Peter Fankhauser, chief executive of Thomas Cook when it collapsed, has expressed his devastation at the outcome but not offered to financially compensate the victims. Photo / Getty Images
Peter Fankhauser, chief executive of Thomas Cook when it collapsed, has expressed his devastation at the outcome but not offered to financially compensate the victims. Photo / Getty Images
COMMENT:
"I personally deeply regret the impact events have had on individuals who placed their faith in Woodford Investment Management and invested in our funds," Neil Woodford said last week after he was fired from his Woodford Equity Income Fund.
"The collapse of Thomas Cook caused a huge amount ofstress, disruption and anxiety. Me and my colleagues are still devastated about the outcome." That was Peter Fankhauser, Thomas Cook's chief executive, speaking before his appearance in front of British MPs last week, where he was grilled about the travel group's collapse in September.
How comforted or forgiving will Woodford's investors be? Will the more than 21,000 Thomas Cook employees and tens of thousands of people who had their holidays disrupted be mollified by Fankhauser's regret?
Not everyone directed their ire solely at the two men. Some Woodford investors blamed the administrators for liquidating the fund, while others blamed the brokers who encouraged them into it in the first place. Analysts accept that Thomas Cook was in trouble before Fankhauser took over in 2014.
But there are plenty who do blame them. Woodford's supposedly cautious flagship fund invested in some technologically dubious unquoted companies. Elaine Coxall, a Thomas Cook flight attendant, told ITV News of "unbearable" visits to the jobcentre and having to rely on unemployment benefits for the first time in her life. Another cabin crew member said she refused to shake Fankhauser's hand when he said "sorry" to her.
The first problem with Woodford's and Fankhauser's statements is their failure to take personal responsibility. Blame lies with an abstract noun — "the impact events have had" in Woodford's case; "the collapse of Thomas Cook" that caused stress, in Fankhauser's.
People often describe these types of "apologies" as being in the passive voice. This is incorrect; both phrases are in the active voice. But we probably need a new term to describe them. "It-just-happened excuses", perhaps. Or "the-wind-blew-it-away apologies". More suggestions if you have them, please.
Another problem with the statements of regret is there is no apparent feeling to them. Coxall appears on the edge of tears as she speaks. Fankhauser is, by contrast, sombre but controlled. Woodford appeared the same in a video to investors after the suspension of the Woodford Equity Income Fund in June.
Neil Woodford, the one-time star stockpicker who fell from grace. Screenshot / Woodford Investment
Would it have helped if they had cried? A recent series of studies in the Journal of Personality and Social Psychology examined the effect when public personalities, whether in business, government or sport, showed some form of non-verbal contrition when they apologised.
Researchers presented people with scenarios such as a representative of the Tokyo Electric Power Company kneeling while apologising for the Fukushima Daiichi nuclear power disaster and a US politician tearfully saying sorry for posting anonymous racist blog posts.
"Does saying sorry receive a more positive response from the public when the apologiser displays some physical embodiment of their remorse?" the researchers asked. Yes. "People who embodied their remorse were seen to be more genuinely sorry than people who simply stated their remorse," the researchers found.
Should Woodford and Fankhauser have knelt? Obviously not. Westerners would look ridiculous doing it, unless they are priests. What about crying? Only if it comes naturally. Fake crying makes things worse.
The best way for the two to assuage their critics would be money. What really stings is the disparity of outcomes for Woodford and Fankhauser, on the one hand, and those who have suffered from their respective collapses on the other. Neither businessman will have to claim unemployment benefits.
Fankhauser's £4.1 million ($8.2m) Thomas Cook incentive shares are now worthless. But they made up less than half of his total £8.4m remuneration over the past four years. He told MPs he wasn't ready to decide if he would give any of that back.
The Woodford fund continued to charge £8m in management fees after its suspension in June. The Woodford investments paid £98m in dividends between 2014 and 2018 to the Woodford Capital vehicle, two-thirds owned by Woodford.
Saying sorry hasn't helped either man. A substantial return of money — their own — might help.
