Skip to content In the late 1980s, Polly Peck International was the City’s “wonder stock”. Analysts reportedly adorned the covers of their research reports with full-page portraits of its charismatic founder, Asil Nadir. Investors loved the story: spectacular growth, bold acquisitions and an entrepreneurial leader who seemed incapable of putting a foot wrong.
Then, almost overnight, the story fell apart.
In 1990, Polly Peck collapsed with an estimated £200 million deficit. Investigations revealed years of concealed losses, overstated profits and the diversion of company funds into businesses controlled by Nadir and his family. After fleeing to Northern Cyprus to avoid prosecution, Nadir eventually returned to the UK, where he was convicted of fraud and false accounting.
In hindsight, the fraud seems obvious. At the time, however, almost nobody questioned the narrative. Analysts celebrated the growth, investors applauded the vision, auditors failed to uncover the deception, and the board offered little effective challenge to a dominant chief executive.
Key lessons
Rapid growth deserves greater scepticism. Fast-growing, acquisitive companies can create enormous value, but they can also use expansion to disguise weaknesses in the underlying business. Growth increases complexity and demands stronger financial controls, not weaker ones. Entrepreneurship is no excuse for weak controls.
Beware very dominant leaders. Charismatic founders often create exceptional businesses, but, when one individual is too dominant and the board fails to challenge, leadership becomes dysfunctional and the risk of poor decisions, or worse, increases dramatically. As the saying might go: When dominant leaders are good, they can be very good, but when they are bad, they can be very bad!
External safeguards are no substitute for an effective board. Auditors, investors, regulators and lenders all failed to identify what was happening inside Polly Peck. You cannot rely on someone else to spot the warning signs, especially if you are on the board.
Key Takeaways
The lesson is not that every fast-growing company with a powerful founder will fail: most do not. But these characteristics are clear risk factors. They should prompt directors, investors and advisers to ask harder questions and seek stronger evidence that success rests on sound strategy, robust business controls and effective challenge—not simply an inspiring vision and explosive growth.
Thirty years of corporate governance reform should have made Polly Peck a historical curiosity. Instead, we have witnessed Carillion, Wirecard, FTX and the Post Office Horizon scandal. Different companies, different industries, different decades, but it’s the same behavioural patterns.
These themes, and more, are explored much more in my new book, with Stephen Jarvis, Why Companies Fail: Exposing Human Performance in the Boardroom, published on 1 October and available for preorder now at Amazon, Foyles and other good book sellers.
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