Hacked firms betray trust

CYBEr- security breaches have become so frequent it is hard to be shocked any longer. What is deeply disturbing is the lack of transparency by those firms that have been breached.

The more we learn of the hack of 143m consumers, including 400,000 British citizens, at credit data firm Equifax, the more shocking it becomes. Especially as some executives sold shares in August – months after the first breach in March and a second hack in July.

Now we are told one of the most trusted firms in the world, Deloitte, with annual revenues of £27.3bn, was hacked in March this year although the first breaches may have occurred in October 2016.

As auditors, Deloitte has access to the most sensitive internal and personal files of some of the largest companies in the world, including GlaxoSmithKline, BAE and BP. It confirmed the breach of its firewalls only after a report appeared on the Guardian website.

Deloitte says that ‘only a few clients’ were affected and ‘no disruption occurred to client business’.

What is particularly embarrassing for Deloitte is that the firm sells itself as among the best in the class in protecting confidential information and providing clients with round-the-clock cyber security advice.

Clearly for companies such as Equifax and Deloitte, which are trusted custodians of personal and corporate information, hacks are an enormous breach of trust.

By failing to spell out precisely what has happened, Deloitte risks reputational damage from which it will be hard to recover.

The only thing Deloitte has going for it is that when it comes to international auditing, global firms have little choice but the big four companies.

KPMG is already in disgrace over its audits of HBOS, the Co-op Bank and Gupta-related enterprises in South Africa. This leaves only PwC and EY with relatively clean hands. But how long that will last is unclear.

Britain’s audit enforcer, the Financial reporting Council, says it has cyber breaches, such as that at Deloitte, on its radar. After the bungling probe of KPMG over the HBOS audit, FrC involvement is as scary as the actual hack.

Royal puzzle

WHEN it comes to corporate governance issues, royal London is often on the side of the angels.

So it is a bit surprising to see senior fund manager richard Marwood taking to the public prints to defend ‘French entity Schneider teaming up with tech firm Aveva’.

He contrasts the structure of the deal, which will see Aveva retain its London quote, with overseas deals for Worldpay and WS Atkins. royal London categorises all these transactions as Brexit- related because of the pound’s fall.

At first blush it seems great that Schneider is promising to inject software acquired when it bought Invensys back into a UK company. There are also unenforceable pledges to keep faith with Cambridge-based research. Unfortunately the London Stock Exchange quotation for Aveva looks more like a sop to critics of overseas takeovers than the long-term outcome. The prospectus, drawn up by Lazards and Numis, makes clear that after a two-year standstill, Schneider will have 18 months to increase its shareholding or make a takeover offer ‘without any need for independent non-executive approval’.

Such a clause would appear to drive a coach and horses through normal takeover rules and allow Schneider to plunder the rights of minority investors without any checks. That hardly fits with the strong corporate-behaviour agenda for which royal London is famed.

Schneider has come up with a creative way of getting its hands on vital UK engineering software, particularly valuable to the nuclear and marine industries. Admittedly French ownership may be safer than Chinese investors. But no one should kid themselves that Paris will not put its own interests, and those of Brussels, above those of the UK.

Making up

THEY are made of stern stuff at Paul Polman’s Unilever. Even as President Trump steps up the rhetoric against North Korea, the Anglo-Dutch consumer giant has grabbed an opportunity in South Korea.

It has moved in with a £2bn purchase of cosmetics firm Carver famous for its ‘Eye Cream for Face’.

Even Kim Jong-un may welcome a better complexion.