The story
Early history
Prior to 1997, Crown Agents was a UK public statutory corporation, overseen by the British Ministry of Overseas Development.
Crown Agents originated as a body conducting financial transactions for British colonies. Agents were first appointed in 1749 to transfer and account for grants made to colonies from the British Treasury. These representatives were known unofficially as 'Crown Agents' from at least 1758, and were accountable to colonial governments, though selected on the recommendation of the British government. A single body was created in 1833, when the Crown Agents' business was consolidated under two Joint Agents General for Crown Colonies with an office of several staff.
The opening words of A. W. Abbott's history were telling in the light of events to follow. “The Crown Agents have no formal Constitution and are not part of the United Kingdom Civil Service or of the United Kingdom Government machine. The Crown Agents are simply two individuals …who have been appointed by the Secretary of State for the Colonies.
In 1861 the office was renamed Crown Agents for the Colonies. Crown Agents' responsibilities on behalf of colonial governments included accounting for Treasury grants, purchasing supplies, recruiting certain staff and raising capital on the markets. Crown Agents also oversaw specific colonial projects, such as certain stamp issues and some infrastructure construction.
As decolonisation accelerated, the office was renamed Crown Agents for Oversea Governments and Administrations in 1954, and the rules were changed to allow it to take on projects for independent states (Iraq being the first example). Crown Agents expanded its activities to include more international development projects and investment management. The world's first sovereign wealth funds were managed by Crown Agents.
Background
The financial collapse of the Crown Agents, which necessitated a bail-out by the Government, was one of the most high-profile failures of the 1974 property and secondary banking crisis, and widely considered a scandal. The decline in its traditional government business had led the Crown Agents “to consider ways of diversifying…and operating on their own account rather than acting as agents for others…So began a short but disastrous period in an otherwise long and distinguished service to others” The move into own account trading dated back to March 1967 and by the end of the 1960s, the activities of the Agents were being publicly queried by The Sunday Times and Private Eye. By 1970, concerns were being raised in Parliament. Judith Hart later referred back to her earlier comments, saying the "constitutional relationship between the Crown Agents and the Government, which was somewhat obscure..."
The Fay Report and Tribunal
The impact of the financial and property collapse on the Crown Agents’ finances became increasingly apparent during 1974 and in October John Cuckney
was appointed to sort out the problems. To meet the potential financial shortfall, the Crown Agents received an £85m grant from the Government. Recognition of the severity of the Agents’ problems, the necessity for further financial support and the political ramifications led to the establishment of the Fay Committee of Enquiry in April 1975; that Committee reported on 1 December 1977. Among its detailed findings was the estimate that losses would exceed £200m.
Read the full text
The Fay report gives extensive detail on the Crown Agent's activities. It was a body without effective supervision in which inexperienced officers engaged in a wide range of speculative banking and property developments on a worldwide basis. “It is manifest from the minutes of the committee that during the period from 1967 to 1974 the conduct of the affairs of the Crown Agents and, in particular, the actions of certain of its staff, lacked competence and good judgement.” The parliamentary debate on the Fay report in turn led to the establishment in March 1978 of a Tribunal "to inquire to what extent there were lapses from accepted standards of commercial or professional conduct or of public administration in relation to the operations of the Crown Agents as financiers on own account in the years 1967–1974. The Tribunal findings were submitted in March 1982. In a formal statement to the House of Commons, the Prime Minister reported that “the tribunal has identified a number of serious shortcomings that existed at that time, not only in relation to the conduct of individuals, in respect of some of whom lapses or criticisms falling short of lapses were formally specified, but also in relation to the operation of institutions and procedures.”
The Investments
The best-known of the Crown Agents’ investments was with the
William Stern group; Stern himself became Britain's largest ever bankrupt to date and the losses of the Crown Agents were reported to be £54m. Less well-known but also a substantial problem were the Australian property investments held under the umbrella of English and Continental Group, where losses were estimated as a possible £35m. There was also a commitment to a wide range of secondary banks. Margaret Reid regarded the Crown Agents’ support for them as “much the biggest and widely discussed amount of finance for the Bank of England's Lifeboat support operation”. Institutions singled out included Triumph Investment Trust, Sterling Industrial Trust and Burston Group.
Crown Agents also acquired Greenshields Cowie, a freight forwarding limited company, in 1973/74.
Recovery
The appointment of John Cuckney in October 1974 was the first step in rescuing the Crown Agents and restoring confidence in its traditional functions. He instituted a programme of controlled disposals, realizing what he could from the property and banking investments. Probably the most intransigent were the Australian property investments which took some years to bring under the Agents' full control. One of the most important organizational decisions made by Cuckney was in March 1977, concerning the Agents’ subsidiary, Millbank Technical Services. Millbank had been established in 1967 to offer services “outside their traditional agency role.” In effect, it had become a substantial exporter of military equipment. Millbank was transferred to the Ministry of Defence, thereby returning the Agents to its traditional activity. However, uncertainty continued over the legal status of the Crown Agents and it was not until the Crown Agents Act 1979 that the legal and constitutional position was regularized. The Act established the Agents as a corporate body under formal name of Crown Agents for Oversea Governments and Administrations.
The Crown Agents Act 1996 provided for the Crown Agents to become a private sector Foundation as a company limited by guarantee, with Crown Agents for Oversea Governments and Administrations as a wholly-owned subsidiary. This change came into effect in March 1997, with David Rowe-Ham as the first President of the Foundation and D. H. Probert as the first Chairman of the company.
In April 2016 its financial services arm, Crown Agents Bank and Crown Agents Investment Management, was sold to Helios Investment Partners.
Insolvency
On 28 July 2024, Crown Agents was reported to be on the verge of collapse. Crown Agents was placed into insolvency on the 1 August 2024, largely due to cuts in funding from the UK Government and cost reduction efforts in the Foreign & Commonwealth Office. An additional contributing factor that management mentioned was the ongoing cost of funding a pension liability.
From Wikipedia’s article on Crown Agents, shared under CC BY-SA 4.0.3