Tony Hayward, the new chief executive of BP, was naïve when he lambasted a hundred senior executives for the company’s “dreadful” operating performance and assumed the comment would not leak out.

But this should not be a hanging offence. It is probably better to have an open and slightly naïve communicator running a company than a spin-doctor.

Details of Mr Hayward’s frank pep talk were revealed in this newspaper on Tuesday. BP’s share price duly slid as investors feared that he was conveying new information about the company’s forthcoming third-quarter results.

Had that been true, Mr Hayward would have committed a serious gaffe. Price-sensitive information should be conveyed to the market in an orderly way – not in ad hoc briefings to senior staff.

Most analysts have yet to finalise their forecasts for BP’s next set of results. But the reality is that the market already expected BP’s results to be pretty dreadful. That was evident from the weekly performance indicators posted on BP’s website.

Mr Hayward’s error was failing to anticipate how his internal message might be construed externally. Public relations consultants charge a lot of money to deliver common-sense advice and rule one is to keep internal and external messages aligned.

Mr Hayward was addressing a fairly large gathering, so he ought to have considered that his comments were semi-public. He should have anticipated that using the word “dreadful” to describe BP’s performance might have led to ugly consequences.

Clearly, it would have been wiser to say something like: “The stock market analysts expect our performance to be dreadful. I have not disabused them of this notion.”

So, yes, Mr Hayward made an error of judgment. Yes, he has some learning to do about how he communicates as chief executive. Can he learn from this? Sure he can. In fact, this episode should give investors comfort.

Far better to have a frank Mr Hayward at the helm, reading the riot act to staff than the sort of savvy chief executive who knows just how to use investor communication to his advantage.

It is not uncommon for new brooms at poorly performing companies to advertise their commitment to business efficiency and “driving shareholder value”.

Talk like that often pushes the share price higher. But generating shareholder value by telling the stock market what it wants to hear is not the same as creating real value in the enterprise itself.

By focusing his communication on the staff, Mr Hayward was trying to stimulate behaviour that ought to be good for BP as
a business.

In time, the share price should follow.

Imperial legacy

The old Austro-Hungarian empire is once again being torn apart by national rivalries. This time it is over energy.

Austria’s OMV oil company, 31.5 per cent government owned, on Tuesday stepped up its hostile campaign to take over Hungary’s Mol to create central Europe’s biggest energy group. The Austrian company, which already owns 20 per cent of Mol, said it was ready to splash out the equivalent of $20bn to take full control.

The Hungarian reaction was predictably swift, with Budapest erecting new barricades to keep the Austrian invaders out. But the Austrians are clearly not giving up that easily. They are now seeking to engage in active discussions with Mol’s independent shareholders and stakeholders as well as the European Commission to break down the resistance of the Hungarian government and Mol’s board.

It all sounds depressingly familiar. Once again a foreign bidder is being blocked by a defensive government – even if this time the situation is made all the more difficult by the Austro-Hungarian legacy. Mol is relying on two layers of defences. Its own internal ones include a 10 per cent voting right cap for every shareholder and a 40 per cent stake controlled by the board and friendly institutions. And Budapest has drafted legislation to prevent foreign state-owned or part state-owned companies from acquiring Hungarian energy assets.

The European Commission last week published proposals to boost competition and create a single energy market. One of its main proposals is to un-bundle power grids and gas transmission networks from the generators and suppliers to ensure freer access for alternative sellers. This is being fiercely opposed by France and Germany.

The hostile takeover battle for Mol simply shows yet again how sensitive the energy sector remains for European governments. And if European member states are dropping their free-market allegiances one after the other, one has to ask whether the European Commission’s energy strategy is doomed to failure.

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