Basil Smallpeice
Sir Basil Smallpeice, was an English accountant and businessman, who served as a director of several companies, including the state-owned airline British Overseas Airways Corporation, the shipping company Cunard and the mining-based conglomerate Lonrho.
Smallpeice, as financial comptroller and later, managing director, was one of the board of BOAC who was instrumental in purchasing and introducing jet powered aircraft into passenger service. He was responsible for the purchase of the de Havilland Comet, the Boeing 707 and the Vickers VC10. His time at BOAC included the introduction of the Comet 1, the subsequent Comet disasters where metal fatigue caused the in-flight destruction of three aircraft, with a loss of 99 passengers and crew, the re-introduction of the Comet 4 and the inauguration of the first jet-powered transatlantic services in October 1958. He would later be instrumental in the purchase of the Boeing 707, which introduced the first by-pass turbofan engine, the Rolls-Royce Conway into passenger service. He left BOAC along with his chairman Matthew Slattery, over disagreements with the Government concerning financial support in return for purchasing the Vickers VC10.
He moved to Cunard as a director and then chairman, where he was responsible for radically altering the passenger and freight operations of the business; on the passenger side of the business, he cut massive losses by selling the Queen Mary and Queen Elizabeth liners, then oversaw the radical re-design of the replacement liner the Queen Elizabeth 2, which was under construction when he took up his position with Cunard. The changes he oversaw allowed the Queen Elizabeth 2 to become a profitable luxury liner for the company. His work on the freight size of the business included the containerisation of the business together with the amalgamation of smaller lines and the formation of joint ventures which would be needed to operate larger container ships. He was chairman of Cunard when the Atlantic Conveyor was ordered and launched as part of Cunard's contribution to the Atlantic Container Line joint-venture.
His final major business appointment was as a non-executive director of Lonhro, where soon after he took office, he uncovered illicit payments to Duncan Sandys and further impropriety undertaken by chief executive Tiny Rowland, who had committed company funds to projects without the agreement of the board and granted share options to other sympathetic board members. Smallpeice and seven fellow directors attempted to remove Rowlands from office on the grounds of his behaviour, but he managed to out-manoeuvre them by obtaining a temporary injunction preventing his removal. The Prime Minister Edward Heath considered Rowland's behaviour to be "the unacceptable face of capitalism" and despite support for Smallpeice and his fellow directors in the press and in the city, where they were dubbed "the straight eight", they all resigned at a subsequent extraordinary general meeting later in 1973.
Smallpeice also held a post as an administrative advisor to the household of Queen Elizabeth II. He became well known and trusted by the Queen as a result of his work with BOAC organising flights and aircraft for the royal family, including the flight which took Princess Elizabeth to Kenya at the end of January 1952 and returned her as Queen several days later.
Early life
Smallpeice was born in Rio de Janeiro, Brazil, on 18 September 1906. His father was Herbert Charles Smallpeice and his mother was Georgina Ruth Smallpeice. Herbert Smallpeice was a senior clerk with the London and River Plate Bank, a British bank which conducted business in South America. Basil contracted malaria whilst in South America and was returned to Britain.He was privately schooled whilst in Britain, initially at Hurstpierpoint College, then at Shrewsbury School, before joining Bullimore and Co., an accountancy firm based in London and Norwich, as an articled clerk. Smallpeice qualified as an accountant in 1930, and undertook the University of London Bachelor of Commerce degree whilst training.
Business career
Smallpeice was initially employed by The Hoover Company from 1931 to 1937 as an accountant and assistant secretary, before moving to Royal Doulton as their chief accountant and secretary, where he stayed until 1948. He served as acting managing director during World War II when Royal Doulton's managing director, retired Royal Navy officer Basil Green, returned to active service. Royal Doulton was covered by an essential work order and Smallpeice's role considered a reserved occupation, restricting him from active military service, though he was permitted to serve with the Home Guard. Basil Green's short return during the Phoney War of 1939 allowed Smallpeice to take up a position with HM Treasury, working with the Organisation and Methods Division, but Green was again recalled to active service when Germany invaded the Low Countries, with Smallpeice returning to Doulton's.He and like-minded accountants in the same position would spend much of their spare time during the war writing papers on accountancy, taxation and management, with one paper, entitled "The Future of Auditing" provoking a strong response amongst Institute of Chartered Accountants in England and Wales members when it was published in their journal, The Accountant in 1941. This would lead to the formation of the Taxation and Financial Relations Committee at the ICAEW in 1942, and Smallpeice would be one of the first members to join that committee. He would join the board of the Office Management Association prior to that.
Smallpeice, with support from E. H. Carr who was then assistant editor of The Times, promoted the idea of employers deducting income tax from wages and passing it to Government directly rather than waiting for employees to do so at the end of the financial year. He introduced this idea to Paul Chambers, then on the board of the Inland Revenue. The idea, which became the PAYE system, would be tested in 1940–1941 and introduced permanently in 1944. The system vastly simplified and increased tax collection during the latter stages of World War II, when Britain was in desperate need of funds.
Smallpeice would, whilst working at Doulton's, involve himself further in the ICAEW, promoting rule changes which would allow chartered accountants working in industry to sit on the ICAEW council, and being eligible to be Fellows of the institute. This would lead to him serving on the ICAEW council from 1948 to 1957.
British Transport Commission
Smallpeice left Doulton's in 1948 when it became clear he wouldn't be offered a board position with the company, and moved to join fellow accountant Reginald Wilson at the state owned British Transport Commission. Wilson, as comptroller, offered Smallpeice the role of Director of Costs and Statistics, but within two years, Smallpeice grew to realise that the business, with 600,000 staff, was effectively unmanageable without support from government and he began to assess his options elsewhere.He spoke to Harold Howitt when he was thinking of leaving the BTC and was informed that Miles Thomas needed an experienced accountant to institute strict financial controls at BOAC. Smallpeice would turn down the role initially, fearing BOAC would be similar to the BTC in terms of culture and manageability. Howitt pressed Smallpeice to reconsider and following a meeting a few days with Miles Thomas and he accepted the position at BOAC, which was tailored to the role he and Miles Thomas desired he have within the company.
BOAC
Smallpeice formally joined BOAC on 1 January 1950, taking the title and role of financial comptroller. The title reflected his intention to provide useful financial information to managers within the company, allowing them to take informed decisions, rather than dictating what the company would be doing from head office. The financial comptroller position became a board position in 1953, and accordingly Smallpeice was appointed to the board. He would then be promoted to the additional position of deputy chief executive in June 1954.He was instrumental in the decision to purchase the de Havilland Comet, believing the efficiencies and benefits of jet powered military aircraft would be useful if replicated in a civilian environment, and recognising the outdated aircraft the airline would otherwise be left with. The early operation of the de Havilland Comet was characterised by the series of fatal crashes which would result in the resignation of Miles Thomas as chairman in 1955. The root cause was eventually attributed to metal fatigue and no blame was attached to either Smallpeice or indeed to Thomas. Smallpeice would initially retain his position as financial comptroller under the incoming chairman, Gerard d'Erlanger, this would be a temporary arrangement and in 1956 Smallpeice was promoted to the role of chief executive, albeit with the title managing director.
d'Erlanger and Smallpeice, who developed a particularly strong working relationship, were supporters of the British aviation industry, pursuing British built aircraft for BOAC. Smallpeice in particular had been a strong supporter of de Havilland throughout the period of the Comet crashes and re-introduction to service, but concerns about the reintroduction of the Comet, delays with the Bristol Britannia and a lack of any other suitable British aircraft nearing production would force BOAC into purchasing the Boeing 707 aircraft. Smallpeice was instrumental in their purchase, discreetly arranging for BOAC staff to visit America and examine the Boeing 367-80 prototype before persuading the government to authorise the purchase, as was necessary at the time.
The purchase of the Boeing 707 aircraft would be followed by several orders for Vickers competing design, the VC10, with BOAC having ordered 35 VC10 aircraft by 1959 and an additional ten by 1961. Payments for these aircraft together with a downturn in transatlantic traffic, increased competition on the transatlantic route by additional carriers equipped with jet aircraft, and a whole host of additional costs associated with the Vickers VC10 and Bristol Britannia purchase would result in BOAC becoming extremely unprofitable from late 1961 onwards.
It was during this period that Smallpeice began to work with Sir Edward Fielden, Captain of the Queen's Flight on arrangements to fly Queen Elizabeth II, Prince Philip, Duke of Edinburgh and other members of the royal family overseas on BOAC aircraft. Smallpeice, who generally took personal responsibility for the organisation of these flights, was recognised for this work in 1961 when he was appointed a Knight Commander of the Royal Victorian Order.
d'Erlanger retired as chairman in 1960, and was succeeded by Matthew Slattery. Smallpeice remained as managing director, and together Slattery and Smallpeice set about cutting costs at the airline as the financial performance continued to deteriorate. BOAC would incur significant losses in 1961 and 1962 amidst decreasing passenger loadings, comparatively high maintenance costs and ongoing payments to Vickers for the VC10 orders. The financial situation was further endangered by competition from independent British operation Cunard Eagle Airways, a joint venture between British Eagle and Cunard. The venture had ordered two Boeing 707 aircraft in March 1961, intending to recapture Cunard's transatlantic market which was traditionally the preserve of their ocean liners, the and. They received permission to operate services between London and New York in June 1961, though this was swiftly withdrawn by the Minister of Aviation when BOAC appealed the decision.
Smallpeice, concerned about the additional competition and unable to obtain additional Boeing 707 aircraft any other way, began talks in April 1962 to merge BOAC's North Atlantic operations with those of Cunard Eagle. Agreement was reached in early June 1962 on ownership percentages, and the newly formed company, BOAC-Cunard, began operations later that month. The new airline would operate all the transatlantic services of BOAC and Cunard Eagle from 1962 to 1966. Smallpeice served as managing director of the joint venture, in addition to his role as managing director of BOAC itself.
The downturn in the aviation sector and ongoing disagreements between Julian Amery, the new Minister of Aviation and BOAC concerning writing off debt incurred buying and troubleshooting new British aircraft resulted in a further deterioration in relations between the airline and government. Amery commissioned an independent report into the financial performance of BOAC, undertaken by John Corbett. The ongoing disagreement about the funding arrangements for BOAC and the need for new Vickers VC10 aircraft would eventually be resolved in late 1963, when Slattery formally retired as chairman, though this was widely seen as a resignation; Slattery commented in 1964 that he had effectively been sacked.
Giles Guthrie, a respected aviator, merchant banker and director of British European Airways who would take over from Slattery as chairman and chief executive, also intended to perform some of the managing director's roles, making Smallpeice's position essentially redundant; Smallpeice was asked to resign by Amery, leaving the company late in 1963 to facilitate Guthrie's new management structure. Smallpeice, like Slattery, considered that had effectively been sacked. The concerns Slattery and Smallpeice expressed about the financial arrangements of the company and Vickers VC10 purchases would be vindicated when Guthrie was able to have the government write off the outstanding debt, inject additional cash into the company, and permit the purchase of a smaller number of Vickers VC10 aircraft. The Corbett report was never made public; neither Slattery, Smallpeice nor Guthrie are believed to have been given access to the full report.
Smallpeice and Slattery were praised by Guthrie in 1964, when the airline reported a profit for the 1963–1964 financial year, commenting that he was unable to take credit for the performance and this his predecessors were largely responsible for the improved financial performance of the airline.