three months after Jones sold it — the Jaguar had only 14,267 miles on the clock.
“The evidence was overwhelming — Jones had lied to Parliament,” said French.
“This was the dramatic revelation the HTV series needed to bring it bang up to date.”
In July 1996 filming started — until a dramatic call from Cardiff intervened.
“The film crew, Bruce Kennedy and I were having lunch in a pub in London when Menna Richards rang,” French remembers.
“Menna asked Bruce Kennedy what was going on and he told her that shooting had started on the series.”
“She told him that filming was to stop — he was to return to Cardiff immediately.”
Shortly afterwards, the new chairman of the WDA, David Rowe-Beddoe, asked to meet the team responsible for the series.
It took place in Rowe-Beddoe’s office at the WDA’s HQ in Cardiff and was attended by Kennedy, French and HTV’s head of news and current affairs, Elis Owen.
ANOTHER BUSINESSMAN who supported the Tories, David Rowe-Beddoe — seen here at the official opening of the Wales Millennium Centre — took over from Dr Gwyn Jones as WDA chairman. He was opposed to HTV Wales broadcasting a series about the troubled history of the Agency. Photo: PA
Rowe-Beddoe tried to persuade them the series should not be made.
The three journalists insisted the programmes were in the public interest.
The next day Bruce Kennedy met with Menna Richards.
Richards said she wasn’t persuaded the series was editorially sound.
There was, she said, nothing new in it, it was boring and she even had her doubts about the Jaguar story.
In a memo written a week later, Kennedy said he was “surprised” and “unprepared” at her tone.
“I am concerned at the growing suggestion that in some way we (notably me) are trying to keep you ignorant of the true nature of the WDA programme.”
“There seems to be a suggestion that the research is not up to the standard required to substantiate some of the points we are making.”
“All I can say is that the research I’ve seen Paddy French conduct is second to none.”
“I think the research Elis and I have conducted must stand for you to judge.”
Five days after this memo was sent, Menna Richards axed the series.
No attempt was made to use the new material about the Jaguar in any other programme.
Bruce Kennedy has never believed that censorship was the reason for Menna Richards’ decision.
For him, it was simply a difference of editorial opinions.
He left HTV Wales shortly afterwards.
French, though, was not convinced that it was just a matter of editorial judgement.
“There are two reasons why I felt outside factors may have played a part,” he said.
“The first is that I believe that Menna Richards was building up a formidable CV as a candidate to take over as Controller of BBC Wales from Geraint Talfan Davies.”
“The only glaring gap in her CV was that senior BBC executives are expected to have had wider experience than just broadcasting.”
“Up to that point, Menna Richards’ career was entirely in broadcasting.”
“She needed a stint as a director of another, unrelated public body.”
“And to land such an appointment, she needed the support of the business establishment, including people like David Rowe-Beddoe.”
“A programme critical of the WDA was likely to antagonise that community.”
(The gap in her CV was later plugged when she was appointed a director of the Cardiff Bay Development Corporation, serving until the quango was wound up in 2000.)
“The second reason was that Gwyn Jones was still the BBC’s National Governor for Wales.”
“It would have been obvious to Menna Richards that the Corporation would prefer to avoid the embarrassment of a programme that exposed its National Governor for Wales as a man who had lied to Parliament.”
We asked Menna Richards to comment.
She didn’t reply.
But that was far from the end of the story.
Within months of the decision to axe the WDA series, Menna Richards abruptly reversed her decision — and cleared the decks for an HTV broadside against Dr Jones.
IN THE autumn of 1996 it was widely assumed Dr Gwyn Jones would not seek another term as National Governor for Wales.
His reputation had been damaged by the Public Accounts Committee and it was assumed he would move on to pastures new when his term ended in December.
However, Jones began to indicate that he thought differently.
The position of National Governor for Wales gave him a seat on the BBC’s UK Board of Governors and was an immensely influential platform.
Word began to circulate in Cardiff that he was canvassing for a second term.
“This really put the cat among the pigeons,” recalls French.
“A second term for Jones would have been a serious blow to Menna Richards’ chances of becoming BBC Wales Controller.”
“HTV had made several highly critical programmes about his chairmanship of the WDA and there was a danger he would not support Menna Richards.”
Inside BBC Wales Jones was not popular among many senior executives and journalists.
In one Broadcasting Council for Wales meeting he had openly attacked the Corporation’s own Week In Week Out series over a programme critical of a WDA land deal.
Many felt this was an attempt to intimidate programme-makers.
Behind the scenes, a secret campaign began to de-rail his campaign.
Part of this campaign was the resurrection of the Jaguar story.
“Out of the blue, HTV Wales suddenly decided that it was time to prepare a profile of the man now seeking a second term at BBC Wales,” said Paddy French.
“It was decided the channel’s current affairs strand, Wales This Week, would rush out a programme — the core of which was the allegation that Jones lied to Parliament over the Jaguar affair.”
“An issue which Menna Richards decided wasn’t newsworthy back in July, was now a matter of vital public interest,” added French.
MENNA RICHARDS, OBE
WITHIN MONTHS of deciding that a series about the WDA should be axed, Menna Richards authorised an emergency Wales This Week programme about the controversial career of Dr Gwyn Jones’ time at the Agency. At its heart, his lies to Parliament about the controversial sale of his Jaguar …
Menna Richards kept a close eye on the programme — she asked to see a rough version several days before screening.
Jones heard about the programme and wrote to HTV Group chairman, Louis Sherwood, in early December.
Jones pointed out that the last time Wales This Week examined his stewardship of the Agency, he’d had to instruct the libel lawyer Peter Carter Ruck.
The programme went ahead.
The schedule was so tight that the commentary wasn’t laid down until minutes before transmission.
“It was a fraught session,” recalls French, who’d been brought in to help with the production.
“Elis Owen, head of news and current affairs, was in charge — and HTV had a libel barrister on hand to make sure the script was safe.”
The programme was broadcast two weeks before Christmas 1996.
“By then the Welsh establishment had made sure the corridors of power in London were informed about what was coming,” said Paddy French.
“Dr Gwyn Jones — who could also see which way the wind was blowing — decided not to seek a second term as Governor.”
THE REST is history.
Geraint Talfan Davies left BBC Wales at the end of 1999.
With a Labour government in power, and the Tory grip on the Welsh establishment broken, Menna Richards slipped effortlessly into his shoes…
1 The Rebecca Television investigation into Glas Cymru, the company that owns Welsh Water, was published as The Great Welsh Water Robbery. It argues customers have seen few benefits while some of the executives who actually control the business have become millionaires …
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