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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

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