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The numbers man on why London needs to give the right message

David Hellier
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John Griffith-Jones definitely comes across as a man on a mission. Whether he&rsquo;s talking about hooking accountancy giants KPMG up with as many of its European partners as possible, helping the banks through one of the most catastrophic crises in their history, preserving the status of London as a financial centre, or teaching young children to improve their reading, this tall, athletic-looking man in his mid-fifties is equally animated.<br /><br />The joint chairman of KPMG Europe, he has recently added a host of businesses to the group&rsquo;s burgeoning European network. Partners from Turkey, Russia, Ukraine, Kyrgyzstan, Kazakhstan, Armenia and Georgia &ndash; &ldquo;the Stans&rdquo;, as they are called internally &ndash; voted to join KPMG Europe in August, becoming part of a network that already spans Germany, Switzerland, Spain, Belgium, Luxembourg and the Netherlands. As a result the Old Etonian leaves London virtually every week to visit one of his overseas outlets.<br /><br />One gets the feeling that Griffiths-Jones is jolly pleased about the way this is heading. &ldquo;I&rsquo;m very excited about what we&rsquo;re achieving with these mergers. The longer it goes on, the more we realise we can do.&rdquo;<br /><br />While rivals such as Ernst &amp; Young prefer a looser, albeit broader alliance, Griffith-Jones argues that KPMG&rsquo;s merger route is already benefiting the group in terms of its offering, its knowledge of different markets and its ability to win cross-border contracts.<br /><br />&ldquo;KPMG is a joined-up group. This is a true globalisation story... one does not need to merge with all these partners but it does make it so much easier to agree things. I think brotherhood and sisterhood in this case is better than cousinhood.&rdquo;<br /><br />But if KPMG&rsquo;s message these days is in part about looking outwards, Griffiths-Jones himself is determined to do all he can to help London preserve its prominent position as a financial centre.<br /><br />Last year he served on investment banker Bob Wigley&rsquo;s report that looked into how to strengthen London&rsquo;s position and he still thinks that all who toil in, or govern, the capital have a lot of work to do. It&rsquo;s also clear that trying to preserve London&rsquo;s position on the world stage is a matter of considerable importance to him and one to which he is prepared to commit much of his time.<br /><br />&ldquo;As a provider of finance, London started in an extremely good spot,&rdquo; he says. &ldquo;But the difference these days is that people no longer have to come to London for money &ndash; they can get it elsewhere. London is now simply a market-place, not just a source of funds and one can create a similar sort of market-place elsewhere, in Dublin, say, Mumbai or Paris. We have to change our mindset.&rdquo;<br /><br />He does not like the new 50p tax rate for high earners but thinks this is not the real issue. He says: &ldquo;50p is not good news but I understand the realpolitik of this and I hope it&rsquo;s not forever.&rdquo;<br /><br />The real issue, he says, is the corporate tax environment and on this he is adamant that the tax regime should be clear, stable and favourable to the UK. &ldquo;We must not tax companies on their worldwide earnings,&rdquo; he says, referring to the debate on territorial taxation. &ldquo;We should tax activity that goes on in the UK, not worldwide... we should not thrash around the world trying to take other people&rsquo;s taxes.&rdquo;<br /><br />And how are the authorities doing on this issue? After all, the government has been debating these knotty problems for years and yet corporates around the world are still waiting for an answer from Her Majesty&rsquo;s Revenue &amp; Customs (HMRC) . &ldquo;I think HMRC and the government buy the concept... and they&rsquo;re going on the right track. But we&rsquo;re not saying it as clearly as we could.&rdquo;<br /><br />The former territorial soldier believes that it&rsquo;s time to rebuild confidence in the City, something easier said than done when even cheerleaders like London Mayor Boris Johnson seems to be losing patience with the behaviour of bonus-hungry bankers. That means getting future regulation right. &ldquo;If the playing field is right, then that&rsquo;s enough for London to succeed.&rdquo;<br /><br />He seems to be fairly indifferent to the actual structure of regulation, not having a strong view, for example, on the future of the Financial Services Authority (which the Tories want to abolish and incorporate into the Bank of England). &ldquo;The important thing is that there is clarity,&rdquo; he says, &ldquo;whoever wins the election.&rdquo;<br /><br />In terms of the recent banking crisis, not surprisingly this most senior of accountants does not think his profession failed. &ldquo;We got caught out by the market drying up, with hindsight, but I don&rsquo;t think the auditors did anything other than their job. Would I wish that we had foreseen the crisis?<br /><br />&ldquo;Yes, but there are other people who did not see it coming too and I think as a profession we have come out of this in good shape if you contrast it with what happened after the dotcom bust and the collapse of Enron and WorldCom when the accounting profession was in the dog-house.&rdquo; As evidenced by the sizeable fees KPMG earned out of the whole process of bailing out and restructuring the banks, the firm has a core strength in the banking sector &ndash; for example, it audits the Bank of England and works closely with all the major players in the sector. <br /><br />&ldquo;I remember during the depths of the crisis going to see Paul Myners (the City minister) with my colleagues in the other big firms and collectively we felt that we, the clients and the government, were just about on top of the situation,&rdquo; he recalls.<br /><br />The banking meltdown did inevitably have consequences for the rest of KPMG&rsquo;s business, however, as economies around the world began to slow over the past two years.<br /><br />While many financial services firms decided to let staff go, KPMG decided instead on a more flexible approach, offering four day weeks on a fifth less pay or extended breaks in return for a 30 per cent pay cut. In the event 85 per cent out of 11,500 staff in the UK took up the option of participating in the reduced working scheme. &ldquo;Audit work and regulatory work has kept us busy and if we hadn&rsquo;t had this (scheme) we would have felt very nervous.&rdquo;<br /><br />After such a momentous period in his working life and his firm&rsquo;s history, one might have expected Griffith-Jones to have some significant memories of the last few months. One of his most memorable moments, though, might surprise.<br /><br />&ldquo;I&rsquo;ve never been so proud as on the opening day of our new Academy,&rdquo; the head of KPMG says of the secondary school in Hackney that the accountancy group is part-financing. There are 220 children there, with intake going up to 1,000. &ldquo;If it works it will be terrific,&rdquo; says Griffith-Jones. And you feel he really means it.<br /><br /><strong>CV </strong> JOHN GRIFFITH-JONES<br /><strong>AGE:</strong> 55<br /><br /><strong>WORK:</strong> Joined KPMG in 1975 and spent<br />11 years in audit. Spent 15 years in corporate finance, joining at its birth in 1986 and becoming a partner in 1987. Became joint chairman of KPMG Europe in 2007.<br />&nbsp;<br /><strong>EDUCATION:</strong> Eton College, before going on to read economics at Cambridge<br /><br /><strong>FAMILY:</strong> Married in 1990. He has two children, aged 17 and 14<br /><br /><strong>HOBBIES:</strong> Interests include the army (a territorial soldier for 14 years), bridge, tennis, domestic building projects and low key dinghy sailing. Member of the MCC and the Royal West Norfolk Golf Club.