Bredonborough The sun has begun
08.49
Bredonborough.
The sun has begun to shine.
Morning reading…
09.37 New reading I…
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10.33 Ferdinand Mount asks why inequality has increased and indicates, as a prime feature, the centralization of power… Oligarchs flourish under the rule of law and within the framework of a democracy.
As a description, this is accurate in the affairs of EG, as directed increasingly by SG Alder Esq., where the power moved increasingly from the hands of the artists to that of EG Management. Conflict of interest ruthlessly driven, undue influence, and lying where necessary (while care was taken not to be caught and exposed in a lie) were characteristics of Mr. Sam Alder’s EG.
In EG I see a microcosm of the business world as it has developed over the past 36 years. I date the transition point in my life, from market economy to market society (Tony Judt’s words) to 22nd. February, 1976.
A compilation of Diary comments for 22nd. February, 1976 follow beneath, with some redundancy in the contents. For those readers who are familiar with an occasional reference to the actions of someone renowned for their probity and sound business practices whose probity doesn’t strike me quite probe as claimed, and whose sound business practices are, in my view, profoundly un-singing, perhaps move down the page.
For those interested parties who lives were directly impacted by Mr. Alder’s conduct, whether as employer, manager, record company or publisher, this is a Diary entry to bookmark. During the period of dispute, 1991-97, I faxed out to the Interested Parties, including King Crimson members, the latest summation of arising information. This entry is a contemporary analogue. Probably, of the c. 6,000 visitors who read this Diary, there are perhaps 25 people in this category who may find this information directly useful. Whether they can comment on it, or not. The larger story, of Rough Music, is in process.
Otherwise, for a student of changing business practices as exemplified in the music industry 1976-97, the following provides a broad overview of SG Alder Esq’s EG. Mr. Alder was a chartered accountant who, in the happier times of the mid-1980s told me he knew how far he could work the system (I think this was intended as a boast). The present culture in banking would seem to be an example of an executive class that believed much the same.
There are many examples in recent history of abusive and improper conduct that, when not directly addressed, acknowledged and redeemed, continues to repercuss and reverberate. It is foolish to think that the abused merely forget, or go away, despite efforts to gag and/or ignore them. There are many different forms of abuse. Managerial abuse, with a conflict of interest ruthlessly driven, bullying and threatening behavior, the flagrant violation of (at least) a professional duty of care, these are addressed in the Diary entries below as standard features of Mr. SG Alder’s EG. Economic abuse, micro and macro, is a subject now moved to prominence and public commentary.
Diary Comments on Endless Grief.
I
Tuesday 1st. December, 2009One example of commentary without knowledge, a classic of its kind & referred to on several occasions before: in the 1990s the writer Michael Bloom declared the reason for the Endless Grief dispute was that the EG managers did not go on the road with KC. Mr. Bloom declared that the proper place for management was in the office doing deals (he did not mention that Mark Fenwick did accompany ELP & Bryan Ferry with Roxy Music for much of their touring). Well, Mr. Alder was in the office doing deals: that was, arguably, part of the problem. What Mr. Bloom failed to comment upon in his rendering, as a significant factor in the dispute, was Mr. Alder’s diversion of c. £2 million of artist income via Athol & Co. to support the collapsing affairs of Messrs. Alder & Fenwick. Perhaps this was of greater relevance than how much time the partners spent on the road with the band? Mr. Bloom’s clueless & uniformed comment shows how reasonably intelligent & basically decent people can easily comment on subjects upon which they are well out of their depth. The arrogance & sense of self-importance is easily forgivable, less so for those who declare their views publicly as “professional authorities”; but not easily excusable.
Why do I continue to comment on EG? There are several answers to this. Today I present one: Because I am just about the only person who can.
All right! Here’s a second: Because I hold Mr. Alder accountable for his actions.
A few of the many files, currently being scanned I…
II...
The original Willowfay Agreement…
… by which EG has the right to acquire 30% of the KC publishing copyrights on 5th. January 1975 or within one year thereafter. Mr. Alder, with David Enthoven, visited me at Sherborne House on February 22nd. 1976, just outside the one year window, for me to sign over my copyrights to EG. This constituted undue influence & was in any case subject to an oral collateral warranty (this doesn’t change anything!).
One of Mr. Alder’s handwritten letters, ie it was not subject to secretarial oversight within the EG office…
On the 7th. June 1990 Mr. Alder is now very worried about (RF’s) project and financial state – there is just not enough income to cover your borrowing… I don’t say that I am worried too often, so can we speak on this a.s.a.p.? Mr. Alder does not mention the two preceding accounting periods when EG did not pay my record royalties; but does mention increasing my increased-borrowing by £25,000 which he signed as (my) attorney. That is, he acted, formally on my behalf, to extend my borrowing to cover the non-payment of EG royalties, without actually mentioning the non-payment of royalties, while also now being very worried about my financial state - but not worried enough by my lack of income to pay those royalties.
Investigation (1992) of Ikenstock Ltd…
… There is no trace of this company in… England, Scotland, Northern Ireland and Wales. There are several possible explanations… the… more likely possibility is that Ikenstock is an off shore or foreign company.
My letter to Music Week of August 13th. 1993…
… with an explanation of rendered documents for Music Week to rebuff Mr. Alder’s threat of a libel action against the publication, following their front-page articles on EG.
There are others, besides Mr. Alder, whose actions have had serious & adverse consequences for me, personally & professionally; and two of these not far distant from Endless Grief. Both persons accepted that their conduct was less than ideal, with repercussions on others including myself, that were severe & long lasting. The first sent me a handwritten letter of apology; this was accepted & the matter closed. The second presented an apology in person; which was accepted & the matter closed. Today, both are personal friends. I have no problems with mistakes made, responsibility accepted, honestly & honourably addressed.
Those innocents visiting the Diary, who have no interest in the resonances & repercussions of Endless Grief, have my sympathy: it is not a subject that lifts my heart. Both EG partners are forgiven; that is not the issue here. In respect of those who have no interest in this sad & instructive affair, and the abuse of trust it demonstrates, please pass over & take no further interest. Those do feel the need to publicly comment on my affairs, better to be well-informed. Those who wander out in public, with their heads placed where sunshine never falls yet feel the need to comment on the weather, sometimes good to carry a raincoat.
Meanwhile, in addition to his work as chairman of the Isle of Man Milk Marketing Association Ltd. and its subsidiary companies that hold
the aim and intention to sell milk and cheese on an expanding market locally and abroad at a price which enables it to pay a viable amount to the producer… Mr. Alder’s good works continue, now also as Treasurer of
The Young Citizens Fund.Finally, for this Diary entry, on the subject of business…
Mr. Alder to RF, in his office at 63a, Kings Road, Chelsea with Mark Fenwick, at our final personal meeting (but not final conversation) on April 17th. 1991: You’re a businessman – just like we are!
Firstly, I was a professional musician, not a businessman; although (to quote Keith Tippett) a professional musician must be businesslike. But when a professional musician becomes primarily a business person, the music dies in them.
Secondly, to the extent that I was a businessman, it was quite unlike Messrs. Alder & Fenwick.
II
Tuesday 10th. February, 2009
An afternoon of sorting boxes for Hernan & Martin to collect next week. Most of today’s files are highly prejudicial & concern Endless Grief.
A letter of March 7th. 1991 from Mr. Alder to the manager of Coutts’ extending my overdraft I…
II...
… to cover the shortfall in my company affairs due to the non-payment of EG royalties, which Mr. Alder loaned back to Mr. Alder & his partner via another of their companies. May we note, I paid the interest on the Coutts’ overdraft & Mr. Alder paid no interest on the forced loan he raised against me, nominally acting on my behalf. Shortly afterwards, on tour in Europe with The LCG, I notified Coutts’ that Mr. Alder was no longer authorised to act on my behalf. Mr. Alder’s response: You made me look like a common criminal! Well.
And a letter of January 22nd. 1992 from the auditor who recently died, and whose ashes were fired off in a rocket last Fifth of November I…
II...
The letter addresses my enquiry as to why, when the Polygram audit of 1982/1983 gave EG £300,000, did the artists receive so little? I received £3,599.68 & Bryan Ferry c. £6,500 (and Bryan was the largest EG artist, by a significant factor). The auditor writes that 70 artists received relatively small amounts, but provides no further explanation. He does not comment that, in addition to being my auditor, he was also EG’s auditor at the time of the audit, and was continuing as EG’s auditor at the time of writing this letter. Neither does he mention how much of the £300,000 stayed went to EG. Well.
Headlines in Music Week during 1993 I…
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VIII...
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The opinion of the EG Music Group’s Managing Director, expressed to me not long afterwards, was that EG never recovered from these headlines. More accurately, EG never recovered from selling the record & publishing catalogues in 1991; the headlines made public what was already the situation in the office.
In happier times, the Financial Times from August 1975…
… two years before Mr. Alder took over EG. David Enthoven is in the middle, Mr. Fenwick on the left of picture, and Mr. Alder on the right. This was a glory year for EG business, and about to get much glorier in 1976 & 1977. IMO, this clearly demonstrates that, in this generation of music-being-made-available, the initiative had moved from the musical imperative to industry interests.
III
Wednesday 11th. February, 2009More boxes of Endless Grief files, including this (IMO) Document Of Deceit…
This is the Assignment of Copyright for Schizoid Man to EG, dated 22nd. February 1976 (while I was at Sherborne House, Gloucestershire) – so EG could collect my royalties! And Mr. Alder, Good Guy That You Can Trust, Chartered Accountant, Treasurer of Nordoff-Robbins for several years, adviser to the Palace & many other good works, looked me in the eyes while telling me this.
What’s that at the bottom?...
Sam G. Alder signs on behalf of EG Music Ltd., the beneficiary of Mr. Alder’s advice as business manager to the Assignor; and the signatures of two witnesses who weren’t at the meeting they are witnessing.
IV
Sunday 7th. August, 2011It seems that the focus of my professional life has returned to Rough Music. The years of Endless Grief may have prepared me to some extent for OMG – it’s UMG! A 20-year nether-world tour from EG to UMG.
Rough Music (With The Left Foot).
The ritual use of cacophonous sound in the punishment of moral offenders… designed simultaneously to expose, rebuke and humiliate those who had seriously offended…
Christopher Marsh: Music And Society In Early Modern England. (Cambridge 2010).
I
I have been looking at the EG digital archive, and it continues to amaze me. In both EG and UMG cases, there were/are several areas of concern. But, in very simple terms, in only one of the examples of clear infraction, both EG and UMG failed to account.
There are, it seems, so many ways to prevaricate, obfuscate, delay, provide irrelevant details to distract focus from core issue/s and evade this one central point – non-accounting – that I wonder whether the Main Men responsible for determining the company cultures received Jesuitical training during the first seven years of their drawing-breath. In EG’s case, non-accounting to me took the form of four consecutive royalty periods during 1989-91. In UMG’s case, no statements have been presented over a period of 19 years Summers & Fripp CD releasing.
The reasonable person might ask: why not own up to mistakes, errors and omissions, and rectify them? then continue: Responsibility is one of the four pillars of the ethical company. One quick answer in response: Owning up to mistakes, errors and omissions acknowledges liability to the offended parties. So, if the companies are concerned not to meet their liabilities, for whatever reasons, the primary course of action is to deny their mistakes, errors and omissions as far as they possibly may without being caught-out by demonstrable untruths/lies; and the secondary course, to prevaricate and obfuscate in the instances where malfeasance is clear and inescapable.
In SG Alder Esq.’s case, owning up would have opened up a range of accompanying issues, including breach of trust and duty of care, conflict of interest, and violation of professional standards of conduct as a chartered accountant. All these carried negative effects upon the Main Men’s hopes of a successful return to the music industry, with new licensing deals to Virgin and BMG Publishing in place (1991); and perhaps more important in the long term, to Mr. Alder’s reputation as Good Guy and Uprising Worker of Good Works.
In UMG’s case, owning up would attract attention to the fragility and unreliability of their management and control systems in two areas:
1. Their takeover of other companies (we have had problems with the UMG takeovers of Island, Sony-BMG, Sanctuary and A&M).
2. The Music Industry’s Bright New Future of digital downloads, the only area Mr. UMG UK PP No. 2 addressed resolutely. Resolutely, that is, after 18 months of blocking by Mr. Second Tier Lawyer (who also gave me grief when he was at Virgin).
Where to begin, to present a consistent account of Endless Grief, from the mass of material? Let’s hear it for digitalization and easy reproducibility! Perhaps a core document, even the primary document in this archive, is a letter from Mr. Andrew Stanger, the Director of Business Affairs at EG, who wrote on EG headed notepaper from the EG Music Group Office at Blenheim House, 180, Kings Road to Coles Miller Solicitors in Wimborne, on 5 March 1991.
Coles Miller represented Michael Giles, founder member of KC and drummer in KC69. Michael was wondering why EG had not been paying his royalties on In The Court Of The Crimson King. Michael was not managed by Messrs. Alder and Fenwick, so had outside counsel and advice, unlike myself. Coles Miller, acting on Michael’s instructions, addressed this reasonable question – where’s my money? – to the Managing Director of EG, who passed it to Mr. Stanger. An artist is perhaps easily ignored, but a solicitor less so.
Mr. Stanger is noted by clients for being highly focused and amenable and who highlight his impressive turnaround time even on issues that were technically challenging and applaud his willingness to pick up the phone and clarify any issue we want. Others note that a particular strength is his ability to explain things in eloquent and concise layman’s language. Just the kinda Go-To Guy needed to sort out the problem of where’s my money? then!
Mr. Stanger’s reply…
Unfortunately we are not at present in a position to be able to pay publishing royalties to your client…
In my book, that explains things in eloquent and concise layman’s language. On 21 March 1991 Mr. Stanger wrote to Coles Miller enclosing a cheque signed by Messrs. (Mark) Fenwick and Stanger, dated December 31st. 1990, for the royalty period ending 30 September 1990.
In reply, on 24 April 1991, Coles Miller demanded interest on the late payment and the future-establishment of a client account for Michael Giles. You have, in effect, confessed to using our client’s money for your own purposes. Litigation is threatened unless a full response is not made by EG within seven days.
Mr. Stanger did not reply until 3 June. I’m not sure this quite counts as an impressive turnaround time even on issues that were technically challenging.
II...
Key points from Mr. Stanger’s reply:
1. The delay in royalty payments was due to an unexpected delay in the completion of the sale of E.G. Records Ltd. to Virgin (now Virgin EG Records Ltd).
2. I do not accept your claim for interest.
3. I am also not in a position to agree that royalty payments received will be credited to a designated account. As you can see there is no provision for such a course of action in the assignment agreements.
In point 1, critically, the formal EG position on the reason for non-payment of artist royalties now moved from the frank and straightforward admission of EG’s Director of Business Affairs that we are not at present in a position to be able to pay publishing royalties to your client…
to…
… an unexpected delay in the completion of the sale of E.G. Records Ltd. to Virgin.
Problematically, Mr. Stanger’s statement of 5 March 1991 acknowledged that EG were unable to pay: therefore, the liability for non-payment was directly EG’s. The subsequent EG position, articulated on 3 June 1991 - an unexpected delay in the completion of the sale of E.G. Records Ltd. to Virgin - is a frequently-recurring element in my own Endless Grief correspondence, and avoids EG being trapped in an untruth The unexpected delay does not explicitly deny that EG were not… in a position to be able to pay publishing royalties but implies that the responsibility for non-payment was no longer EG’s: therefore, EG had no liability for late payment. We would have paid you if the sale to Virgin happened sooner!
As an explanation in/of royalty accounting, this is nonsensical.
EG received royalties from its licensees within the six-month period prior to paying royalties to its artists (there are fine details, but the overall picture is sound). In the industry, this is sometimes referred to as The Six-Month Problem. If licensors use/divert client income-received before the due accounting date, instead of putting it in protected client accounts, and are unable to re-fill The Pot before payments are due, then they may have to send out letters saying unfortunately we are not at present in a position to be able to pay publishing royalties to your client. Or, as in the case with some EG-managed artists, not even send out letters.
One might also ask: what relevance does the delayed sale of EG Records have on royalty payments by EG publishing? Clearly, Mr. Stanger’s letter of 3 June 1991 shows that income flows and licensing receipts to the two EG companies (EG Records and EG Music) were not kept distinct; and went into (what was known in the early 1970s as) The EG Pot.
Nor is there mention in the 3 June 1991 letter of the series of draw-downs from Virgin Records in anticipation of the completion of the sale of E.G. Records Ltd. to Virgin (now Virgin EG Records Ltd). My own conversations at the time, with MA Fenwick Esq. (SG Alder’s partner) and very highly-placed persons at Virgin, suggests that by the completion of the sale, a significant part of the sale price (c. £2.5 million) had already been paid over by Virgin. What had happened to that?
So, a fuller explanation by Mr. Stanger in his 5 March 1991 letter might have been:
1. We don’t have the money.
2. EG Music publishing income went the same way as EG Records’ income.
3. We have received a large proportion of the EG Records sale from Virgin.
4. You’re not having any of it.
5. It’s not our fault.
Nevertheless, the unexpected delay serves to give a spurious justification to avoid acknowledging what had taken place at EG (cf Coles Miller): using clients’ money for its own purposes.
So, what happened to the money that came into EG and didn’t go out to artists in prompt payment of their royalties?
Most likely the key time-period, perhaps the beginning of The Drive To Endless Grief, is August 1988. This coincides with two UK events with particular impact on the partners:
1. The unstoppable inflationary surge in the British property market suddenly stopped, as if overnight.
2. The first warnings of major problems for Lloyds’ Names.
A third factor, the slowing of the music industry, was an additional problem, but not itself catastrophic to the interests of the EG Main Men, Messrs. Alder and Fenwick.
Cash-flow problems at EG in 1989 became in 1990-91 a crisis.
1990
1. The EG Music Group’s loss for the financial year 1990 was £942,000 on a turnover of £3,735,000.
The EG Music Group was owed in excess of £4,000,000 by a company under the common control of Messrs. Alder and Fenwick, presumed to be Old Chelsea, the partners’ property development arm. Auditors Hughes Allen reported they were unable to form an opinion as to the recoverability of this debt (Old Chelsea went into liquidation in August 1992, settling the question of recoverability).
2. In The Athol Trust, the pension scheme for the benefit of the EG Music Group’s controlling directors, the Chairman of the Trust’s remuneration was £30,000 (the same as 1989); the highest paid director received £93,500 (£85,000 in 1989). No premiums were paid in 1990 (cf the trustees were paid £100,000 in 1989).
The EG Music Group’s outlay of funds to The Athol Trust in 1990 was £123,500 (i.e. 13.11% of its financial loss for the year).
3. The EG Music Group Ltd. paid £292,000 (£269,000 in 1989) for the consultancy services of Athol & Co. Ltd. (Messrs. Alder and Mr. Fenwick each received £180,000 from Athol & Co. in the financial year 1989 but the accounts for 1990 were not filed as of March 1993).
4. EG Music Group loss £942,000
EG Music Group paid to Athol Trust £123,500
EG Music Group paid to Athol & Co. £292,000
EG Music Group payments to Athol & Co. + The Athol Trust
= £415,500
(1989 - £484,000)
i.e. payments to the two Athols = 44.06% of EG Music Group’s financial loss for 1990.
5. By December 31st. EG Music Group was unable to meet its royalty payments to artists.
6. EG Management Ltd. (incorporated August 1988) had a profit for the year of £11,000 on a turnover of £185,000, and carried forwards an accumulated loss of £19,000.
7. Old Chelsea Property Corporation had a loss for 1990 of £2,320,432 on a turnover of £1,750,196 and carried forward an accumulated loss of £2,712,198 to 1991 (and went into liquidation on August 12th. 1992).
OCPC’s tangible assets fell by over £1,000,000 in the year from just over £5,000,000 to approx. £4,000,000. The write-off was in respect of the value of investment properties which were valued by the Directors (i.e. Messrs. Alder and Fenwick) who concluded that the values ascribed to investment properties (mostly freehold) were reasonable.
Auditors Hughes Allen concluded (the company accounts are dated February 1992) that the going-concern basis of the Old Chelsea Property Corporation was only justified if its bankers and creditors continued to support it for the forseeable future. (It appears this ceased in August 1992 when, it is likely that of the creditors, Coutts & Co. pulled the plug).
Three reasonable questions:
1. Why were Messrs. Alder and Fenwick of the EG Music Group unable to pay both first- and second- period royalty statements on publishing and records in 1990, to artists managed by Messrs. Alder and Fenwick of EG Management; in the same year that Messrs. Alder and Fenwick of the EG Music Group were able to increase the pay of Messrs. Alder and Fenwick of Athol & Co. to £292,000 (from £269,000 in 1989) for continuing to consult to themselves at the EG Music Group?
2. How were Messrs. Alder and Fenwick of the EG Music Group able to pay Messrs. Alder and Fenwick of Athol & Co. £292,000 in 1990 for Messrs. Alder and Fenwick’s consulting services to the EG Music Group; given that these consulting services increased the financial loss of the EG Music Group for 1990 to £942,000?
3. Where did the lotsa-money payments to Messrs. Alder and Fenwick, from whichever of the companies under their common control, actually go? That is, if not (at least partly) in royalty payments to EG artists?
V
Tuesday 16th. August, 2011In the filing cabinet, folders of terror and wonderment…
… all part of the voluminous EG Archive. Researches on Mr. SG Alder’s offshore company, Ikenstock, at the time of Endless Grief…
… and astonishingly: An Examination Of Royalty Accounting Records of EG Music Ltd. On Behalf Of Bryan Ferry And Companies 1/10/88 Through 30/9/90…
This is a highly confidential document, and very informative. It would perhaps have surprised Mr .Alder that this was in my hands, as Bryan and his advisers are subject to a gagging order and unable to discuss any of the details regarding royalty payments during the Unfortunately We Are Not At Present In A Position To Be Able To Pay Royalties To Your Client Period (1989-91). This is only one of the highly prejudicial EG-related documents that arrived, in an unmarked brown envelope, during the early 1990s.
From happier times…
… SG Alder Esq. writes: Looking forward to another interesting year together. Perhaps neither of us anticipated how many interesting years lay ahead.
VI
Thursday 15th. April, 2004And in the recent news --
Mr. Alder, the "honest, God-fearing family man" (his own words), a member of the Institute of Chartered Accountants (although he failed his finals), a freemason, adviser to the Prince’s Trust, a member of the Silver Clef committee fundraising for Nordoff-Robbins Music Therapy (of which Mr. Alder was Treasurer for several years), the "Good Guy That You Can Trust" (his words), the (former) artist manager "renowned for his Probity and Sound Business Practices" (the words of his solicitor), who "has Nothing To Hide - what has he done?" (his own words), a "Big Boy Caught With His Pants Down" (his own words again), a Backroom Boy at EG in 1970 who aspired to the Front Office (which, given the catastrophic collapse of EG, was arguably beyond his grasp) rarely draws much public attention to his business activities. A rare delight, then, for those who follow Mr. Alder’s interests with an interest of their own --
http://www.iomonline.co.uk/ViewArticle2.aspx?SectionID=872&ArticleID=767886
http://www.gov.im/lib/news/communications/broadcasting.xml
http://www.manxradio.com/scripts/public-archivesearch/archiveview.pl?id=10696
http://www.manxradio.com/scripts/public-archivesearch/archiveview.pl?id=10530
Not long ago, Mr. Alder presented himself (to a former EG employee) in these words: I’m a gentleman farmer now! I am unable to comment on the veracity of the claim, although Mr. Alder may be a farmer. However, according to these online news reports, Mr. Alder’s status has changed: media entrepreneur Sam Alder. Mr. Alder is part owner of a radio station --
AIMING TO BE RADIO TWO
02 April 2004
THE MEN behind the latest company to be granted a radio licence say they hope their station will be on air by the end of the year and will cater for a BBC Radio Two-type market.
Athol Radio Ltd has been working on the application for 18 months and received news of the success from the Communications Commi-ssion on Monday.
Behind the station is Ron Berry, former Manx Radio presenter and director of advertising firm The Agency, former Manx Radio presenter and sales and marketing manager George Ferguson, and businessman Sam Alder.
The address, given in the reports, of Athol Radio Ltd. is the same address as accountants Messrs. Alder Dodsworth & Co. - 22, Athol Street, Douglas, Isle of Man, UK, IM1 1JA --
http://www.find-uk-accountant.co.uk/isle-of-man/douglas/alder-dodsworth-and-co.html
What’s in a name? Athol & Co. was the company lent some £4 million by the EG Music Group in the period 1988-91. Both Athol & Co. and the EG Music Group were under the common control of the two partners in EG, Messrs. Alder & Fenwick.
Athol & Co., its finances supported by the loans from EG Music, in turn supported the finances of Messrs. Alder & Fenwick. The financial viability of the partners had been extremely prejudiced by the drop in the property market (impacting the partners’ Old Chelsea Property Co.) & large cash calls on them as Lloyd’s Names, members of the Marine 475 insurance syndicate. Some of the £4 million lent by the EG Music Group to Athol & Co. was drawn from my (unpaid) record royalties from EG Records (on which EG Management also deducted 25% for "managing" my affairs).
Mr. Alder covered the deficit in my financial affairs, caused through his non-payment of my income, by arranging borrowing on my behalf (as my business manager with power of attorney) at Coutts & Co, Sloane Square. In effect, Mr. Alder created a form of forced (and undisclosed) borrowing from myself to Messrs. Alder & Fenwick (via Athol & Co.) and on which forced borrowing I also paid the interest.
The success of the EG Music Group was based largely on their ownership of their managed artists’ phonographic & publishing copyrights. My own copyright assignments to EG were made on the basis (as explained to me at Sherborne House on February 22nd. 1976 by Mr. Alder himself) that the assignments were necessary for EG to:
1. protect my interests;
2. collect my royalties;
3. protect the copyrights around the world.
This advice, given to me by Mr. Alder, was regrettably inaccurate: a licence to EG would have had the same effect, and my copyright interests would have remained mine. The effect of the advice was to favour EG at my expense (and similarly for the other Crimsons).
These are examples of a manager’s conflict of interest being wilfully exploited to advantage his own position, to the detriment of a managed artist owed a professional duty of care, if not the personal duty of care instinctively recognised & accepted by a gentleman.
This is the quick story. The longer story is an interesting one waiting to be told, with documents waiting to be scanned & presented online; it will be a research archive for those wishing to discover the mechanics of the music business in the 1970s & 1980s, some of its characters and business practices of the period. It is also a microcosm of the period & the widespread collapse of trust in professional bodies and "the word of a gentleman"; the weakening of controlling authority in the networks of public school contacts; and the abdication of responsibility towards clients in many areas of business.
Meanwhile, in the contemporary world of media ownership, a bona fide question that might be raised is whether the personal character of those involved in ownership of broadcasting should be above reproach. This is perhaps one of several further enquiries that might be directed to the appropriate parties.
VII
Remembrance Sunday 8th. November, 2009.In this Weekend FT’s Andrew Hill (Lombard) column…
We all suffer when banks abuse customers’ trust.
Lombard: when banks abuse customers’ trust
By Andrew Hill
Published: November 6 2009 20:41 | Last updated: November 6 2009 20:41
The credit crunch and ensuing financial crisis were inflamed by a breakdown of trust on a grand scale.
The
Financial Services Authority fined UBS £8m for its failure to prevent
employees carrying out unauthorised trades with customers’ money. Four
as yet unnamed members of staff foisted more than $42.4m of losses
(since reimbursed) on to unsuspecting customers until someone blew the
whistle.
Two
insights stand out starkly from the FSA’s final notice of the fine. The
first is the long period over which these abuses took place: two years,
during which at one point up to 50 unauthorised trades were being made
daily. That this happened during the “golden years” for banks, in 2006
and 2007, is no coincidence. The FSA suggests one material factor
leading to the failures – the second important insight – was the go-go,
bonus-fuelled growth UBS’s international wealth management business was
pursuing at the time. As the Swiss bank’s own painful postmortem of its
ill-fated expansion into subprime securities revealed, aggressive
growth…
I have commented before that the abuse of trust,
revealed very publicly in the collapse of the banking & financial
sector during the past 12-16 months, is pretty much a commonplace of my
life as a professional player over the past 42 years. Now ordinary,
innocent members of the public may have a sense of life in the music
industry.
Andrew Hill’s comments…
1.
Unintentionally implied? For employees to have re-directed clients’
money is worse than for the principals to have done so?!!
2. The financial mess was inflamed by a breakdown of trust on a grand scale.
3. Two years is a long period for abuses to take place.
4. The go-go, bonus-fuelled growth UBS’s international wealth management business was pursuing at the time.
5. Ill-fated expansion into subprime securities...
If we recall the collapse of EG during 1988-1991:
1.
The abuse of trust was by the principals of the EG Group, Messrs. Alder
& Fenwick; albeit the employees mostly did what they were told,
including those nominally holding responsibility for my own interests.
2.
Mr. Alder was a chartered accountant, Secretary & Treasurer of
Nordoff-Robbins Music Therapy, adviser to the Palace. Surely this was a
man you could trust? A Good Guy That You Can Trust (to quote Mr. Alder himself) in an industry renowned for its, well, abuse of trust.
3.
Two years is the period during which my record royalties were not paid,
but redirected to the principals via Athol & Co, formerly EG
Management, to support their collapsing affairs; ie the unpaid royalties
were converted into forced & undeclared interest-free loans to the
partners, while I paid interest on my own borrowing, arranged for me by
Mr. Alder to cover the subsequent shortfall in my affairs.
4.
Mr. Alder’s attention increasingly moved from the music & record
industry, a money-making machine 1968-1978, into property & security
interests after 1978; funded by advances for publishing & records
on the EG catalogue (which were not shared with artists). EG was awash with money
(c. 1977 to quote a former Power Possessor at Island Records).
Contributions to the partners’ pension fund in the early 1980s was at
£100,000 per annum.
5. The ill-fated expansion of Messrs. Alder & Fenwick was into the Lloyd’s insurance market, notably the Marine 475 syndicate.
Manuel Castells p3…
… power is based on the control of communication and information…
Control
was the prime distinguishing feature of EG managerial policy. As one EG
employee, with responsibility for KC, put it to me during Endless
Grief: the first thing they taught us was, control the artist.
EG controlled information, and they also controlled the money supply of their managed artists. The Chieftains
were one of the very few artists having a client account at EG (they
were sub-managed within the office). I was a long-term artist, whose
relationship had begun when one trusted the word of a gentleman.
Mr. Alder even played this card, after I wrote to Coutts & Co. at
Sloane Square (March / April 1991) to withdraw Mr. Alder’s authority to
act on my behalf; eg to extend my own borrowing to cover his non-payment
of due royalties). Mr. Alder declared to me: You made me look like a common criminal!
On the
Nordoff-Robbins site, Monday, April 23rd, 2007
Sam Alder retires as Chairman of Nordoff-Robbins Music Therapy
Sam
Alder, Chairman and founding member of the Nordoff-Robbins Music
Therapy Charity, has resigned from his position as Chairman of the Board
of Governors at the advice of his doctors.
An
accountant by trade, Sam spent much of his life in the music industry,
managing bands including T Rex and Roxy Music. This work introduced him
to the pioneering work of Nordoff-Robbins Music therapists and he became
instrumental in establishing the charity, working firstly as Secretary,
then Treasurer and latterly Chairman.
Pauline
Etkin, Managing Director of Nordoff-Robbins Music Therapy, said: “Sam
Alder’s contribution over more than 30 years to Nordoff-Robbins Music
Therapy has been invaluable and wide. He has been a driving force in
many aspects of the charity’s development and it is with great sadness
that we see him depart. We all want to thank him for his support and
wish him a happy retirement.”
In
his various roles within the charity, Sam Alder helped to raise over
£6m pounds, which allowed the building of a dedicated Music Therapy
Centre, and the expanding of the range of the charity throughout the
United Kingdom and overseas. This includes the establishment of therapy
centres in Scotland and New York. He also initiated the establishment of
the International Trust for Nordoff-Robbins Music Therapy, which has enabled the protection of the intellectual properties of the work…
(my emphasis).
Would
that Mr. Alder had taken a corresponding interest in protecting the
intellectual properties of his artists; rather than, for example,
telling me that it was necessary to assign EG my copyrights so that they
could collect my royalties, protect my interests & defend the
copyrights around the world (Sherborne House on
22 February 1976).
On
January 13th. 2009, our attention of DGM HQ was directed towards the
40th. Anniversary of the birth of King Crimson in the basement of the
Fulham Palace Café. On that day, another event took place in London:
City University awarded Mr. Alder an honorary
Doctor of Arts for services to philanthropy and music…Mr
Samuel Alder is Senior Partner of Alder Dodsworth & Co, Chartered
Accountants and runs the family estate which includes a dairy farm.
After graduating from the University of Durham, Mr Alder qualified as a
Chartered Accountant and started his career at Whinney Murray, now Ernst
& Young. He ran the E.G. Group of music companies in partnership
for twenty five years and was a founder investor of several commercial
radio stations as well as the music industry’s main international
charity Nordoff Robbins Music Therapy. For a number of years Mr Alder
was the charity’s Hon. Treasurer and Chairman, as well as a Trustee of
the BRIT Trust, and the Hon. Treasurer and later Vice Chairman of the
Duke of Edinburgh’s Award Special Projects Group. He holds the positions
of Chairman of the Isle of Man Creamery, Chairman of the Isle of Man
Arts Council, Chairman of the Board of Governors of King William’s
College, Chairman of the Association of Governing Bodies of Independent
Schools and is a member of the board of the Independent Schools Council
and also of the Independent Schools Inspectorate.
The Nordoff-Robbins site has
this…
Sam
Alder, a founding member of the original 1976 Nordoff-Robbins
Fundraising Committee who served as Chairman of the Board of Governors
from 1997 to 2007, was awarded an honorary Doctor of Arts by City
University London at a ceremony on 13 January 2009. The honour was made
for services to philanthropy and music, and in particular for his
proactive work for Nordoff-Robbins Music Therapy over three decades.
Pauline Etkin, CEO of Nordoff-Robbins Music Therapy, who nominated Sam
Alder for the degree said:
"Sam
Alder possesses a rare combination of talents. With a background in
classical music, he qualified in the City as a Chartered Accountant with
a major firm and then went on to become a principal in a music
management and publishing company where he managed the careers of
musicians such as T Rex, King Crimson, Toyah Willcox and Roxy Music.
This combination of skills and gifts made him an ideal Treasurer in 1976
for the newly-formed Nordoff-Robbins Music Therapy Charity Fundraising
Committee. This company of exuberant young people worked to raise funds
within the music industry for a pioneering new way of using music to
help children and adults with many forms of disability or illness,
helping them to communicate and achieve an improved quality of life.
"In
no small measure the amazing success of the charity over the years has
been thanks to Sam’s many gifts. Under his wise guidance the charity
grew steadily from year to year, to become the nationally operative
organisation that it is today with an annual turnover of nearly £3
million, providing music therapy services across the UK, as well as two
Master’s degree training programmes and a PhD programme, all validated
by City University. In 1990 Sam was instrumental in raising six million
pounds, which allowed the building of a dedicated Music Therapy Centre,
and the expansion of music therapy throughout the United Kingdom and
overseas. This included the establishment of therapy centres in Scotland
and New York. He also initiated the establishment of the International
Trust for Nordoff-Robbins Music Therapy, which has enabled the
protection of the intellectual properties of the work.
"Sam is a remarkable man who combines many abilities which he has used freely for the good of all."
It
would be interesting to ask artists formerly managed by Mr. Alder,
notably Bryan Ferry & Toyah, in addition to their professional
advisers, for comments on Mr. Alder’s many abilities which he has used freely for the good of all. Regrettably,
Bryan & Toyah & others are restrained from commenting
favourably on their relationships with Mr. Alder because they are bound
by EG gagging clauses. As is most likely apparent to any reader of the
Diary, I am not. This permits me to provide bear witness to some of Mr.
Alder’s many abilities which he has used.
Quoteable Quotes:
SG Alder Esq.: I’m an honest, God-fearing family man (handwritten letter 1991).
SG Alder Esq.: We’re sorry for what happened (letter 1991; Mr. Alder didn’t say what happened).
Bill Bruford: Who manages the manager?
(The Autobiography 2009).
Albert Low: Conflict & Creativity At Work (2008) p.121 ... because
(the president) is the dynamic center of the company, the way that he
carries out his function will also determine the ethos of the company...
he will determine its fundamental and distinctive character, its value
system – the spiritual, ethical, moral and legal context within which
the field operates; and also the social system – the way that employees
will interact with each other.
P149 As
(Elliot) Jacques pointed out… we have an innate sense of fairness, and
when that sense is violated we suffer… cognitive dissonance that can
range all the way from the sense of unease to a sense of outrage.
P169… the prevailing ethos in the corporate world is that greed is good.
Pauline Etkin, CEO of Nordoff-Robbins Music Therapy (2009): Sam is a remarkable man who combines many abilities which he has used freely for the good of all.
Guitar Craft Aphorism: There
is merit, and blessing, and reward for those who undertake necessary
work; attenuated to the degree that this work is undertaken in the
anticipation of merit, and blessing, and reward.
I have
seen in the industry, in various characters at various times, a
trajectory from ambition to greed to exploitation to arrogance to hubris
to collapse. But, it doesn’t matter much where we begin; it matters
very much who we become.
VIII
Monday, 12th March 2012In 1975 and 1976 various copyright assignments were made in EG’s favour
by members of the original King Crimson. Michael Giles’ assignments to
EG Music Ltd. are dated December 2nd. 1975 and Peter Sinfield’s December
19th. 1975. Peter Sinfield remembers asking Mr. Alder what would happen
in the eventuality of the copyrights being sold and being told by Mr.
Alder that in the event of a sale of copyrights, Peter would receive his
share. Mr. Alder was “unable to recall” this as of July 1st. 1991 in
response to an enquiry by David Ravden, the prominent music industry
accountant, on behalf of Peter.
On February 22nd. 1976 my
managers David Enthoven and Mr. Alder visited me at Sherborne House,
Gloucestershire, where I was on retreat between October 1975 and July
1976. I was presented with documents assigning my publishing copyrights
to EG Music, on the basis that this would enable EG during my retreat to
“protect my interests, collect my royalties, and protect the copyrights
at law around the world”. At this meeting I was assured that these
assignments were necessary technicalities to enable my managers to
protect my publishing interests. My understanding was that our
relationship continued as before, as enshrined in the Willowfay
Agreement of January 6th. 1970 and signed by all the members of the 1969
Crimson and EG.
It would not today be considered acceptable
practice in the music industry for management to recommend a course of
action which, even nominally, confers on them a clear benefit to the
detriment of an artist following that advice, without
independent
legal counsel being either recommended or consulted. Nowadays I am
informed that a licence, rather than copyright assignments to EG Music,
would have been sufficient for EG Management to “protect my interests,
collect my royalties, and protect the copyrights at law around the
world”.
David Enthoven accepts that the advice which I was given
at the meeting of February 22nd. 1976 fell short of the ideal.
Graciously, David wrote to me in 1991 apologising for the adverse affect
upon my interests of his growing ill-health during the 1970s. This, I
was happy to accept.
During 1976 David Enthoven’s health
continued to decline. Mr. Alder increasingly took charge of the running
of the EG companies. The original relationship with Island records as
licensee ended and the Polydor relationship replaced it. In 1976/77 EG
became “awash with money” (in the words of Tim Clarke, former head of
Island) through the label advances from the new Polydor deal. (Advances
from Island had been on an album-to-album basis). Formerly EG had
financed itself and its artists as part of its management
responsibilities and commitments of 1969. This mainly came out of “The
EG Pot”, into which all income flowed and from which all money was
dispersed on a messy and “need to have” basis.
In 1976 the Old
Chelsea Group was formed, with consequences for all involved, and on
July 6th. Messrs. Alder & Fenwick became directors of the Old
Chelsea Group plc.
In June 1977 David Enthoven left EG after being told by Mr. Alder: “I never want to work with you ever again”.
IX
Monday, 21st March 2011February 22nd. 1976 is the day Mr. Alder & David Enthoven visited me on retreat at Sherborne House and, on the basis of inaccurate information (read, lies) & twisted advice, had me assign my publishing copyrights to them (necessary to protect my own best interests, I was told). The oral collateral warranty accompanying the assignments was “not recalled” by Mr. Alder, fifteen years later, when the sale of copyrights became an issue.
X
Saturday, 30th October 1999Response To The Guestbook:
As promised: King Crimson copyright (for the EG / Virgin catalogue 1969-84) vested in RF as an individual. What follows is, obviously, a personal interpretation.
The chief feature, or governing strategy, of EG / Messrs. Alder & Fenwick was control. This involved control of income, control of information, and control of power in all its forms. Except one - creative action. Ironically, by exerting control, EG put themselves outside the sphere of creativity activity.
Maximum control = certainty = guaranteed outcomes.
Certainty = death, and its creative analogues.
"The first thing they (EG) taught us was, control the artist" (former EG employee in conversation with RF). This meant that EG could only survive when it had access to, and could exploit, the creative action of others - primarily its artists. Gradually, all the EG artists left an office which, by exerting maximum control, extended its Hand of Death to embrace them. Hence the alternative expression of the EG acronym: "Everyone's Gone (or going) Management".
A corollary of control is the fear of creativity. So, not only did EG's strategy act to ultimately drive away its artists, it also acted as an employer of people who were themselves not inclined to act creatively. There were only 2 or 3 exceptions, in my view (2 were sacked and 1 left). Alex Patterson (of The Orb) worked at EG for a while in the late 1980s as an A&R man. When he took his ideas to employer Mark Fenwick (before The Orb happened) he was told "Dance music won't last" (AP to RF conversation). Mr. Alder approached Alex in the EG Aftermath to do some production work for EG, when The Main Men were seeking to re-establish themselves as viable players in the music industry. But Alex & The Orb were by then well established and knew the score with EG.
So, control was EG's strength on one level, while also their profound weakness.
The greater the uncertainty in any process, the greater the room for the spirit to enter.
The greater the control in any process, the greater the process is bound by mechanical laws.
A mechanical process winds down.
If a controlled process is also inequitable & exploitive, its long-term future is unlikely to be sustainable.
An operation of the spirit is eternal.
When the dispute began I had little information about my own affairs, let alone EG / Messrs. Alder & Fenwick's body of operations. "What have we done? We have nothing to hide" was the last comment Mr. Alder made to me, face to face, in my final meeting at 63a, Kings Road, with Mr. Fenwick & himself (April 1991). This is an unusual comment from someone who has nothing to hide to someone who wasn't suggesting they were hiding something.
Messrs. Alder & Fenwick made high claims for themselves in terms of their "renown for probity and sound business practices" in an industry known for its dishonesty and exploitation towards artists. My only weapon as a small, lonely aspirant musician facing the EG organisation & employees was to access information and make it available to others. From the standpoint of Messrs. Alder & Fenwick, knowing what they knew of their activities, this was not information which could be allowed to become public knowledge. But gradually, I acquired a large body of information on their affairs. By 1994, I knew what they had done, & why and how they'd done it.
For the first two years of the dispute, regrettably neither Virgin nor BMG took me seriously. It was only when my High Court writ was served (1993) that both these parties were prepared to respond to me, although both of them had been aware of the issues before their acquisitions of the EG record & publishing catalogues. I presented myself as acting on behalf of all the KC artists, although I was the only party named in the High Court writ and the only person paying the legal fees. Ken Berry, power-possessor at Virgin, has my respect. BMG Publishing I view as artist-unfriendly and I hold them in contempt.
The terms of the out-of-court settlement with Virgin significantly increased the royalty rates to all the artists.
The terms of the out-of-court settlement with BMG Publishing increased my royalty rates.
Copyrights for both records & music were invested in RF as an individual, although bound by exclusive licences for the durations of the copyrights.
This was the best deal I was able to achieve, acting as the sole litigant against my former managers & their companies, and two of the world's largest music groups. As the formal copyright owner, I acknowledge in turn the copyright interests of the other relevant Crimson artists.
But why would Virgin / BMG acknowledge RF as copyright owner but not the other artists? Well, they haven't told me, but this is my take:
1. There was only one name on the High Court writ.
2. In any copyright / licensing issue, there is only one person to deal with.
The second is probably key. It is impossible to act effectively or swiftly with a committee, particularly of artists. There will always be disagreement, even where the members are experienced, mature and friendly. Where members have grudges, personal unresolved issues or resentments, disagreements multiply. Difficulties become problems, problems become insurmountable, and when insurmountable problems become intractable. In matters of business, this means business grinds to a halt.
RF is in effect, as a poster suggested, a default setting for Crim copyright. There may be some former members for whom this is not a fully satisfactory solution (I'm one of them). There were two other practical options:
1. Copyrights owned by Virgin & BMG;
2. All members to be formally allocated an equal share of the copyright interest. This would have taken a joint action involving each member, equally sharing the legal fees, time and energy put into the action. But no artist in their right mind would give up their life, career & savings to fight an extended legal action (which is why so many business advisers in the music industry get away with as much as they do). This implies that other (and former) Crims have greater sanity quotients than RF.
The comments below are from an introduction to an extensive report which I presented to interested parties in 1994/5.
Endless Grief
I
"What is immoral is not that the adviser's interests have been served, but that they have served as the criterion of action ... the adviser has been guilty of teleopathy, and has violated both fiduciary responsibility and ordinary decency".
????Just Business - Business Ethics: Elaine Sternberg (1994)
My contention is that Messrs. Alder & Fenwick of EG Management increasingly gave precedence to their own interests over those of their artist; that is, they used their position as advisers to exploit an artist whose interests they nominally served, and that this became their prime criterion of action. EG Management therefore are guilty of violating their fiduciary and professional responsibilities and duties towards me.
This I argue on the basis of fair comment given the acknowledged late payment of artist income, the published and audited accounts of EG companies and companies under the common control of Messrs. Alder & Fenwick, the principals' known position as Lloyd's Names in the period 1984-91, and my close involvement with the EG Group between January 1969 and June 1991.
I argue also on the basis of fair comment and available information that Mr. Alder used the Power of Attorney which he held in my affairs, in conjunction with his privileged position, to negotiate and authorise loans to my personal company, such loans as would not have been necessary (or at least to the same degree) had Mr. Alder in his dual and triple capacity as my record and publishing company discharged his responsibilities in prompt accounting of due and arising royalties; also, that the manner in which he conducted and directed my business affairs was such as to conceal the actual position whereby my affairs were being prejudiced by the financial difficulties of companies under his common control.
Upon the basis of this, I argue that the inherent conflict of interest is clearly demonstrated; that Mr. Alder could not have been other than aware of it; and that he allowed himself to use the several positions of responsiblity which he held over my affairs to act in accordance with, and further, his own interests over and above those of my own.
I also argue, subject to depositions given by David Enthoven and John Gaydon in 1993, that I enjoyed copyright interests in both records and publishing from 1969. Subsequent assignments, e.g. publishing copyrights assigned to EG Music made at Sherborne House on February 22nd. 1976 at the insistence and recommendation of Mr. Enthoven and Mr. Alder in person, were made without benefit of legal counsel (which was neither recommended nor present) and subject to a collateral oral warranty given by both of them.
I argue therefore that the disposal of the EG Records and EG Music catalogues were subject to the original agreements made in respect of them, ratified by the collateral oral warranty, and in which I enjoyed a part interest.
I argue also that subsequent assignments were made on the basis of the undue influence of my management, notably Mr. Alder, a prime beneficiary of the assignments made at his recommendation and insistence.
II
The settlement agreement between Messrs. Alder & Fenwick, Virgin Records, BMG Publishing and myself settles the outstanding issues as a matter of law and accounting. It does nothing to resolve the fundamental problems nor to address their causes. A resolution requires an acknowledgement of events such as have occurred, an acceptance of responsibility for those events, and an attempt to address the concerns to which those events have given rise.
The claim of Messrs. Alder & Fenwick to be the "Good guys" and "honest, God-fearing family" men "renowned for their probity and sound practices", of setting high standards of professional life, in an industry which provides many examples of malpractice, is one which is hard to reconcile with my experience of the actual conduct of EG business affairs, at least in recent years. The claim also sits badly with several of the former EG artists whose experience of dealing with Messrs. Alder & Fenwick would not seem to be in accord with the high claims made by the partners of and for themselves.
Self-deception is not illegal, but where ill-founded claims of integrity are incorporated into a company's quasi-public presentation of itself and becomes a basis for trading, one may reasonably argue misrepresentation.
"Sound business practice" is taken to include such demonstrable and easily-established features as protected client accounts, the recommendation or provision of independent legal and financial advisers, and regular and prompt accounting. Any firm claiming high standards for itself would set transparency and openness as primary operating principles in the conduct of their business.
Similarly, a potential conflict of interest is recognised and acknowledged, and outside parties or arbitrators approached where difficulties may be anticipated. The position where a record company manages its artists, a music publisher is business adviser to its writers, and where record and publishing companies are the same person as business manager, is a position fraught with potential difficulties and exploitation of the artist. This situation is only feasible where the company personnel are of the highest standards of integrity and the business practices are firmly based in ethics and morality. Simply put, the firm is run by gentlemen for whom their word is their bond, and for whom personal honour is involved in discharging any undertaking which is held as binding.
Such was the position of EG Records, EG Music and EG Management, under the common control of Messrs. Alder & Fenwick who claimed of themselves renown "for their probity and sound business practices".
"The EG Way"
I
Increasingly throughout the 1980s Mr. Alder used the term "the EG Way". What was "the EG Way"?
All artist income was funnelled directly into EG Management from live performances, records and publishing, including royalties from EG Records and EG Music. EG Management deducted 25% commission from the artist's gross income, including the royalties received from EG Records and EG Music. Costs attributable to the artist (considered as such by EG) were also deducted by EG from artist income. If a tour suffered a loss, the loss was recouped from record royalties.
The full costs of recording an album were attributed to the artist and deducted from the advance paid by the licensee (Virgin Records during the latter 1980s). The advance was recouped against artist royalties. The advance paid to EG Records (i.e. their share of the total advance from the licensee) was also recouped against artist royalties - the share of advance paid to Messrs. Alder & Fenwick was met by the artist. EG's share of the royalties were paid from the sale of Record One, yet the artist received no royalties until the cost of producing the album, any loss touring in suppport of it, any residual advance left for the artist, and the total advance to Messrs. Alder & Fenwick, were all recouped. In addition, full costs of changing formats (for example, from vinyl to CD) or maintaining the format in keeping with current technology and standards (by re-mastering recordings) were charged in toto to the artist. EG Records then claimed to own the copyright in the record for which the artist had paid. (Messrs. Alder & Fenwick sold the copyrights of the EG Records catalogue to Virgin Records in April 1991 for an estimated £2.5 million).
Simply put, Messrs. Alder & Fenwick owned the record for which the artist paid, received an advance for which the artist paid, and drew income from Record One. The artist also paid for tour losses in promotion of the album, in addition to doing the work. When all these costs had been recovered from the artist's share of sales, the artist would then also receive royalties.
This became the EG "usual policy" under Messrs. Alder & Fenwick and was markedly different from the early and founding relationship between managers and artists.
The expression "the EG Way" became increasingly used by Mr. Alder (I never heard it used by Mr. Fenwick) after 1984, seven years after the departure of David Enthoven (although David Enthoven's name was still displayed on EG headed notepaper as a director until early 1985 when he threatened legal action to remove it). I heard the expression mostly in the negative (as in "that is not the EG Way"). This occurred when Mr. Alder disagreed with a proposal. Sometimes this was also implied in the expression: "We don't do that".
II
Messrs. Alder & Fenwick have never revealed to me the terms of their licensee arrangements for EG Records and EG Music. I am unaware of the size and percentages paid to EG Records for any records I have made and delivered, and am similarly uninformed as to advances and agreements made between EG Music and its licensees for any of my published material. (Publishing licensees have never been audited). The annual advances paid from the licensees to Messrs. Alder & Fenwick were then at the partners' disposal prior to the period in which payment of artist royalties became due (whether made promptly or not).
The terms between myself and EG Records and EG Music were (according to Mr. Alder) determined by EG Management according to "usual practice". A "usual practice" would seem to imply:
i) Such practice as was commonly understood between all parties;
ii) A consensual basis for that "usual practice";
iii) An operation over time involving the full knowledge, consent and understanding of all parties; in this case the EG Group and its artists.
The degree to which artists have been consulted in the determination of the EG "usual practice" and the extent to which they are knowledgeable in its operations, is currently subject to some controversy. Also, the dates upon which various facets of this "usual practice" have begun to be implemented are also the subject of current debate.
The governing assumption between myself and my managers was that the terms were the best available in the market conditions of the day, and that Messrs. Alder & Fenwick (as managers) in determining these conditions were acting in the best interest of the artist. As owners of the record and publishing company to which they were supplying my services, it must also be assumed that they were acting in the best interests of their record and publishing houses.
The incompatible nature of these dual and triple interests was never mentioned to me by the partners. These dual and triple interests were further complicated by Messrs. Alder & Fenwick's movement into business interests which included property development (1984), the Lloyd's of London insurance market (also in 1984), and the acquisition of a security and related companies shortly afterwards. What would be the case were a company under the common control of the partners to run into difficulties? What would happen if the EG Music Group guaranteed a loan of £1.85 million from a bank to their property company, and the market then collapsed? What would happen if the partners were on Lloyd's syndicates which made large cash calls on its Names?
Fair to say, my understanding of the terms of engagement were significantly other than those understood by Messrs. Alder & Fenwick. The "usual practice" to which I was a party was the EG usual practice from the very beginning, in 1969. Since there were no discussions to significantly modify these underlying agreements after 1969, even that they were ratified in February 1976 (between myself, David Enthoven and Mr. Alder) and in July 1977 (between myself and Mr. Alder in London).
The "usual practice" recently and presently referred to by Mr. Alder to explain certain aspects of our joint business arguably includes subsequent modifications introduced by Mr. Alder without my knowledge or assent.
EG "usual practice" has recently been invoked by Mr. Alder for not paying record royalties (because of "cross-collateralisation" in accordance with EG "usual policy").
III
My impression is that Mr. Alder interpreted a querying of his decisions as impugning his honour. The maintenance of his good reputation seems to have been important for Mr. Alder, given his willingness to threaten litigation where adverse criticism and commentary is involved. Mr. Alder has claimed for himself, in conversation or letters, that he is "an honest, God-fearing family man", a "Good Guy", trustworthy, and "renowned for his probity and sound business practices".
I do not dispute that this is how Mr. Alder sees himself. Yet when high standards of personal integrity and business practice are claimed but where conflict of interest, gagging clauses (even between husband and wife), evasion, and widespread late payment of royalties are present on a significant scale; where a settlement agreement asks an artist to give up their right to audit (1991); where (in my own experience) bullying and undue influence are brought to bear; it is fair comment to suggest that there are prima facie reasons for questioning a party's such high claims of and for themself. One might wonder whether "the gentleman doth protest too much".
Gentlemen are those who, in one definition, "behave with courtesy while under stress". Gentlemen do not access their clients' funds, misuse Power of Attorney, refuse to give accounting, act wilfully in extremis to their own advantage where there is clear conflict of interest, nor seek to evade and escape responsibility for their actions. Neither do they expect, nor demand, that their employees or licensees adopt a lie on their behalf. If a gentleman's conduct is unbecoming, they acknowledge that this is within the purview of their own person, and the matter goes no further.
To consider and discuss a person's actions, demonstrably available for analysis, examination and commentary, is not to seek to defame the reputation of that person: it is to establish an accurate picture of their actions and reach a judgement on their conduct. Once that judgement is made, one is free to extrapolate from the quality of the conduct the quality of the person. As Henry Kissinger remarked (regarding the post-bellum arguments surrounding the conduct of the Vietnam war): "These are matters which reasonable people may debate". Mr. Kissinger assumed that reasonable people were not denied the provision of relevant information, nor restrained from both private and public discussion by gagging clauses, maintained vigorously by threats of litigation.
Where there is any oral agreement between two parties, originating in good faith many years ago, it is hard to argue against the decisions of the party holding the money and who claims a "usual practice" in a distribution which is not substantiated by written agreement; particularly where the same party is responsible for supervising on behalf of the first party their own conduct in the distribution.
My argument, based on fair comment and available information, is that EG "usual practice" is sometimes malleable and changeable, in accordance with the particular point which Mr. Alder is arguing. Mr. Alder risks the criticism that EG "usual practice" is whatever Mr. Alder would claim to be such, despite available evidence and the understanding of its (former) artists; even, may be discovered and instituted retroactively by EG.
I argue, on the basis of fair comment and available information, that Mr. Alder's claims of "renown for his probity and sound business practices", of being "an honest, God-fearing family man", of setting high standards of professional life in an industry which provides many examples of malpractice, is one which is hard to reconcile with the actual conduct of EG business affairs, at least in recent years. The claim also sits badly with several of the former EG artists, with whom I am in contact, and whose experience of dealing with Messrs. Alder & Fenwick would not seem to be in accord with the claims made by the partners of themselves.
Hypocrisy is not illegal, but it is without honour.
XI
Thursday, 13th July 2006Headline news is the arrest yesterday of Lord Levy, who is
being investigated in an alleged loans-for-lordship police enquiry. Prior to
his ennoblement, Michael Levy left school at 16 for a career in accountancy and
(to quote the FT) used his experience on
showbusiness accounts to launch his own record label in 1973. Mr. Levy sold
Magnet to Warner Bros in 1988 for around £10 million. I have no information as
to how much of this sum was distributed to artists involved in Magnet, but I am
able to hazard a guess: probably as much as when Geffen Records was sold, when
Island Records was sold, and when EG Records was sold.
Sam Alder’s background in accountancy took him to the EG
group of companies in 1970 as a “backroom boy”. So, both Lord Levy & Mr.
Alder have backgrounds in accountancy & the record industry; both belong to
the generation of accountants Anthony Sampson referred to in the phrase “the
bean counters took over”. Sampson argues that this generation of accountants
became initiators & entrepreneurs, using their financial training to do so,
rather than operating a service industry which supported the financial affairs
of clients.
On February 22nd. 1976 Mr. Alder, then my
business manager, advised me to sign over my copyrights to EG that they might:
protect my interests;
collect my royalties;
defend the copyrights around the
world.
Regrettably this information was unsound, untrue, contrary
to my personal interest, and significantly in the personal interest of Mr.
Alder, the accountant & adviser giving me advice (a license was sufficient
for all of these). The copyright assignments were a necessary part of the
strategy to re-license the EG catalogue, on very different terms to those of
the preceding period, and on much improved terms to EG vis a vis their artists.
(The longer story is waiting to be told).
XII
Monday 21st. March, 2011
The FT included an interesting article on growing concern for ethical
standards in business. This in the light of ongoing massive corporate
scandals, only the latest of which is Parmalat. The article suggests
that interest in the ethical dimension of business activity is a
relatively recent development. This suggests to me that recent &
ongoing scandals have only made very public what has only been, after
all, de facto Standard Operating Procedure widely considered by Power
Possessors as quite acceptable, but to be shrouded in an impenetrable
discretionary cloud. Better that shareholders, regulators, artists, have
little or no notion of (what is now called) a culture of greed.
If I had ever mentioned notions of The Ethical Company to Mr. Alder of
EG, he would have snorted in a blend of derision & dismissal; as in
fact he did on occasion in response to various suggestions by me. (The
tenets of The Ethical Company, as declared on DGM Website 1.0, were each
of them in direct opposition to the guiding principles of EG Standard
Operating Procedure). To quote an exceptionally highly-placed person in
the Virgin hierarchy, of the EG partners at the time of Endless Grief: the trouble with those two is they don't know when to stop squeezing the orange.
A guiding volume on business ethics, most useful when I was attempting to understand & articulate EG conduct, was Just Business: Business Ethics
by Elaine Sternberg (1994). Quotations from this excellent book
appeared on several of the early DGM releases. This one succinctly &
briefly summarises Mr. Alder's behaviour as accurately as Big Cheese of
Virgin's description --
What is immoral is not that the
adviser's interests have been served, but that they have served as the
criterion of action ...the adviser has been guilty of teleopathy, and
has violated both fiduciary responsibility and ordinary decency.
If any visitor to this Diary, or anyone who has read my various comments on EG since 1991, raises the question when will Endless Grief actually end? One possible answer might be, today. Another might be, tomorrow.
There are several possible beginning dates for Endless Grief. February
22nd. 1976 is the day Mr. Alder & David Enthoven visited me on
retreat at Sherborne House and, on the basis of inaccurate information
(read, lies) & twisted advice, had me assign my publishing
copyrights to them (necessary to protect my own best interests, I was
told). The oral collateral warranty accompanying the assignments
was "not recalled" by Mr. Alder, fifteen years later, when the sale of
copyrights became an issue.
Another possible date, signaling the
beginning collapse of EG, is August 1988. This is the month that the
booming property market in the UK suddenly stopped (although it was not
recognised as such until some months later). Then, soon afterwards,
during the Autumn of 1988, the worstest of worse news arrived at No.
63A, Kings Road, Chelsea: Lloyds' Names in Marine 475 were going to get
cleaned.
The no-going-back breakdown of my relations with EG can
be dated to April 17th. 1991, when Mr. Alder threatened legal action to
force me to stay within EG. To threaten the most loyal of EG artists
was an exceptionally stupid act.
Now, cutting to the end game
& passing through 6.5 years of litigation, out-of-court settlement,
severe under-accounting from Virgin & BMG for several years &
settlement payment earlier this year: under the out-of-court agreement
with Virgin, control of KC classic recording copyrights effectively
reverts to myself tomorrow; and the license period to EMI ends today.
This is the short story. Perhaps one day the longer story will be told.
A
notionally reasonable member of the music-using public may not (even
now) believe the fundamentally corrupt & exploitative nature of the
music industry. Unless they were a former Lloyds' Name, a Maxwell
pensioner, had bought a mis-sold pension, held shares in Enron or
WorldCom, had dealings with brokers on Wall Street, or staked their
well-being on the future of Parmalat.
XIII
Monday, 9th December 2002Brief History Of The BMG Acquisition
Of The EG King Crimson Publishing Catalogue The
sale of my copyrights, mainly in respect of King Crimson records and
publishing, by EG to Virgin & BMG in 1991, was the basis of a
dispute ongoing between April 1991 and September 1997. This was the
subject of a High Court writ with an eventual out-of-court settlement
which acknowledged my copyright ownership and improved the royalty
payment (although in the 5 years since the settlement was completed BMG
has not implemented the royalty increase).
BMG undertook due
diligence (a copy of which I possess and brought to our meeting on
October 22nd.). Two of the items raised in respect of the transfer of
copyrights by the artists to EG were consideration and undue influence.
The
first question was: is royalty payment in itself sufficient
consideration for a bona fide transfer of copyright ownership? The
answer was, and is, clearly no.
The second question was: were
the artists subject to undue influence, in that the management giving
the advice to the artists tranfering the copyrights, were themselves the
beneficiaries of the transfers? The answer was, and is, clearly yes.
Peter
Sinfield recalls that, when asked to assign his copyright interests to
EG, Peter asked Mr. Adler: "What happens if you sell the copyrights?"
Mr. Adler replied: "You'll get your share". When the copyrights were
sold, Mr. Alder "did not recall" this undertaking.
I was myself
given deliberately inaccurate and misleading (the word is actually
"dishonest") information by Mr. Adler on February 22nd. 1976 when I was
asked to make assignments in EG's favour.
BMG and yourself were
aware of the euphemistically termed "grey areas" in 1991 and, you may
recall, withdrew £50,000 from the EG sale as a penalty. So, we are both
aware that the acquisition of my/KC copyrights at the time was tainted.
Today,
with wider discussion and information made available from the period,
with issues of transparency and swift accounting (such as were mentioned
on the front cover of Music Week for November 30th. 2002 in respect of
your sister company BMG Records) widely debated, we are surely in no
doubt that the BMG acquisition was a stinker. The legal position was
settled as of September 1997, but the acquisition was morally flawed.
You
are a decent man, and I don't believe you will put energy into
defending the ethical propriety of the BMG acquisition - an artist was
screwed by the management he trusted and, in your heart, you know it.
The
original publishing relationship between the members of King Crimson
and EG was formalized in the Willowfay Agreement of February 1970, which
set out the understanding of the preceding year of King Crimson's rapid
success.
The Willowfay Agreement defined a 70-30 split between
artists and EG in terms of income, and gave EG the right to buy a 30%
share of the copyrights at the end of a 5-year sub-publishing licence
(to David Platz).
(I re-discovered this document in January
1997, the same week that I received the out-of-court settlement document
in respect of my action against EG, Virgin Records & BMG).
At
the end of the 5-year sub-license to David Platz (late 1974 - early
1975) Mr. Adler of EG approached David Platz for an advance on
publishing royalties. David Platz agreed, on the proviso that the
artists received their share of the advance. This was not well-received,
nor acceptable, to Mr. Adler. The quote attributed to Mr. Adler (from
an EG employee) in response was: "No-one tells us what to do!"
Accordingly,
Mr. Adler moved the sub-publishing to a publisher prepared to pay EG an
advance directly, without the artists being involved. Mr. Adler then
used these advances partly to use as loans to some of the artists, on
which they paid interest to EG. Good wheeze, or what?
To move
the sub-publishing, EG had to show good copyright assignments. This was
the basis of "influencing" the artists to sign over their copyrights to
EG so that EG "could collect the royalties" and "protect the
copyrights".
In 1991 I had been outside the music industry for 6
years, suddenly without management and my business affairs in a mess,
at a time of recession. My position was then a very weak position and
the out-of-court settlement was the most that I could achieve at that
time. Today, I would not accept the terms that I accepted then.
11.57 So, what is an effect of these Diary entries? I…
II...
III...
IV…
These are a clear indication of another change in the larger society: the availability of information. Control at EG included the control of information, hence gagging clauses on most former artists and employees. Had I myself signed the gagging clause included in the Settlement Agreement with EG, none of the above would exist.
Dr. Sam G Alder now pops up on Google searches I…
II...
III…
KING WILLIAM’S COLLEGE SOCIETYDr. Alder is himself on the square and King William’s has its own lodge…
Mr. Alder was honoured on January 1th. 2009, the fortieth anniversary of the birth of King Crimson…
Arts Council Chairman awarded Honorary DoctorateDate Posted: 10/Mar/2009 00:00
By: David Le Prevost
The Executive Chairman of the Isle of Man Arts Council, Sam Alder, has recently been awarded an Honorary Doctorate of Arts for Philanthropy and Services to Music by City University, London.
Mr Alder was born and educated on the Isle of Man at King Williams College, where he is now Chairman of the Board of Governors. After qualifying as a Chartered Accountant and working in the City of London, his career took him into the music industry where he managed such acts as T-Rex, Emerson Lake and Palmer, Bryan Ferry and Roxy Music and Brian Eno. He is also a founder investor in several commercial radio stations, including 3FM on the Isle of Man. It was for his involvement with Nordoff-Robbins Music Therapy that Sam was awarded his Honorary Doctorate.
A national charity established in 1976, Nordoff-Robbins Music therapy has earned the respect and support of professional musicians from the popular and classical worlds, eminent physicians, psychologists, educationalist and many others. The charity is highly supported by the rock music industry and provides over 30,000 music therapy sessions at over 50 locations nationwide each year. The charity set up a Master of Music Therapy course for therapists, which is validated by City University.
He has played a central role in Nordoff-Robbins corporate development for over thirty years beginning as Treasurer and from 1997 to 2007 acting as Chairman of the Board of Governors.
Mr Alder was appointed to the Isle of Man Arts Council in 2002 and has been Executive Chairman since 2006.
Clearly, a man to be trusted and respected, an ideal character to play an important role in society and charitable institutions.
http://en.wikipedia.org/wiki/Honorary_degree#Practical_useAn honorary degree[1] or a degree honoris causa (Latin: "for the sake of the honor") is an academic degree for which a university (or other degree-awarding institution) has waived the usual requirements, such as matriculation, residence, study, and the passing of examinations. The degree is typically a doctorate…
The recipient of an honorary degree may add the degree title postnominally, but it should always be made clear that the degree is honorary by adding "honorary" or "honoris causa" or "h.c." inparenthesis after the degree title. In some countries, a person who holds an honorary doctorate may use the title "Doctor" prenominally, abbreviated "Dr.h.c." or "Dr.(h.c.)". Sometimes, they use "Hon" before the degree letters, for example, "Hon DMus".
In recent years, some universities have adopted entirely separate post nominal titles for honorary degrees. This is in part due to the confusion that honorary degrees have caused.
Perhaps Doctor Sam doesn’t quite have the ring of Sir Sam, the knighthood that Mr. Alder was expecting in the early 1980s for his work at Nordoff-Robbins. But Dr. Alder has its own ring about it, particularly when not harnessed to Dr.h.c. or (Hon)Dr.
Toyah herself preceded Dr. Alder, in 2001, with her own Honorary Doctorate from the University of Central England; in recognition of her distinguished achievements in performing arts, media and broadcasting. The title was / is proudly accepted, but not trumpeted.
12.23 Two of The Humans have set off to work, to join the third writing and preparing material for their upcoming new album, at the Piddle.
E-flurrying underway.
18.12 Some afternoon practicing and working on The Writing Project.
21.37 Supper by the back door…
… and a walk down the street…
… to the bridge…
… and local creatures of the wooly kind…
To gentle.
