Evershed: Duffield withdrew sweets for poor performance

Patrick Evershed has claimed his former boss John Duffield bullied and humiliated New Star staff including withdrawing an offer of sweets from managers having a bad period of performance, according to his witness statement lodged with an employment tribunal today.

In the document, Evershed said he believed the "much publicised demise of New Star was as a direct result of founder, John Duffield's bullying, his interference with the way in which the fund managers managed their funds and his refusal to take on board anyone's advice".

"He (Duffield) would prowl around the floor on a regular basis with his jaw jutting out and emitting growling sounds and call us "morons" and "criminals".

"He knew how each fund was performing each hour and he would compare our performance against each other in such a way as to cause distress to those who had had a bad hour or day."

Evershed claimed Duffield would withdraw an offer of sweets to fund managers if performance suffered.

"He used to come round offering us sweets and then withdraw the offer of a sweet from anyone who was having a bad day," said Evershed.

Evershed claimed New Star's formal response to his grievances - made via letter in 2009 - saw Duffield admit to offering sweets to managers but deny ever withdrawing them based on fund performance.

Evershed said in his statement that in a career spanning 40 years, he had never experienced such a "poisonous working environment".

"Rather than instill competitiveness amongst fund managers, the humiliation of John's treatment had quite the opposite effect; it destroyed fund managers' morale and their confidence, made them stressed, anxious and fearful of John and subsequently led to their funds' underperformance.

"I do not consider there is any way John's behaviour could properly be considered as banter (as New Star claims it was)."

The Tribunal also heard that the "level of stress and illness [at New Star] was quite exceptional."

During cross-examination, Evershed claimed it was this highly stressful environment that contributed to his fund's poor performance.

He described the atmosphere at work as horrendous and extremely unpleasant, stating it was "so intimidating, so humiliating, so distressing."

Daniel Oudkerk, the lawyer representing New Star, countered Evershed's claims about poor performance by arguing his fund had started to perform badly years earlier.

Oudkerk said: "You said your fund did badly because you were bullied by Duffield, but your fund was starting to do badly in 2006.

"Let's compare like with like, your small cap fund in 2008 and another small cap fund of similar size.

"The New Star fund fell by 73%, and Rathbone [special situation fund] fell by 77%."

Oudkerk said the similar falls showed it was the market, and not bullying, which led to Evershed's fund's downturn.

"What we see here is the operation of the markets," he said.

Evershed also expressed concerns about pressure being brought to bear by then New Star CIO Gregor Logan on the property fund managers to continue investing in the market long after they became worried about its value.  

Evershed said after leaving New Star his reputation had been seriously damaged "because I went from being at the top of the league tables, getting a very good press and being in great demand, to being at the bottom of all the league tables and getting bad press".

Former New Star CIO Theo Zemek also claimed she was bullied by firm founder John Duffield, according to the lawyer acting for Evershed.

Zemek, now working at Axa Investment Managers where she is global head of fixed income, worked at New Star prior to its takeover by Henderson. She left in 2007.

According to Daphne Romney, Evershed's lawyer, Zemek has given "a compelling account of how she herself was bullied by Duffield". While Zemek has given a witness statement she may not be allowed to take part in the case after missing the deadline for submitting it.

The tribunal chairman will decide shortly whether she will be able to participate as her evidence was only submitted to the court on 2 November.

Oudkerk has argued against Zemek's statement being included because she did not herself see Evershed being bullied.

Oudkerk said Zemek's statement read: "I personally did not witness Patrick being bullied."

Oudkerk added the statement had "cropped up three days before a trial that has been in the pipeline for years," after questioning why it was being submitted so late.

Evershed, who is seeking lost earnings of over £1m, claims he was the victim of constructive dismissal while at New Star following bullying by the boss of his previous employer, Duffield.

In a letter to the group's human resources team before he left, he wrote Duffield "has been most vile to most of the fund managers for several years and bullying us".

"In particular he bullied me into reopening my fund [Select Opportunities]. This destroyed the performance of the fund and my reputation."

Duffield, the founder of New Star, will not be appearing in court during the case brought against his former company by Patrick Evershed.

Investment Week understands Duffield will not be called as a witness by the defence, and has not issued a witness statement.

Last year Evershed was given the green light to pursue Henderson - New Star's new owners - for unfair dismissal.

New Star was bought by Henderson in 2009, and its new owners are now defending the claims.

The group would have been made aware of any outstanding legal disputes prior to purchasing New Star. Evershed accused Duffield of bullying fund managers before leaving New Star.

Duffield now runs investment firm Brompton Asset Management.

The case, scheduled to last for ten days, continues.