Old friendships are built on trust. Take David Ross and Charles Dunstone, who met at school and eventually ended up running the Carphone Warehouse, Europe's biggest mobile-phone operation. They have always remained sure of each other. As Ross once said, "We have an intimate and personal understanding of what makes each other tick." So the revelation that Ross, 43, had secretly pledged one-fifth of Carphone's shares (as well as smaller stakes in National Express, Big Yellow and the marine safety company, Cosalt) as guarantees against personal loans apparently devastated Dunstone (see below). But the scandal is also a personal tragedy for Ross. He now faces "public ruin", says the Daily Mail. The details of the affair will be raked over for months.
At its root was a simple mistake: "Ross gambled on property prices shooting ever upwards. And lost." The money he borrowed was channelled, at the top of the market, into hedge funds and a property venture, Kandahar Real Estate, launched in 2006. Kandahar's speciality was regional shopping centres, whose values have since crashed. Meanwhile, his Carphone shares are down some 75% from their peak. The upshot is that his fortune estimated at some £900m two years ago has been smashed, says The Independent. So much for his hard won "Midas reputation".
David Ross is a contradictory character, says the Evening Standard. He often comes across as "a working-class boy made good", but in fact he's a member of the Ross frozen food family: "the nearest his native Grimsby has to aristocracy". His grandfather made a killing fishing the North Sea, ensuring a comfortable start in life for subsequent generations. Although described as "commitment-phobic" (his many celebrity girlfriends include Will Carling's ex Ali Cockayne and the model Saffron Aldridge), Ross remains wedded to the family tradition: he still flies the lone star of the family trawler fleet on the lawn of his Leicestershire pile, Nevill Holt.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
After outgunning his chum Charlie Dunstone academically at Uppingham School, he studied law at Nottingham, eventually joining Arthur Anderson as an accountant. Friends thought he was barmy when he chucked that in to launch Carphone Warehouse with Dunstone in 1989. "But their timing could not have been better." Carphone chimed with the mobile boom, opening outlets as quickly as demand spread. The pair made a formidable partnership, says The Guardian. Dunstone, the venture's front-man, described "Rosso" as his "secret weapon" a view that came to be shared by the Tories, who once considered making Ross, a generous party backer, their London mayoral candidate. In the event, he was snapped up by Boris Johnson to inject financial discipline into the 2012 London Olympics committee.
Latest Videos FromMoneyWeek
Patron of the arts, charmer and "all-round good bloke", Ross seemed to have it all, says The Independent. A regular on the London party circuit, he frequently summoned friends, such as Gary Lineker and Sir Richard Branson, to shoot on his estate. He was "a businessman of his time", who epitomised the free-wheeling mood of the past decade. "His fall may be equally apt."
Was David Ross a knave or simply a fool?
For a man renowned for shunning the media, David Ross "has spent a lot of time making headlines", says The Guardian. There have been stories about his eye-catching girlfriends, the birth of a love child, and the murder of his much-loved stepsister at the hands of a jealous ex-husband two years ago. The crime took place at his estates at Brampton Ash in Nottingham. And when Ross put the property on the market last month for £7.75m, most assumed he wanted to be rid of the memory. It now seems that financial considerations played a part too.
By pledging shares reportedly as collateral for a £100m loan taken out with JPMorgan Ross has not committed a criminal offence. But he stands condemned as either "a knave or a fool", says Jeremy Warner in The Independent. Ross claims his ommission to declare the loan was an "oversight". But he can hardly plead ignorance of the rules: when he took out similar loans in 2002 and 2003 he made full declarations. His future is now uncertain much will depend on the outcome of an investigation by the Financial Services Authority. He has already resigned senior positions at Carphone and National Express.
Ross insists that he won't default on his loan, and has no "current" intention to sell his £130m of Carphone shares. But if the bank insists on a sale, Dunstone is in an unenviable bind, says the Evening Standard. As a 22% shareholder, City rules prevent him buying Ross's 19.4% stake without making a fully fledged takeover bid. No wonder Dunstone is "desperate" to find a third-party buyer.
