Guinness’s CEO broke the law to win a takeover, then spent 10 months in prison

In early 1986 Guinness plc was competing with Argyll Group to acquire Distillers Company, owner of Johnnie Walker and Gordon’s Gin, in a £2.7 billion takeover battle. Guinness’s chief executive Ernest Saunders orchestrated a secret scheme to inflate Guinness’s share price by illegally paying £25 million to co-conspirators — including American financier Ivan Boesky — to buy Guinness shares. The higher share price made Guinness’s paper bid more valuable and helped it win the takeover.

The fraud was uncovered when Boesky was prosecuted for insider trading in the United States and revealed the payments. The UK Department of Trade and Industry launched an investigation. After a six-month trial, Saunders was convicted of conspiracy to contravene the Prevention of Fraud Act, false accounting, and theft. He was sentenced to five years in prison in August 1990.

Saunders served only 10 months at Ford Open Prison. On appeal his lawyers argued he had early-onset Alzheimer’s disease, citing brain scans. The Court of Appeal halved his sentence, and he was released on medical grounds. Within months Saunders made a dramatic recovery, returned to business as a consultant, and was later found by the European Court of Human Rights to have been denied a fair trial because of compelled testimony. The scandal remains one of Britain’s most notorious corporate fraud cases.