Comment: Francois Barthelemy, Partner, F&C Partners LLP: It is all Double Dutch

Francois Barthelemy , Partner with F&C Partners LLP, the fund of hedge funds business, is surprised at comments made last week by Joop Wijnt, the Dutch minister for the economy.

'In an outburst on Dutch radio Joop Wijnt accused certain investment funds of behaving like "locusts" following calls from two hedge funds to break up supermarket group Ahold. The two hedge funds in question, Centaurus Capital and Paulson & Co, have built a stake of 6.4% in the EUR 11bn company and argue that by restructuring the group could increase its valuation by a further EUR 3bn. Barthelemy said the real issue at stake was whether the hedge funds as shareholders had the right or indeed the duty to make sure the management teams they had hired were doing a good job of managing their assets.

"Doing a good job is primarily about producing healthy, sustainable financial returns. Shareholders and not managers (or government ministers) are the owners of the business, which makes a robust corporate governance process crucial to ensure management are truly accountable. We think it is healthy that managers of companies have to report to their shareholders and are accountable for their actions. There is an abundant list of cases where poor management has been allowed to mismanage businesses for so long that they eventually go bankrupt. In fact, Ahold is a great case in point. Historic mismanagement of the group has led to false accounting in the US subsidiary and the near demise of the company. It is wrong for the management of a company to refuse to meet with large shareholders and it is equally misguided for a government minister to make comments that are clearly against! the principles of established good governance.

"If you consider the fact that hedge funds and other professional investment managers are largely investing money on behalf of pension funds and investment companies, then the end shareholders are by and large pensioners and savers around the world.

"The corporate structure of hedge funds means that they have the freedom to raise their voice in the face of incompetent management teams and it can be argued that they do so primarily on behalf of people who invest their life savings in order to pay for their retirement, a better school for their grandchildren, or the holiday of a lifetime."

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