The Sunday Times (UK)

March 16 1997

Terry Murden

Widows to boycott 'millennium bug' victims

SCOTTISH WIDOWS is refusing to invest in companies that fail to update their computer systems to cope with the expected millennium computer crisis.

Already the insurer has sold shares worth £30m in two American companies because they did not satisfy its tough criteria. It says the issue has become a key consideration in its investment strategy.

At midnight on December 31, 1999, a double zero will replace the year designation which computers will read as 1900 instead of 2000. It is feared that entire computer records and programs will be thrown into chaos.

The Scottish group is among a number of British companies becoming more anxious about the millennium computer problem. Some, including British Telecom (BT), are taking tough action to protect their supply chain. BT sent letters to 1,800 suppliers saying it would cancel contracts unless firms took appropriate steps.

Alan Denholm, the head of Scottish Widows' American desk, said: "A company's ability to handle the problem could have a serious bearing on its performance. We are asking all our existing and potential clients if they appreciate what impact the millennium might have on their company, and if they have made provision for it."

Denholm has sent questionnaires to 45 American companies asking about their awareness of the millennium situation. "It has become a key consideration in our investment strategy.

"Where companies cannot demonstrate that they have planned for any eventuality surrounding the millennium we have sold because of that failing," he said.

Denholm would not reveal details of the shares sold but said: "If companies cannot reassure us that the problem is covered then we are perfectly prepared to sell our interest in them. It presents too high a business risk for us not to consider that."

Despite increasing concerns, a survey published last month by PA Consulting and Taskforce 2000 showed British companies were making a little progress. Only 9% of those surveyed had done an audit, compared with 8% in a similar survey last May.

But more now recognise it will affect them, with 28% of top managers aware of the problem, against 15% in the first survey.

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