UK – Alistair Lennard, one of the fund managers at the centre of the Merrill Lynch/Unilever high court case, was just 27 years old with three years experience as a fund manager and a “hunger for success”, when he took on responsibility for around £600m in UK equities for the Unilever Superannuation Fund, the high court was told today.

On her first day in the witness box, Carol Galley, chief operating officer (COO) of Merrill Lynch Investment Managers (MLIM) was questioned by Jonathan Sumption Q.C. – acting on behalf of USF, about the appointment of Alistair Lennard to manage the USF portfolio.

Harking back to an earlier comment he made about Lennard as a “wild card”, Sumption asked whether a description by John Richards, head of the investment team at MAM ,that Lennard had a “hunger for success”, was apt.

Galley commented that she felt the statement was true, adding: “Yes, he had a passion for picking stocks and was ambitious for success.”

Lennard had been a member of Mercury Asset Management’s ‘Select’ investment team when he took over the running of the USF portfolio.
Sumption asked whether this was not a young age for a team that was based on “experience and seniority”.
Galley replied that experience and seniority did not necessarily mean ‘old’ in the fund management world.

Sumption then focused on the amount of risk that Lennard had taken with the USF portfolio in comparison to the management style of Galley before him.
He claimed that while Galley managed the USF fund according to a low indicator of risk, with Lennard the portfolio had been extremely concentrated and run at risk levels of 4% and higher.

Galley maintained that Lennard managed the portfolio within a “managerial system of supervision.”, adding that his investment decisions were “not taken from the air”, but as part of a team effort.

Sumption also asked Galley whether USF had been informed about the decision to increase risk levels in the portfolio.
Galley replied: ” I do not think that we had a conversation that compared the portfolio with 1987.”

USF is suing MLIM for £130m (e210m) alleging that MAM (now part of MLIM) negligently took too much risk when managing £1bn for the fund between January 1, 1997 and March 31, 1998.
MLIM contests the claim and the case is expected to continue for a further three to four weeks.

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