National security is not always a big deal

Perhaps we should call it Moulton’s Law. Only last week, Jon Moulton was sounding off against the government for sticking its beak into his attempt to sell Northern Aerospace to some Chinese gentlemen. In that case government objections have effectively been overruled by the Competition and Markets Authority, which has waved the sale through.

Apparently by coincidence the machinery of Whitehall has now hit back with a new crackdown on foreign takeovers that raise national security concerns. Officials will take new powers to intervene.

More deals will face Whitehall scrutiny, including small sales of assets and intellectual property as well as whole companies.

Transactions will be called in and some will be blocked. No sector of the economy is exempt.

This raises the obvious question of what ministers mean by national security. The White Paper issued yesterday promises details at some later date. As national security and economic interests are increasingly blurred by Donald Trump’s clashes with China, those details will be important.

After all, to a great extent today regulations such as those now proposed are aimed at the Chinese and their ambition to climb the international ranks as a political, economic and military power.

Beijing makes no secret of this and does not really makes a philosophical or even a policy distinction between such goals. From the Chinese end of deal making it is all national security.

It is not only about China, of course. There are some unsavoury regimes in the Middle East that we might not want to acquire sensitive assets here, for instance. Yet China has a greater will and greater means to make acquisitions to further its interests.

As with Russia’s oligarchs, it is made clear to the Chinese business elite that the state’s interests are their interests. Wealth is by permission that can be rescinded, as the former boss of Anbang Wu Xiaohui recently discovered when he was banged up for 18 years. International deal making by Chinese companies is effectively international deal making by the Chinese state.

That is not to say it should not be allowed. This is not the time for Britain to raise the drawbridge. Doing business with China is essential.

So the Government is right to say that “success of the new regime will require its tight focus on national security and not on wider public interest issues”.

We are promised that “the reforms will be proportionate and focused in their application, with each case following a clear and predictable process”. Yet it is hard to square such statements with the Business Secretary Greg Clark’s busked interventions in the Melrose takeover of GKN earlier this year.

National security, industrial strategy and politics were merrily blended as he struggled to practise what the Government now preaches.

There are justifiable concerns about increased political interference in private business as a result.

Investors might just about still trust that the current UK Government will not use its new weapons irresponsibly. But who knows what the next outfit, or the one after that will do?

A Corbyn administration could be relied upon to take a different view of what is in the best interests of national security to any government before it.

The courts will have oversight, but once an official objection is registered surely few foreign buyers would fight a case. As Huawei, the Chinese telecoms equipment maker, has discovered, the mark of suspicion is impossible to remove.

Moulton’s Law should mean a clearer process for scrutiny of foreign takeovers, but the expansion of government power is a sign of murkier and more unpredictable world.

‘Corbyn may be relied upon to take a different view of what is national security’

Barclays saga continues

Here we go again then. The Serious Fraud Office is going to have another go at prosecuting Barclays over its adventures in Qatar during the financial crisis.

The bank had said it was expecting the move but chairman John Mcfarlane must have privately hoped the fraud busters would just go away.

New management is on the way at the SFO and the Barclays case has been hanging around for years.

But the incoming director Lisa Osofsky, due to start in September, has presumably approved what seems a risky attempt to revive the case, which concerns a 2008 fundraising effort.

There could be years left in this one.