UAE ‘using smoke and mirror tactics’ in Telegraph takeover
THE Abu Dhabi fund pursuing a takeover of The Telegraph has been accused of “last-minute smoke and mirrors” after it revised the deal, prompting further delays and uncertainty.
Writing in today’s Telegraph, Sir Iain Duncan Smith, the former Conservative leader, says the changes are “undoubtedly… an attempt to convince the regulators and responsible ministers that their proposed deal is something that it clearly isn’t”.
Sir Iain, who has argued that allowing a foreign state to acquire The Telegraph would be dangerous for democracy, says: “Notwithstanding the last-minute smoke and mirrors, the fundamentals remain the same.”
Yesterday, Redbird IMI, which is 75 per cent funded by Sheikh Mansour bin Zayed al-nahyan, the vice-president of the UAE, told officials it had created a new corporate structure. It prompted Lucy Frazer, the Culture Secretary, to say she was minded to order a further investigation just days before regulators were due to deliver their views on Redbird IMI’S original proposals.
The fund, led by Jeff Zucker, the American media executive, has been in discussions with Ofcom, which is investigating whether its planned takeover is in the public interest. It had been expected to deliver its report to Ms Frazer by tomorrow.
However, this week Redbird IMI established an English limited partnership to replace a Delaware holding company in an apparent attempt to address the concerns about the perceived threat to press freedom from the involvement of an autocratic state. It would bring the ownership structure under UK company law and seek to distance it further from International Media Investments (IMI), the sheikh’s company in Abu Dhabi, which has a record of censorship and editorial interference.
However, the 11th-hour change, which comes soon after Redbird IMI called in George Osborne, the former chancellor, as an adviser, appeared to anger Ms Frazer, who delivered a rebuke to Redbird IMI in Parliament. She said: “I do not consider this is conducive to the full and proper functioning of the process.”
A Redbird IMI spokesman said: “This
change was made in order to clarify the point that IMI is a passive investor in the company that will own The Telegraph and as such will have no management or editorial involvement whatsoever.”
The fund derailed auctions of The Telegraph and The Spectator last year by helping the Barclay family repay a £1.2billion debt to Lloyds Banking Group. It aims to convert £600million of the lending into ownership. Ms Frazer appeared to cast doubt on the fund’s claims that IMI would be an entirely passive investor, noting that “there are certain reserved matters where IMI consent will still be required under the partnership agreement”.
The Government is likely to issue a second Public Interest Intervention Notice this week to allow Ofcom more time to consider the revised takeover. It would add weeks to a timetable that is already predicted to last into summer. After Ofcom reports, Ms Frazer has powers to order a deeper investigation by the Competition and Markets Authority lasting up to 32 weeks.
The process could also be paused for a general election campaign, which could put the final decision of whether to approve or block Redbird IMI in the hands of Labour ministers next winter.