UAE’S swoop for Vodafone is a threat to Britain, warn ministers
THE United Arab Emirates’ stake in Vodafone is a threat to Britain’s national security, ministers have found.
Oliver Dowden, the Deputy Prime Minister, intervened to demand protection from the Gulf state after it became the telecoms operator’s biggest shareholder with a 14.6 per cent stake worth £2.7billion.
Mr Dowden said Vodafone, which holds sensitive Whitehall contracts and owns critical infrastructure including undersea cables, was at risk of “material influence” by the UAE. He ordered the company to establish a special committee to oversee any work that has a bearing on British security. Vodafone will also be required to keep officials informed about its partnership with e&, the UAE’S state telecoms operator. Its executives will only be allowed to take non-executive positions at Vodafone.
The partnership was agreed by the companies almost a year ago. Hatem Dowidar, the UAE telecoms chief, was granted a seat on the Vodafone board, with an option to nominate a second director if the stake is increased above 20 per cent.
Mr Dowden’s intervention, made under the recently introduced National Security and Investment Act, comes as ministers scrutinise an Abu Dhabifunded takeover of The Telegraph and The Spectator.
Last night Andrew Neil, the chairman of The Spectator, said he would resign if the deal goes ahead and described plans for a “dictatorship” to own the titles as “absurd”.
He called on ministers to “step in”, telling BBC Newsnight: “We shouldn’t be owned by a foreign government.”
This newspaper can reveal that a cross-party group of more than 20 MPS and peers has written to the Culture Secretary expressing their deep concern at the prospect of the UAE
government-backed partnership Redbird IMI seizing control of Telegraph Media Group.
The signatories come from the Conservatives, Labour, Lib Dems, and SNP and include former Cabinet ministers, a former justice secretary, and former chairmen of the public accounts committee. They have urged Lucy Frazer to refer the proposed takeover of The Telegraph to the Competition and Markets Authority for a so-called Phase Two review, to ensure that the deal is subject to thorough and independent scrutiny.
The media regulator Ofcom was due to report back today after Ms Frazer asked it to carry out a Phase One review of the proposed deal over concerns about press freedom, though that deadline is likely to be extended.
Senior Tories have also demanded a parallel scrutiny of the potential threat to national security, but there has been no announcement. However, such investigations are often not disclosed until they have been completed.
The UAE’S swoop on Vodafone was part of a wave of oil-rich Gulf states buying into sensitive industries in the West. Saudi Arabia took a 9.9 per cent stake in the Spain’s Telefonica, and US security officials are vetting a string of takeovers by Abu Dhabi investors over fears about the UAE’S ties to China.
Mr Dowden said the order to create a special committee at Vodafone was “necessary and proportionate to mitigate the risk to national security”.
Neil O’brien, the former health minister, added: “If the Government regards the UAE as a security risk even just carrying our telecoms then that has pretty clear implications for their ability to run our newspaper and magazines. While we want to have a friendly relationship with the UAE, them coming to own our media is likely to lead to many unwelcome questions for Abu Dhabi.
A Vodafone spokesman said: “We are pleased to have received clearance in our home market for our strategic relationship with e&, and for e& to take a seat on our board.”