Ian Hannam: the barbarian conqueror of the City

City 'fixer' Ian Hannam's public rebuke by the Financial Services Authority over allegations of insider information has divided traders. Is he a victim of a dysfunctional watchdog?

"Ian Hannam was given a standing ovation after a defiant speech as he left JP Morgan's trading floor last week," reports The Independent. It shows how his case has galvanised the City.

The resignation of its most celebrated rainmaker, following a £450,000 fine from the Financial Services Authority (FSA) for "non-deliberate market abuse", was "a shocker". Now half the mining industry, an army of fund managers and even former shadow home secretary David Davis have rallied to his cause.

Hannam is a victim of "scalp-taking" by a "dysfunctional" watchdog, thundered Davis. "To destroy someone's career just to extend the law about what is considered insider information is beyond what is reasonable."

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Whatever the rights and wrongs of the matter (see below), the self-styled "citizen-soldier" has many favours to call in. Hannam worked on nearly every major natural resources deal in the past ten years transforming the FTSE 100, says The Times.

At his haunt in the Lanesborough hotel's cigar room, the former SAS man plotted the flotations of many emerging market stocks, including Vedanta, Kazakhmys and Ferrexpo. He most recently brokered the $90bn Glencore / Xstrata merger.

Hannam's encyclopaedic sector knowledge, combined with his huge energy and personality, made him a supreme fixer. As Xstrata chief Mick Davis observes: "He has a capacity to make things happen that others lack".

Hannam's mystique centres around his military background. "Battle stories are legion" about the "swashbuckling" Territorial Army captain who began life in a South London council estate, says the FT. Hannam is renowned for "coming up the hard way".

Joining the SAS from school, he later studied at Imperial College London, before heading abroad with Taylor Woodrow. Legend has it that "he decided to go to business school and get rich" while living in a tent in Nigeria: he envied the limousines of oil executives.

With an MBA under his belt, Hannam joined Solomon Brothers on Wall Street, who sent him to London to establish the City's first equity capital market desk. There, he had "his first taste of controversy" when he brought Robert Maxwell's Mirror Group to market, says The Guardian. He moved to Robert Fleming, bought by JP Morgan in 2000, and orchestrated its acquisition of the Queen's stockbroker, Cazenove. "Hannam was seen by Cazenove's blue-blooded bankers as some kind of barbarian conqueror. But he kept landing the deals.

"Critics dislike Hannam's "big ego" and his "Millwall supporter" traits, arguing that his "machismo" has brought companies with questionable corporate governance into the FTSE 100, says The Times. Yet he is praised by friends and foes alike for his commitment to his clients. For the moment, a "brilliant player has been bounced out of the game". But few doubt that, in one guise or another, Ian Hannam will be back.

Was the FSA wise to turn its guns on Hannam?

"It must have come as quite a shock to the FSA apparatchiks when Ian Hannam turned on them," says Neil Collins on FT Alphaville.com. The accepted procedure, following "the ritual humiliation that accompanies a critical report", is for the miscreant to issue a "more-in-sorrow-than anger statement", and move on.

Hannam, however, "is made of sterner stuff". He plans to take the ruling to an independent tribunal. Given the thinness of the FSA's logic, "it promises to be quite a scrap".

The case centres on Heritage Oil, the explorer founded by Tony Buckingham, whose plan was to create a FTSE 100 oil group based on Kurdistan's reserves, says Dominic O'Connell in The Sunday Times. Hannam's role was to persuade the Kurdish government to buy a stake.

The FSA found fault with two emails sent to a mysterious Mr A later revealed to be the Kurdish oil minister Ashti Hawrami. The first talked about a potential rival offer; the second about Heritage finding oil in Uganda. Both were "come ons", intended to bring the Kurds to the table as the FSA admits, no trades were made on the back of this information. Hannam's chief misdemeanour was "not considering" whether his remarks qualified as inside information.

This case has split City opinion "down the middle": some argue Hannam "is a victim of misjustice" and others that he "got his just deserts", says the FT. What concerns opponents is not the case itself but how it "reflects broader concerns" about transparency.

The FSA only took an interest in Heritage after Hannam shopped Mehmet Sepil, ex-boss of Genel Enerji, on a "straightforward" case of insider trading involving the explorer, for which Mehmet was fined nearly £1m, says Collins. "Hannam must wish he had kept his mouth shut." By turning its guns on the whistleblower, the FSA "has made sure" that other bankers in his position will do exactly that.