Sunday, 22 August 2010

BHP Billiton, the $200bn mining company, will tomorrow find itself in the middle of a massive geopolitical independence row due to its hostile takeover of Potash Corporation of Saskatchewan.

Marius Kloppers, the chief executive of FTSE 100 stalwart BHP, is taking a $39bn offer for Canadian fertilizer giant PotashCorp directly to shareholders after its board dismissed the amount as “grossly inadequate”.

However, the deal is set to get even uglier due to PotashCorp’s relationship with Office Chérifien des Phosphates (OCP), Morocco’s state phosphates company. OCP is estimated to supply around 500,000 tonnes of phosphates to PotashCorp.

The Sahrawi people have long fought for the independence of the Moroccan-occupied Western Sahara and have accused PotashCorp of propping up an “illegal regime” by importing so much phosphate. Three vessels filled with phosphates are understood to have sailed to PotashCorp facilities so far this year.

In a letter to William Doyle, the PotashCorp president and chief executive, dated 1 October 2008, Western Sahara Resource Watch (WSRW), an activist group, said: “We urge you to demonstrate your attachment to international legality, human rights and basic standards of corporate social responsibility by reconsidering your involvement in shipping phosphate of Western Sahara origin.”

WSRW’s international co-ordinator, Sara Eyckmans, said that the group will write to BHP’s management and shareholders tomorrow. “Given the urgency of the situation, we need to get our case in on Monday,” Ms Eyckmans said. “If BHP does take over the company, we do not see how it could help its corporate responsibility profile [unless it stopped trading in Western Sahara]. We will tell management about our concerns. To the shareholders, we will highlight that we are in close dialogue with ethical investors around the world.”

Ms Eyckmans added that the group had raised its concerns to PotashCorp several times in recent years but had not received a response. A spokesman for the company said that it had replied on each occasion.

WSRW’s claim of influence with ethical investors has some weight; €32.5bn Norwegian life insurer and investor Kommunal Landspensjonskasse blacklisted PotashCorp for purchasing phosphate from Western Sahara.

BHP’s offer for the potash and phosphate group is one of three big deals last week that electrified the City, which has been starved of major acquisitions since the credit crunch began to bite. FTSE 100 group Cairn Energy agreed to sell a 51 per cent stake in its Indian operations to miner Vedanta and Korea National Oil went hostile with a £1.9bn bid for Dana Petroleum.

Remarkably, despite the enormity of BHP’s offer, the group’s huge market value means that it does not cross the percentage threshold that would force the mining colossus to get the deal approved by shareholders.

However, Mr Kloppers is expected to outline the rationale of the takeover to analysts following BHP’s full-year results on Wednesday. Cairn and Dana release first-half figures on Tuesday and Friday respectively.

Sunday, 12 September 2010

The acrobat was performing the Spanish web, winding down from the ceiling on a red ribbon in a move many Britons will remember from an advert promoting BBC1. But the people clustered around the stage weren’t watching Berlin’s Cosmic Artists directly. Instead, they peered through special spectacles at TV screens showing the action live in 3D.

The giants of the television hardware business, Samsung, Sony, LG, Toshiba and Panasonic, were all pushing stereoscopic screens (and accompanying goggles) at the IFA consumer electronics show in Berlin last week. Panasonic, for example, featured not only the live acrobats, but 3D clips from the Blue Man Group, Universal’s Despicable Me, a promo for the London Olympics, and, on a more high-brow note, a trailer for the forthcoming Wim Wenders film about the late dancer Pina Bausch.

Crucially, after Avatar’s success, film-makers and broadcasters are piling into the technology. A flurry of films including Alice in Wonderland, Shrek Forever After and Toy Story 3 followed the sci-fi blockbuster. And as Sky says of its new channel, due in homes before Christmas: “3D is the next revolution in television.”

The new technology is not just for content professionals, either. Panasonic’s headline-grabbing gadget this year is a 3D home camcorder – a world first – for under €1,500 (£1,250). Wedding videos will never be the same.

But a bigger contributor to the Osaka company’s bottom line will be the one million 3D sets it expects to sell. “It’s like the switch to colour,” says Panasonic’s president, Fumio Ohtsubo. “Once they’ve tried colour, no one wants to go back to monochrome. When you compare it with the pleasure of 3D, the inconvenience of wearing glasses is next to nothing.”

In a Spartan conference room above one of the vast exhibition halls at Berlin’s Messe complex, Mr Ohtsubo is holding forth in Japanese, his voice soft and his demeanour calm. He’s wearing a blue striped shirt with a white collar and two small badges on his jacket lapel: one says simply “Panasonic”, the other is a green leaf with the slogan “Eco ideas”. And there-in lies a contradiction. For while Panasonic’s marketeers are focused on television’s latest magic, Mr Ohtsubo wants to talk about a less sexy product – batteries.

Like companies from Marks and Spencer to Shell, Panasonic has an environmental plan, in this case called GT12 (Green Transformation 2012). “We want to bring everything under the eco umbrella,” he says.

Central to that plan is Panasonic’s 100 per cent takeover of its home-town rival, Sanyo, launched this summer after it bought a 50.2 per cent stake for £2.8bn last December. The attraction, says Mr Ohtsubo, is not Sanyo’s wide range of consumer products, from mobile phones and (2D) television sets to refrigerators and washing machines. Instead, the allure is its expertise in alternative energy generation – particularly solar power – and storage, a low-profile field that he believes has huge potential. “Even without subsidies, we think the solar business will grow,” he says.

The company that is now Panasonic was founded in 1918 by Konosuke Matsushita, his 22-year-old wife, Mumeno, and her brother, Toshio Iue, 15. Its first product was an improved light-bulb socket. Nearly 30 years later, while Japan was occupied by US forces, Mr Iue borrowed a disused Matsushita factory and began to manufacture bicycle lamps. His business later became Sanyo.

So was Panasonic’s acquisition a fraternal rescue or a predatory pounce on a weakened rival? Sanyo has been plagued with bad luck for the past decade. First it got caught selling under-powered solar cells in the subsidised Japanese market. Then, in 2004, a devastating earthquake crippled its semiconductor plant in Niigata plunging it into a financial crisis. A ¥300bn (£2.3bn at today’s exchange rates) restructuring in 2006 left its banks holding five out of nine board seats.

Even the company’s battery division was not immune. In 2006, shortly after the collapse of a proposed joint venture with Nokia to make handsets, it recalled 1.3 million mobile phone batteries when they demonstrated a tendency to overheat. Efforts to sell the semiconductor division were abandoned in 2007 after the credit crunch hit. Mr Iue’s son, Satoshi, stepped down as chairman for personal reasons in March that year and the grandson of the founder, Toshimasa, resigned as president in April.

By then, Sanyo was embroiled in a US Securities and Exchange Commission investigation (since settled) for allegedly failing to report a $1bn loss. By November 2008, Sanyo’s new president, Seiichiro Sano, was in talks with Mr Ohtsubo.

There are several possible explanations for Mr Ohtsubo’s dedication to greenery and interest in Sanyo. Cynics might argue that it’s just greenwash. But the price he’s paying for his rival, though well below peak, is far too much if all he wants is a lick of green paint to satisfy investors on corporate social responsibility (CSR).

Another explanation is that Mr Ohtsubo has spotted, or thinks he’s spotted, a genuine growth market and is seizing the opportunity. If so, he’s got nerves of steel, because this is a huge gamble. Solar power installations are not profitable without subsidy, and in tough economic times, government handouts are vulnerable. Spain, Europe’s solar power leader, cut its photovoltaic subsidy – worth €3bn (£2.5bn) last year – by up to 45 per cent this summer amid howls from the industry.

Rechargeable batteries, where Panasonic-Sanyo now leads the world, with 43 per cent of the market, is also a long-range bet. The company likes to show off the battery packs it makes for hybrid cars. But while it’s true that hybrid market share is growing fast, it’s doing so from a low base, 3 per cent in Europe last year. This is a market driven by the desire of some people to “do something” about the environment rather than by calculated self interest. The sales growth could have a low ceiling.

To succeed in either of these fields, Panasonic will have to improve its technical performance. This, it seems, is Mr Ohtsubo’s strategy. “There’s a lot more we can do to improve our technology in order to increase capacity and speed up charging time,” he says. “Everyone knows petrol will be replaced by electricity.”

What nobody knows, though, is how quickly this will happen. The tipping point will come when electric cars undercut the price of those with internal combustion engines. And that will depend not only on Panasonic’s technology but on innovation by car makers and how long supplies of cheap oil last.

Initially, investors took a dim view of Mr Ohtsubo’s decision to buy Sanyo and another part-owned energy subsidiary outright in an ¥800bn deal. The move sent Panasonic shares tumbling 11 per cent. And the firm had only just pulled out of a two-year slump.

But the buy-out did make sense to some analysts. “Panasonic faces fierce competition from Samsung and Sony in consumer electronics,” Yuji Fujimori of Barclays Capital in Tokyo told Bloomberg at the time. “Its rivals are not as competitive in the energy-related products and household-electrics systems that Panasonic aims to strengthen.”

Oddly, Mr Ohtsubo does not justify the acquisition by pointing to juicy profits so much as matters of principle. “A company is only viable when it is useful to society,” he says. “Each company has a role to play, and the role Panasonic should play is to cope with the most important issues of the time. At the global level, that’s how human beings can co-exist with the environment.”

At Panasonic, the idea that the company has a higher social purpose was being taught to employees long before Western management gurus invented CSR. “At the base of our vision is the principle and philosophy of our founder,” says Mr Ohtsubo.

That principle was set out in 1932 in an address by Mr Matsushita to his assembled employees: “Our mission as a manufacturer is to create material abundance by providing goods as plentifully and inexpensively as tap water,” he said. “This is how we can banish poverty, bring happiness to people’s lives, and make this world a better place.”

And nearly 80 years later, Mr Ohtsubo is eager to take up the challenge. “We have so many things to do,” he says. “This is giving us much pleasure.”

For the lucky, a check-up at the GP consists of nothing more sophisticated than a blood-pressure cuff, an icy stethoscope and a jar to pee in. For those with bigger problems, it can involve medicine’s heavy artillery, from bedside ultra-sound devices to giant metal doughnuts that generate magnetic fields several times stronger than the Earth’s.

Medical imaging has come a long way since Wilhelm Roentgen took the first X-ray of his wife’s hand in 1895. Until then, doctors had no way to tell what was going on inside a living body. Autopsies (often illegal) could show them where organs were but not their functions.

If today’s scanning technologies – X-ray, positron emission, magnetic resonance (MRI), computer-aided tomography (CAT), ultrasound and single photon emission – seem impressive, tomorrow’s promise to be wondrous. Doctors will be able to detect not just large-scale structures but the microscopic interplay of proteins and enzymes as they react to diseases and treatments. Early screening will spot many problems before they become terminal. Diagnostic scans will predict which therapy will work best on a given patient, while follow-up images will determine whether all is going to plan.

From biotech start-ups to pharmaceutical and medical equipment giants, all want a piece of this new action, but one British-based company seems particularly well positioned. GE Healthcare, formerly Amersham, the first company to be fully privatised by Margaret Thatcher in 1982, was sold to the Americans in 2004 for $10bn. Back then, some in the City professed confusion about a company with a wide range of businesses lumped under the catch-all heading “diagnostic life sciences”. They may still be nonplussed, but one set of numbers is crystal clear. GE Healthcare’s sales have soared from $9bn in the year before the sale to $17bn in 2008.

“We’re at a tipping point,” the company said in a paper last May, comparing the coming transformation to that brought about by Thomas Edison when he invented the light bulb. “To take healthcare into the future, we do not have to wait for technologies that will be available in 2025. We need only look at the technologies we have today and act.”

GE Healthcare’s main campuses are scattered around the Chalfonts, a huddle of leafy villagesnorth-west of London. Dr Patrick Grove, then a 26-year-old organic chemist, established the company at Chilcote House in 1940 to refine radium for instrument dials on aircraft and ships. After the Second World War, it became a national centre for the development of radioactive materials and is still a licensed nuclear site.

Chilcote House is now the campus reception centre; security is tight and before visitors can enter some buildings, they must pin on a dosimeter to measure their radiation exposure. The office of Dr Marivi Mendizabal, GE Healthcare’s head of discovery, is in a less glowing building. Still, the main room is divided in half by a glass wall inscribed with a double helix at waist height, with her lab on the far side. In a soft Spanish accent, Dr Mendizabal introduces a series of techniques, some developed in-house (the R&D budget is $1bn), some by partner companies, and others licensed from academia. They range from products approved for use to those still in early trials. What they share is a simple logic – better imaging means earlier diagnosis and more effective treatment.

While hardware has improved, the big change is in what Dr Mendizabal calls “wet science”. One characteristic of chemistry, and particularly large biological molecules, is that they have counterparts that fit like keys in locks. Find the right key and it will latch on to a particular lock. It’s the same technique used by the body’s immune system to send antibodies after the antigens on invading cells. “It’s not just antigens, though,” she says. “This works on other molecules too.”

Consider AH118635, a synthetic molecule invented at GE Healthcare that’s so new it doesn’t even have a catchy name yet. It reveals whether cancers are growing or not by latching on to a marker called integrin alpha 5 beta 3, which regulates blood-vessel growth. Most tumours are only alive near their surface; the centres die because they can’t get enough blood, says Dr Mendizabal. AH118635, if it gets regulatory approval, will be able to tell how successful a tumour is at building new vessels, both by itself and after it’s attacked with drugs designed to disrupt the process, such as Roche’s Avastin.

Or take Hexvix, a chemical which accumulates in tumour cells and glows when exposed to blue light. Developed by PhotoCure, a Norwegian company, and distributed globally by GE Healthcare, Hexvix is already in clinical use. It increases the number of potentially cancerous cysts detected during optical bladder inspections, reducing the risk to the patient.

Another collaboration, this one with InSightec, combines two technologies, MRI and ultrasound, to replace the knife in treating uterine fibroids, a condition which often leads to hysterectomy. Instead, surgeons locate the fibroids on an MRI scan and focus a beam of high-intensity ultrasound to raise their temperature until it destroys the cells. The procedure takes just three hours and the patient is off work for a day, as opposed to four to eight weeks after a hysterectomy.

Even Roentgen’s X-rays are becoming more useful. Nano agents, the first major development in X-ray technology since the invention of computer-aided tomography 30 years ago, promise to give doctors 1mm resolution of soft tissues as well as bones. The trick is to bundle up a tiny but dense ball of iodine atoms in a shell. Injected into the body, the iodine atoms act as tiny shutters, blocking the X-rays and revealing the internal shapes of organs.

Elsewhere in the Chalfonts, Robert Dann is showing off a virtual colonoscopy. Early treatment of colon cancer is 90 per cent successful, compared with 10 per cent if it is caught late. But the screening process is intrusive and unpleasant, so the take-up rate is low. The virtual colonoscopy turns a CAT scan of the large intestine into a movie, allowing the doctor to “fly” through the colon looking for colour-coded, pre-cancerous polyps. If this raises the screening rate from 30 to 100 per cent, more than 10,000 lives a year could be saved in the UK alone. 

Saving lives is the popular measure for medical successes, but cutting costs is also important. The new wave of scanners promises to do this in two ways. By helping researchers evaluate drugs at an earlier stage, they reduce the cost of pharmaceutical development. And by catching diseases earlier and allowing more targeted treatments, they reduce direct clinical costs.

After generations in which technology drove the cost of medicine ever higher, it’s about time the pendulum began to swing the other way.

The company – which uses barcodes and a bank of computers at a secure facility in Britain to check for fake medicines – already has operations in Belgium, Greece and Italy and is looking to roll out its system in another three to four markets this year, said managing director, Gary Noon.

Its expansion into Ireland involves hooking up all 1,500 chemists in the country. Initially, pharmacists will only be able to confirm the batch that the medicine comes from, but within a year, each individual packet will have a unique 74-digit number.

Spun off from PA Consulting two years ago, and backed by venture capital outfit Ipex Capital, Aegate offers a secure system similar to those used by banks to confirm debit and credit cards used in shops and cash machines.

Counterfeiters have built on their success in selling fake Viagra over the internet and are now targeting the world’s top-selling drug, Lipitor, as well as medicines to treat heart attacks, cancer and even schizophrenia. Some packaging is so convincing that it takes a lab test to show that the pills inside are phoney.

The World Health Organisation estimates that 1 per cent of drugs sold through legitimate channels in the developed world are counterfeit. In Britain, over the past three years, the authorities have identified 14 batches of drugs as fakes.

Half a million counterfeit medicines were seized at the EU’s borders in 2005 and officials expect recent figures to be higher. The WHO estimates the illegal trade will be worth $75bn (£50bn) globally by 2010.

If, as expected, Günter Verheugen, the EU enterprise commissioner, recommends legislation requiring point-of-sale authentication in his pharmaceuticals proposal due to be published in April, Aegate is in a strong position. While several other companies have tested systems, the British firm is the only one in Europe with operations up and running.

Dame Mary Perkins adamantly denies she’s the Imelda Marcos of spectacles. Unlike the former first lady of the Philippines, who had 1,060 pairs of shoes in her wardrobe by the time her husband was deposed, Dame Mary insists she has “just” four dozen eyeglasses.

On the day we meet, she’s sporting a semi-rimless pair with a light-green metallic frame, fashionable letterbox lenses and broad armatures with a horizontal slit along the middle to allow just a sliver of peripheral vision. “For years I used to tell people not to choose frames with thick arms, because if you’re reversing your car you’ll have a blind spot,” she says, tucking the Supras back into their case. “And now, what’s the fashion? Thick arms,” she laughs. “So what if you crash your car?”

If her personal collection is – relatively – modest, her company stash is not. “Over the past 15 years I’ve kept every single frame we’ve carried. It’s all in boxes and I’m trying to find the best way to display them,” says the co-founder of Specsavers, Britain’s largest chain of opticians. Possibly at the V&A, I suggest, thinking that if the country’s leading design museum can make room for Kylie Minogue’s gold lamé hotpants, it could surely spare a rack of display cases to exhibit a few thousand snazzy frames.

At first glance, Dame Mary, 64, is an unlikely champion for the fashion industry. Her personal style is a businesslike twinset-and-pearls look (accented with a Guernsey flag pin) and her manner reminds me more of a wise elder aunty than, say, Dame Vivienne Westwood. Yet her influence has surely been more far reaching than her punk contemporary’s.

The two-for-the-price-of-one deals at the heart of Specsavers’ aggressive marketing campaigns have led to a revolution in eyewear, turning a once-ugly prosthetic into a must-have fashion accessory. The chain sold 18 million prescription lenses last year, all of them made – under licence from Pentax – at its three UK factories.

Glasses are no longer a sign of geekyness and are regularly worn by people with 20-20 vision. The likes of Tommy Hilfiger, Red or Dead and, in an exclusive deal signed last year, Jasper Conran now design frames. Gone are those NHS specs for children, with the springy wires that looped over the ears and dug painfully into the flesh. Or at least, they were gone for a while. “Who would have thought Harry Potter would have brought them back into fashion?” she says.

Like some early 20th-century Bolshevik, Dame Mary is already exporting her revolution. Specsavers had more than 1,000 stores in nine countries at its year-end in February, and is aiming to double that in the next four years. Its latest expansion is into New Zealand, where it plans to open 60 outlets this year. In Australia, it has been on an acquisition spree, picking up 40 outlets from Vision Centres and Vision Crest Optometrists. Turnover also crossed the £1bn mark last year, two years ahead of schedule.

The main obstacle to global growth is the structure of national markets. “What we like is where the optics model is similar to the UK’s,” she says. “In Italy or France or Germany, most people would go to an eye doctor to get tested, then go around the corner to buy their glasses. We prefer to have a fully qualified optometrist on the premises, owning that practice and both testing and dispensing.”

Domestically, the company is still expanding, though slower than it is abroad. Dame Mary thinks it will benefit from the downturn in the economy as shoppers look for cheaper options without sacrificing style. “Our typical customer has a very similar profile to an Asda customer,” she says. Already the chain has introduced a new Star range of glasses, frames and lenses, for just £25. “We managed to hold prices for 10 years but six months ago we could see people starting to think, ‘I’ve only got so much money in my purse.’ ”

She’s also optimistic about the future of her digital hearing-aid stores – after five years, already the largest private providers in the country – and positively bullish about a varifocal lens, called Occupational Tailormade Multifocal, that is due to be rolled out this autumn. And despite the downturn, the company is investing in technology. It is introducing fundus cameras, a microscope that takes pictures of the retina, as standard in many of its shops.

Specsavers is Dame Mary’s second chain. The first she formed with her husband, Doug, whom she met while they were studying to be optometrists at Cardiff University. Based in her home town, Bristol, it grew to 23 stores before they sold it in 1980 for a reported £2m. Soon after that, the family moved to Guernsey, where her father, also an optometrist, had retired.

“I thought I might do something different,” she says. But after a spell doing charity work for the Citizens Advice Bureau, and a term studying to be an accountant (”ghastly thought”), she returned to optics.

The lure was Margaret Thatcher’s plan to liberalise the business in 1984. “Before that, you could not advertise – not even an announcement in the local paper for a new shop opening. You couldn’t put frames in the window with prices on them.”

Many in the industry decried the reforms as the end of the small, family optician. “It was like asking turkeys to vote for Christmas,” she says. But the flip- side, she realised, was that a chain could lift the burden of boring business bits so opticians could spend more of their time gazing into eyeballs.

Her vision was a chain of joint partnerships, similar to franchises. Most of her shops are half owned by Specsavers and half by the resident optician. The company looks after such back-office operations as marketing, payroll and the warehousing of frames at the headquarters in Guernsey, where it is the island’s largest private employer.

The result is that some 1,000 opticians have survived instead of being squeezed out by chains of wholly owned shops.

The irony for Dame Mary is that all this means she no longer does eye tests herself. Instead, she contents her self with “secret shopper” expeditions, which she finds far more informative than focus groups. “You wouldn’t believe the things people will tell you if you’re just sitting next to them.”

Entrepreneurial success has come at a price. Her children suffered when she was building her first chain, because the business had priority, she says. “When I give speeches, I always tell people not to do what I did.” Still, her offspring have not disowned her. All three have gone into the family business and her son, John, became joint managing director last year. Though she’s cagey about when, or even whether, she’ll retire, the company clearly has an in-house succession plan. For good or ill, we can all expect to hear her catchphrase for years to come: “Should have gone to Specsavers”.

Nigel Mason is apologetic when he arrives at GE’s British head office in Berkeley Square, central London. This isn’t his building, explains the boss of GE Healthcare UK as we wait for security to sign him in. Once his visitor’s badge has been clipped to his jacket, we’re ushered into G4, an ultra-modern but poky little room. By then, though, he’s done saying sorry. And by the time we get to the subject of the much-criticised NHS computerisation project, he’s bridling a bit at the very suggestion that he should be on the defensive.

“I’m proud of our role,” he insists. “It’s a positive story.”

Mason has been head of GE Healthcare International’s Public-Private Partnership team since 2004, two years before he added the title of country manager to his job description, and he clearly takes the project personally.

His company is responsible for the picture archive and communications system (Pacs) in the southern cluster, one of five broad NHS regions. Every one of the hospitals had their Pacs delivered both on time and on budget, he claims.

“As a result of the successful roll-out, we were asked to take an active part in the North-west and West Midlands, where a previous incumbent had been struggling.”

Pacs has had two technical failures in the past 18 months, he admits, but in both cases the backup kicked in immediately and the medics using the system to look up patients’ X-rays or scans weren’t even aware there was a problem.

GE Healthcare, which has its global HQ in Chalfont St Giles, Buckinghamshire, is one of the biggest players in the medical technology sector, supplying a wide range of equipment including big-ticket items such as magnetic resonance (MR), positron emission tomography (PET) and computed tomography (CT) scanners. Since 2004 when it bought Amersham – the first company privatised by Margaret Thatcher – GE has also had a presence in the pharmaceutical side of medicine. Worldwide, it has earnings of $17bn (around £8.5bn); in the UK, it has 2,800 employees.

And even in with recession starting to bite in the US, the American conglomerate is unlikely to retrench in its core market. “The UK is relatively small in global terms, less than 10 per cent of our business. But what that masks is the importance of the international market relative to the US. We genuinely do see ourselves as a global company, rather than a US company doing business overseas, which is what it might have been five years ago.”

Mason’s job is to figure out which of a dizzying range of technologies is best suited to a particular task, and then persuade NHS trusts to see things his way. “Healthcare cannot go on expanding its budget for ever,” he says. “For example, we produce six diagnostic tools that can be appropriate for coronary artery disease.”

He starts ticking them off on his fingers without pausing to explain what they do, let alone how they work: “echo cardiography, stress ECG, myocardial scintigraphy, multi-slice CT, cath lab and PET”. Each is understood well individually, but until recently there has been no assessment of their relative merits. Mason’s team has now developed a model showing which works best for patients in different risk groups, and will be sending it out to cardiologists for trials within the next few months.

Appropriate technology is also central to GE Healthcare’s response to the Government’s proposals for polyclinics – super surgeries with 20 or 30 doctors. Although critics complain that these would herald the end of personalised GP services, Mason thinks they would have the opposite effect, bringing medicine closer to patients.

“After you see your GP, if you need anything more elaborate than a pill, you have to get an appointment and go to a hospital five or 10 miles away,” he explains. “But patients who don’t need to go into an acute setting should never go there. This will be a lot better for the patient and from a cost point of view.”

The only question is whether a given polyclinic will need its own MR scanner (price tag £700,000) or just a bone densitometer – a low-level X-ray machine that can detect osteoporosis or identify “tofis”, people who are Thin on the Outside and Fat Inside. “Potentially, people like me, who look relatively slim, could be at risk because they have a build-up of fat around key organs,” he says.

In his late forties with a thick head of silver hair, Mason prides himself on being a walking endorsement of “early health”, and still pursues windsurfing – a sport he took up at university. His other great interest is restoring and racing classic cars. In 1998 he co-drove a blue 1959 Jaguar Mark 9 in the classic Monte Carlo Rally, finishing a respectable 36th out of 200.

Such competitive, adrenalin-fuelled sports just add to Mason’s image as a confident, go-ahead corporate executive. But hidden inside is something less common. Unlike most people at his level, his degree was not in business or finance but science, specialising in nuclear medicine. “I studied biophysics [at York] in the second year it was offered, before it was even known as a viable subject,” he says.

His Masters thesis, completed while he was working at Barts hospital in London, was the development of a “tissue equivalent phantom for CT” – in essence a three-dimensional test card for the scanners. Although he demurs when it is suggested that he actually understands all his products, Mason admits to deriving pleasure from being able to keep up with developments in his field.

He is also enthusiastic about ultrasound and uses it to illustrate several of his points, such as the pace of miniaturisation and convergence. “Five years ago, ultrasound was the size of a domestic fridge, wheeled around on a trolley,” he says. “Now it’s not much bigger than my portfolio here and soon it will be the size of my BlackBerry.”

Images of Dr McCoy’s tricorder on Star Trek spring to mind, but Mason immediately brings me back to Earth. “Several ambulance trusts are looking at ultrasound,” he says. “It could be life-saving with appropriate training, but we don’t want to put this diagnostic tool out into the hands of anybody.”

By convergence, he means that separate technologies are being used together to get results that neither could achieve alone. One example is the combination two years ago of PET scans and CT scans. “PET looks at function, down to molecular pathways, but you end up with a bright dot in the middle of blackness. That’s not much use to a surgeon,” Mason explains. “By using a CT scanner, which gives good spatial resolution, he’s able to see that hotspot in full three-dimensional context. Ultrasound could be next, he says, combining with the catheters and X-ray machines used in cath labs to investigate heart function.

Other than that hint, Mason is cagey about what his fellow scientists are working on in their labs. But he’s optimistic that the pipeline of ideas will continue to flow. “We’re moving from a world of ‘I believe our technology can do that’ to ‘I can prove our technology can do that’.”

‘Fore!” When Tiger Woods smashes the ball straight for their heads, most people flinch – some duck – until the point-of-view pulls back to show trees hurtling past along the fairway. The simulacrum of the world’s greatest golfer is a bit dodgy, but the ball he has just smacked at your head is convincing. And it will be sailing out of a screen in a living room near you by this summer. After a century and a half of intermittent research, three-dimensional television is so close, you may feel you can reach out and touch it.

Some people watching the demonstration at Samsung’s digital media and telecoms research park in Suwon, an hour south of Seoul, do try to grab the animated images of approaching spacecraft, anthropomorphic cars and blobby aliens. It makes them look even sillier than the oversize goggles they have to wear to get the 3D effect. But the experience is so riveting that none of them cares. “It feels really real,” declares one normally sceptical French technology journalist as he tries on the goggles for a third viewing.

The target early adopters for 3D TV are, anyway, the affluent young men who have redefined cool to include computer games. No longer geeky, this business will be worth $46.5bn (£23.6bn) by 2010, almost half as much as the $104bn filmed-entertainment market, and it’s growing faster. High-end games, like most animated films today, are created using CGI (computer- generated images), and making them 3D is child’s play: you just instruct the computer to calculate each frame from two slightly different angles. The result is an illusion of depth which, whether you’re roaring around Monte Carlo in your F1 Ferrari or quarterbacking the Dallas Cowboys to NFL glory, makes a huge difference to the feel and enjoyment of a game.

That Samsung Electronics, the world’s largest consumer electronics firm, should want to take the lead in 3D TV is not surprising. From entering the flat-screen sector 16 years ago, without any technical support from the Japanese companies that had pioneered liquid crystal displays, it has risen to sit among the dominant players in the industry. In Europe alone it is number one for TVs, with 22.3 per cent of the market.

And the company is just one of more than 50 that make up Samsung Group, South Korea’s biggest conglomerate, responsible for fully one-fifth of the Asian Tiger’s economy. That’s 20 per cent of a big pie: Korea joined the trillion-dollar club in 2004 and today it has a GDP per head similar to Spain or Greece.

Size brings with it problems, however. To operate efficiently, different companies within the group have to act independently, sometimes developing incompatible strategies. For example, Kim Hunsuk, vice-president for research at the visual display division of Samsung Electronics, who still wears the company’s tan and blue bomber jacket, sees no new niches for his product to exploit – a view not shared by the LCD division that supplies his screens. At Tangjung, 40 minutes from Seoul by high-speed train, close to 100 robotic production lines are churning out the latest LCD screens in pristine conditions – guests have to wear plastic slippers over their shoes just to look through windows at the sealed units on the shop floor. Here there is much talk about new uses for flexible flat screens, made with plastics instead of glass, such as compact screens to which you can download today’s newspaper before rolling it up and carrying it to the Tube.

The family-owned chaebol – as South Korea’s biggest conglomerates are known – has other woes. An independent counsel investigating corruption allegations against Samsung Group demanded that its reclusive chairman, Lee Kun-hee, his wife, Hong Ra-hee, and son, Lee Jae-yong, appear earlier this month to answer questions. Mr Lee was questioned for 11 hours during his first visit to the counsel’s office, and was called back again a few days later. The investigation, into accusations made by the group’s former top lawyer, Kim Yong-chul, involves an alleged 200 billion won (£100m) in slush funds, below-value sales of convertible bonds and the purchase by Mrs Hong of 60bn won of artworks in a single year. No charges have been laid, but the notoriety alone must be deeply upsetting for Mr Lee, who almost never speaks publicly.

In Suwon, however, no one wants to talk about the parent company’s legal troubles. The fifth floor of the research centre is packed with flat screens, LCDs, plasmas and even a few organic light-emitting diodes, stacked inches apart, sometimes with the cases removed to reveal the circuit boards inside.

Lab benches seem to be in such short supply that three young techs have partially blocked the main corridor, just outside the glassed-in laboratory, with a trolley-mounted screen. Crouched round it, they conduct their tests oblivious to the gaggle of Western journalists filing by into a conference room where Michael Zöller, senior marketing manager for televisions at the European head office of Samsung Electronics, is explaining a chicken and egg problem: “Who’s going to buy a 3D TV if there’s no content for it, and who’s going to make 3D content if no customers are equipped to watch it?”

Samsung Electronics is trying to break that impasse. Instead of waiting five or 10 years for the next generation of 3D technology to become widely available, it is bringing out a souped-up version of a very old technology in the hopes that when the switch comes, its brand will already be established as the dominant player.

Sir Charles Wheatstone, a Victorian scientist, invented stereo-scopy, as it is formally known, in 1840. Sir Charles recognised that 3D vision is an illusion created by the brain using various clues, most importantly the stereoscopic images collected by the eyes. Hold a finger close to your face and shut first one eye and then the other – your finger jumps, and the size of that jump is a reliable gauge of how far away it is. With both eyes open, the brain erases the jump, but keeps the information to tell it how distant things are.

The future technology that everyone is hoping for will most probably involve angled beams that deliver slightly different images to each eye. The drawback is that the viewer has either to sit in exactly the right place, or the television must identify faces, locate the eyes, and aim its beams at these precisely chosen points. The former is a non-starter; the latter is still years away from going on sale at an affordable price.

In Samsung’s system, as with earlier 3D technologies, both images are displayed but light heading for the wrong eye is blocked – as it was, most famously, in the Seventies by the red and green filter cardboard spectacles given away in cinemas showing 3D films.

The Korean company’s innovation is to have the television screen flicker between images for the left eye and right eye, at the same time that the lenses of their goggles flicker between opaque and transparent. To ensure that the viewer doesn’t notice this, it has to be done very fast, 120 times a second – more than twice as fast as images appear on ordinary television screens and five times as fast as in movies. This only became possible with the latest generation of plasma screens.

Samsung’s 3D TV system has three components: a 120Hz plasma screen; the PDP 470 – not cheap, but attractive on its own for anyone who wants the large-screen plasma experience; a computer, which most people have already; and a 3D kit consisting of goggles, software for the computer and a little infrared emitter that sits on the television and ensures that goggles and screen are synchronised.

“The kit will cost about as much as two new games,” says Mr Zöller, picking just the right comparison to appeal to his target market. After games, content is expected to flow from films, television and websites.

Like any big electronics company, Samsung Electronics has numerous other technological tricks to promote, most of which will be standard fare in the industry within a year. The main selling point of the PDP 470 is that it makes moving images look sharper, particularly during the high-speed movements you get in live sports.

My own favourite innovation is a modest function that keeps the sound volume level when you’re channel hopping. Others may prefer the limited interactive content, including built-in recipes and children’s programming and even static displays of famous paintings by artists such as Matisse – though a poster from the National Gallery would be a lot cheaper.

Sunday, 8 October 1995

FEW PEOPLE today would deny that Paul Reichmann is sharp. Even his features seem chiselled. Framed by his black yarmulke, prominent ears and full beard, a pair of dark, deep-set eyes bore out. For 30 years he cut deals in Canada, the United States and Britain that were estimated to have made the family worth more than all of New Zealand. But the collapse two years ago of his grandiose Canary Wharf project in London’s Docklands led many to believe he had been permanently blunted. Sent away for re- honing might have been a more accurate metaphor.

For last week Reichmann retook possession of his most famous landmark, the skyscraper at 1 Canada Square and its attendant office and retail complex. Not many businessmen can say they stumbled so badly, then rose again. The rapid comeback, taking less than three years, is a testament to his reputation for being not only canny but scrupulously straight in his business dealings. But while paying off the banks that backed him in the 1980s will have polished that image, the episode has left nagging doubts about his judgement.

At first glance the pounds 800m purchase from an international consortium of 11 banks vindicated his staunch belief in the project in 1992, when all around him were sceptical. At that time Olympia & York, the company founded by Reichmann and his two brothers, Albert and Ralph, owed its banks almost pounds 600m on the Docklands development. Reichmann claimed an extra pounds 590m in bridging loans would see him through until the London office market turned up again. After pushing the project into administration the banks, led by Lloyds, invested pounds 280m to complete the 4.5 million sq ft first phase of the development and deferred interest charges until 2007. Reichmann, you might conclude, was right all along.

The main difference between then and now is that while Canary Wharf was initially backed by debt, it is now financed by equity partners, Larry Tisch, the media mogul, and Prince al-Waleed bin Talal bin Abdulaziz of Saudi Arabia. Reichmann International, the family’s new company, also has an ambitious pounds 800m plan for Mexico City.

But the failure of O&Y had other consequences, one of which was to shed more light on its secretive workings. Reichmann’s distaste for publicity is well known. The Reichmann brothers, five in all, were the sons of orthodox Hungarian Jews who fled central Europe during the Second World War, first to France, then Spain and on to Tangiers. Paul Reichmann still recalls the Nazi bombing of refugees south of Paris when he was eight.

His father, Samuel, had made money in poultry but in Tangiers he switched to banking. His mother, Renee, began shipping chocolate into Europe in exchange for the lives of refugees smuggled out of Hitler’s death camps.

From Tangiers Paul was sent to school at a Talmudic college in Gateshead, Tyne and Wear. His family wanted him to teach but in the 1950s he moved to Toronto and began building factories in the suburbs. From there he moved into office properties. In 1975 he put up First Canadian Place, a daring 5 million sq ft office and retail complex in Toronto.

But the big break came shortly afterwards when he expanded into New York, buying eight properties for $320m (pounds 202m) followed quickly by another 10. Although derided by critics, the portfolio is reported to have increased in value 10-fold over the next decade. Backed by the Bronfman family, the owners of Seagram, the international drinks company, he also built the $1.5bn World Financial Centre on Manhattan Island during the depths of recession in the early 1980s. It too was criticised for being over- ambitious, but again hindsight showed Reichmann to have been a wise investor.

Throughout O&Y’s evolution into the world’s largest property company the Reichmanns stuck to a family management structure typical of much smaller businesses. Outsiders were not allowed to peer into the boardroom. Decisions were made quickly and silently, sometimes by Paul alone, sometimes with Albert and Ralph present. And those decisions were heavily influenced by their strong spiritual and family ethos. Paul Reichmann is famous for sealing deals with a handshake, and eschewing corporate lawyers whenever possible.

While other moguls luxuriated in yachts and jets, Reichmann’s extravagances were aimed wholly at family and faith. Peter C Newman, a Canadian business writer, described the Toronto wedding of a minor niece in his book The Acquisitors.

The women were dressed by the country’s top fashion designer, in outfits that cost up to $50,000. But the dresses had to conform to orthodox traditions of modesty, and their wearers were separated from husbands and sons during the service. An orchestra was flown in from New York but played only Hasidic music. The dancing was segregated.

Those values also emerge in Reichmann’s projects. Although Canary Wharf has many critics, it undeniably relies on classical sources. Apart from the tower itself, the development is well-proportioned and spacious, with shady arcades and wide pedestrian walks beside the waterfront. It is a reflection of the deep commitment to the aesthetic that lies at the heart of Reichmann’s beliefs.

But around that core lie convictions that are, perhaps, less well founded. One of his ideas is a counter-cyclical theory of property markets – the theory that brought about his downfall. Reichmann was convinced that the boom and bust property markets moved in conflicting waves in different cities. When New York was down, for example, London would be up. The recession of the early 1990s did not prove him entirely wrong – merely that he had chosen the wrong cities. The downturn hit North America, Britain and Japan at about the same time, while leaving other European and East Asian economies buoyant. With rents falling in all his key markets, Reichmann was unable to keep up payments on Canary Wharf’s debt.

His reliance on his own business instincts also led him astray, claims Peter Foster, author of Towers of Debt: The Rise and Fall of the Reichmanns. Persuaded that others would be bound by their word just as he was, he failed to get firm guarantees of transportation links to Canary Wharf. The development is still three years away from getting the Jubilee line extension it so badly needs.

Over-confidence, compounded by the banks’ eagerness to lend, was also to blame. Reichmann borrowed billions of dollars for takeover bids in pulp and paper and the oil business, industries where he had little experience. Not until Canary Wharf ran into trouble did the banks question whether his balance sheet was strong enough to support the loans. When it collapsed, the O&Y empire owed between $13bn and $15bn.

Whether he has learnt from the debacle of 1993 is unclear. The cloak of secrecy, though parted by the banks, remains in place over most of his activities. If he is older and wiser, Reichmann can look forward to building a second great fortune. If not, another spectacular disaster could await him.

In the summer of 1914, one Captain Harry Colebourn, a veterinary surgeon with the Canadian Second Brigade, was travelling by rail through the wilderness on his way to England for the Great War. Stopping briefly in White River, Ontario, he met a trapper trying to sell a bear cub. Although “a bear of very small brain”, the cub fetched C$20 (pounds 9), was promptly named after the captain’s home town, Winnipeg, and became the regimental mascot.

One imagines Winnie enjoyed leading parades down The Mall in his military tunic, waving a baton and humming the marches. But when the regiment left for the trenches of Flanders, he was assigned to guard a pen in London Zoo. There he met Christopher Robin and his father, and the rest is literature.

But happy childhood reminiscences have a way of turning sour when confronted with the real world. White River, wanting to celebrate its most famous ursine citizen, tried to put up a statue of that “silly old bear” in the 1980s, only to find itself in a five-year battle with Disney, which owns the copyright there.

Checking my facts with London Zoo last week, I found myself thinking, in the most thoughtful way, that the paw prints in front of me looked familiar. The zoo, it turns out, unveiled its own statue of Winnie on Wednesday. “Oh Dear!” Had they had any copyright problems? None so far, but what the new owners of Reed’s publishing interests might say is another story.

FANS of the new director-general of the Confederation of British Industry were raving about his intellect last week. At 39, Adair Turner is a “profound thinker”, said Archie Norman, chief executive of Asda and a fellow graduate from the McKinsey & Co consultancy. But the best illustration of his thoughtfulness is known to few people outside his family.

In 1963, at the age of eight, Turner was living in East Kilbride, where his father was town planner. One day his mother, Kathleen, found him in the living room staring glumly at the television. “What’s the matter?”, she asked, to which the prodigy replied: “I’m terribly worried about the balance of payments.”

Danka’s turn

WHAT Rentokil has done for rat-catching and Dyno-Rod for drains, Danka wants to do for the equally unglamorous world of office equipment supply and servicing.

“We’ve launched a name-awareness campaign,” explains Danka’s chief executive Dan Doyle. “We aim to get our name known first, and then people will want to find out what we do.”

On Thursday, Danka signed a four-year sponsorship deal, worth more than pounds 3m, with Everton Football Club, holders of the FA Cup.

No doubt the company is hoping its somewhat unconventional marketing strategy will be as fruitful on the football pitch as it has already been on the race track. When Master Oats landed the Gold Cup and Alderbrook took the Champion Hurdle at the Cheltenham festival in March, both winning jockeys sported the Danka logo on their silks.

Despite Everton’s cup success, the club’s valuable Premier League status has been under threat for the past two seasons. But the pounds 5m signing of the unsettled Manchester United winger Andrei Kanchelskis might introduce a little more consistency and secure Danka an even higher profile.

THE BANK of England is in the dock not just for its failure to spot anything wrong at Barings, but also the failure of its Governor to establish proper communications when news broke of the collapse on that fateful Friday evening.

Eddie George had gone off on a skiing holiday and knew nothing about the affair until he got to his chalet to receive the increasingly frantic messages to call London. In the view of many people who attended the meetings at the Bank that weekend, had the Governor been there on the Saturday (instead of just the Sunday), a rescue could have been arranged. “Why”, growled the head of one of the remaining merchant banks, “didn’t he carry a mobile phone like the rest of us, or at the very least phone in to the office from the airport?”

Fully booked

LAST week’s Board of Banking Supervision report on the collapse marks deadline time in the Barings instant book business. Judith Rawnsley, an ex-employee with a reported pounds 50,000 advance from the publisher HarperCollins, is working all weekend to meet Tuesday’s submission date for publication this September. Bunhill’s former colleague turned cricket reporter, Stephen Fay, is sanguine (publication date: December) about the rush to press: “Where I’ve been chasing the story, I don’t find anyone else’s footprints.” Obviously another Pooh fan.

The Chechen capital, Grozny, devastated by heavy fighting over the past three weeks, is the focal point of the region’s oil and gas supply network.

A BP spokesman said the company was watching events in the republic closely. The shortest of three potential pipeline routes from Azerbaijan to world markets passes through Chechnya.

The consortium signed a $7bn deal with Azerbaijan in September to develop the Azeri, Chirag and Guneshli fields under the Caspian Sea, which are believed to contain reserves of 55 billion tonnes, equivalent to a major North Sea field. It is looking at three possible routes for a $3bn export pipeline. Two of them – to the Mediterranean or the Gulf – run through Iran, and are not popular with the consortium’s American members, which include Amoco, Pennzoil and Unocal. Those routes would also be vulnerableto attacks from Armenians or Kurds.

The remaining route, through Chechnya to Novorossiysk, Russia’s main Black Sea oil terminal, is the shortest and crosses the easiest terrain. But prolonged conflict in the republic could endanger the project. The Russian air force has bombed the city’s refinery, despite interior ministry assurances that “energy enterprises” in Chechnya would not be targeted.

Although the pipeline will not be needed for at least five years, a decision on the route is likely to be taken much earlier. Russia, which has a 10 per cent interest in the project through Lukoil, favours the route through Grozny to Novorossiysk.

The republic is one of Russia’s oldest oil provinces. Some fields have been operating for almost a century. As its fields have dried up, production has declined from 20 million tonnes in 1970 to 800,000 tonnes in 1993, according to Jonathan Stern, vice-president of Gas Strategies, an industrial consultancy.

But it remains a major transit point. Grozny is a hub for two major oil pipelines, linking the producing and refining areas of Astrakhan and Baku with Novorossiysk, and a host of natural gas routes.

The Grozny oil refinery, which has a capacity of 18 million tonnes a year, is said to be in poor repair but has become more significant to Russia since the collapse of the Soviet Union. It lost much of its refining capacity when other republics became independent, said Stuart Christie, editor of CIS Oil and Gas Report.

Rumours in Moscow at the start of the war suggested the real motivation for the invasion was a decision by the Chechen government to privatise some of its oil and gas infrastructure. Western analysts place little credence in this theory, however.

Copyright 1995 Newspaper Publishing PLC