BT's Hanif Lalani ends 26-year career under global services cloud

Hanif Lalani

BT’s former group chief financial officer, Hanif Lalani, leaves the business in March after a 26-year career with the telecoms company following the financial debacle at its key Global Services business – where he was drafted in as emergency CEO 15 months ago.

Lalani stepped down from BT’s board with immediate effect when the company announced his departure on 8 January and was replaced as Global Services CEO by Jeff Kelly, who had been heading up EDS’s American operations.

Ugandan-born Lalani became CEO of the Global Services business in October 2008, replacing Francois Barrault when the group revealed that the division, which had been lauded as the driver of growth for BT, was running at a large loss and was actually its one underperforming division.

“Poor cost controls” led to it reporting a £340m writedown in early 2009 and it then reported losses of £2.1bn on sales of £8.8bn. It took a financial review charge of £1.6bn and a restructuring charge of £280m.

Lalani was drafted in from the group CFO role to become CEO of the division and was charged with leading the restructuring process. He has not said what he plans to do next.

In his 26-year run, Lalani had a number of finance and management roles. He has been CEO of its Northern Ireland business after serving as FD there. For that work he was awarded an OBE for services to business in Northern Ireland, in 2003.

He joined the board in 2005 as group CFO, succeeding Ian Livingston who was made group CEO.

As FD, Lalani proved a tough driver of cost savings and efficiencies, overhauling the finance function. He cut out £65m from its costs and centralised all its processes.

“It’s very easy for a big organisation to become divisionalised and silo-based, for every division to have finance within the team. We moved away from doing everything, everywhere to doing it once for the organisation,” Lalani told Financial Director’s sister title Accountancy Age in 2006.

Lalani also earned the respect of the City and investors for his forthright manner and for having improved disclosure at the telecoms giant.

“Hanif took over as CEO of Global Services at a difficult time for the division. He and his team first stabilised, then started to turn around the business, delivering significantly improved financial results,” said Livingston of Lalani’s move to clean up Global Services.

But the troubles there have left a long shadow over the legacy of his successes. “Couldn’t he have spotted that GS, whose operating margin has fallen from 9.9% to 5.5% in the last quarter as underlying earnings fell 36% to £119m, was in trouble when he was group finance director? Worryingly, the answer is no,” The Times said of Lalani’s role in the division’s fate last November.

The newspaper reported him responding: “At this level, you give autonomy and accountability to the (divisional) chief executives. When they start missing numbers, that is when you get involved and say: ‘What’s happening?’”

Lalani told The Times that he thought the division’s growth rate had not caused its problems. “What hasn’t happened is the focus on delivery,” he explained.

The chartered accountant told Accountancy Age in 2006 that he saw himself as “a good communicator”.

“If you can share with investors the drivers of the business and where you are in that strategy, then they will appreciate the honesty and frankness.”

He revealed that the culture at BT did not always support that attitude.

“I think the ‘stand-up-and-speak-your-mind culture’ doesn’t exist [at BT]. When you’ve come through the civil service you do what you’re told. I think there’s a characteristic that’s still there and one that you would really want to break,” he said. “You want people to stand up and give their views and I think people are reluctant to do that. As we bring more people in, you can see that changing slowly. But I don’t think it’s one of those natural things here.”

Read the full interview with Hanif Lalani here