The full extent of former New Star fund manager Patrick Evershed's claims of bullying by his former employer John Duffield have been exposed.
Evershed is currently contesting his departure from the now defunct asset management company on the basis of constructive dismissal. He left months before New Star was forced to re-structure its debt and then was ultimately sold to Henderson Global Investors for a fraction of its peak value.
In a judgement handed down by the Employment Appeals Tribunal today, Evershed claims that in the run-up to the credit crunch in 2008, when he was running the New Star Selected Opportunities fund, he told Duffield that he believed:
- That the credit crunch was coming
- He was bullying the group's head of property Roger Dossett to buy over-valued properties
- He was destroying the confidence of his own fund managers and the group's marketing department.
Evershed, who now works for Hargreave Hale, lost the initial claim and is now appealing. Today he won an amendment which will see the case judged under the Whistleblowing Act, meaning that the damages he can potentially win in a further appeal are unlimited rather than being capped at £66,000.
Duffield's legal team denied all of Evershed's claims during the appeal. It said: 'New Star denies the chairman in any way bullied [Mr Evershed] or attempted to undermine, demean or humiliate him. The chairman always spoke to and acted towards [him] with courtesy and respected [him].'
However, the three judges agreed the case could be judged under the whistleblowing Act because Evershed wrote to New Star's head of human resources shortly before he was asked to leave the company in September 2008 claiming Duffield was bullying him and his colleagues.
The latest judgement in the case reveals the full letter Evershed wrote to the head of human resources, Helen Steel.
The letter said: 'I would like to make formal complaint about the way John Duffield has been bullying me and several of my colleagues.
'He has been vile to most of the fund managers for several years and bullying us. He has created a most unpleasant atmosphere throughout the firm. His conduct and the atmosphere which he has created has destroyed the performance of the New Star funds. He recruited stars and then destroyed them by the way he treated us.
'The board are aware of they [sic] way Duffield has been treating us and by the way his conduct has undermined the self confidence of the fund managers and the marketing department but they have been too frightened of him to deal with the situation in the way they should have.
'In particular he bullied me in to reopening my fund. This destroyed the performance of the fund and my reputation. He has also destroyed the performance of several other funds and the reputation of several of my colleagues.
'He also bullied Roger Dossett into buying properties when he and I and many others kept telling him the property sector was over valued. I kept telling him for over three years that a credit crunch was coming, but he turned his back on me each time and walked away. He refused to listen to me or Roger.
'When I told him to stop bullying Roger to invest in over-valued properties he threatened to sack me. I intended to take him to court over this but I was persuaded by Richard Pease not to do this. This was the worst decision of my life. I could have saved a lot of people a lot of money if I had brought action through the courts against him at that time.
'I would also like to make a formal complaint against Gregor Logan. He also bullied Roger and his team in to investing in over-valued properties.
'I am sorry to have to write this letter to you but an increasing number of my colleagues have come to the reluctant decision that it is time for Duffield to be removed. It would be better if the board did this rather than leave it to me to take the matter to court.'
After his employers received the letter the judgement says Evershed was promptly summoned by the then New Star chief executive Howard Covington, who is said to have suspended Evershed from his duties, saying he was 'clearly emotionally unfit to manage money'.
Evershed was given 15 minutes to clear his desk and as he passed Duffield he is said to have warned Evershed to be 'very careful' as 'this might be very expensive for you'.
New Star then wrote to Evershed stating that he no longer had the authority to make investment decisions because he had been seeing a psychiatrist (which Evershed denied) and would not be allowed back until a practitioner chosen by New Star had confirmed him well enough to make investment decisions.
A key plank of Evershed's compliant is that when he launched the Selected Opportunities fund he had agreed with Duffield to limit the size of the fund to £50 million. He argues Duffield sought to re-open the fund after a run of strong performance and this ultimately undermined it.
Evershed used the sharp decline in performance on his fund as evidence of the impact of the bullying at New Star in his Court of Appeal hearing.
He said: 'John Duffield recruited investment stars to his new fund management group. In the first two years, five of the six main retail funds were in the top quartile of their respective sectors.
'Four years later, however, because of the bullying and undermining which the fund managers suffered from John Duffield, five of the six main retail funds were at the bottom of their respective sectors.’