David Pett, partner at Pett, Franklin and Co, made the comments at a debate on the social benefits of employee share ownership in the City of London, organised by bank Kleinwort Benson.
"David Cameron himself has been heard to expound on the virtues of the John Lewis Partnership model for employee share ownership, to which I would respond ‘there is only one John Lewis partnership,’" Pett said.
"Why is that? It is a unique structure. John Lewis Partnership is extremely successful and I’m not casting aspersions on it at all.
"But it’s not what it purports to be. It’s not an employee run company. Employees do not own shares in John Lewis Partnership. It is controlled by a trust that owns virtually all of the shares in the partnership.
"The interesting thing when one looks carefully at the documents that lay behind that structure it is very difficult to discern who it is that has responsibility for the appointment and removal of directors of the trustee company. In a sense that is almost—and I don’t want to be derogatory about it—a self-serving oligarchy in that it’s the board of directors on the company that appear on the panel that appoint and remove the directors and the shareholders of the trust.
"Employees simply don’t get a look in and in fact until fairly recently employees received the dividends—so called—in the form of a cash bonus fully subject to tax."
Pett said that on a number of occasions companies had come to him saying they would like to replicate the John Lewis model.
"What we have ended up with is something that is very different from the John Lewis model as it stands," he said. "Yes, it involves a trust. It has a trust that may have a controlling shareholder in the company, but we also put in place mechanisms whereby employees do have rights to select and appoint directors of the trustee company. More often there is also a market in shares created so employees can obtain shares and they grow in value, and when the employee leaves, they able to realise the value of those shares, and sell them back on that market."
John Lewis was unavailable to comment on Pett's views.
Later in the discussion, Natalie Merrens, the head of Strategic Wealth Advisory at Kleinwort Benson, outlined the benefits and disadvantages of employee-owned businesses (EOBs).
"EOBs' profits experienced greater resilience in the 2008-9 recession," Merrens said. "However, EOBs have difficulties obtaining favourable financing from institutions used to dealing with listed companies."
In a show of hands at the end of the meeting, attendees voted overwhelmingly in favour of the notion that "employee share ownership is beneficial to society" without a single "no" vote being cast.