The UK, as Business Minister Lord Grimstone says, has always been an attractive place for overseas investment.
The peer, a seasoned City grandee, yesterday launched a report into inward investment, declaring the UK a land of opportunity that is open for business.
This is absolutely right, provided the overseas outfits concerned have a genuine long-term interest in building a business and creating jobs and are not just opportunistic predators.
Drumming up trade: Business minister Lord Grimstone (pictured) yesterday launched a report into inward investment, declaring the UK a land of opportunity that is open for business
Whether it takes the form of a Nissan car factory in Sunderland or Wall Street banks pitching up in the City and Canary Wharf, the right kind of overseas investor has delivered great benefits.
Even much-criticised Amazon is a serious and committed player, and has ploughed billions of pounds into this country.
The US online giant is creating more than 10,000 permanent jobs in the UK this year, taking its workforce to more than 55,000.
If only it would pay a reasonable amount of tax to HMRC instead of the current tiny sums, it would receive a lot more credit.
Foreign capital will play an important part in levelling up, and local mayors will be looking to attract overseas investors to their region.
But in the general enthusiasm to prove that post-Brexit, post-Covid Britain still exerts magnetism, ministers should not suspend their critical faculties and let the barbarians in at the gate.
Deals need to be handled with judgment and care, as David Cameron and George Osborne could attest after having rolled out the welcome mats for the Chinese.
It seemed like a good idea at the time. But changed geopolitics have led to rapid back-pedalling over Huawei’s involvement in 5G and China’s participation in new nuclear.
The hostile bid for Cadbury by Kraft of the US involved broken promises to keep a factory open near Bristol and led to changes to the rules on foreign takeovers.
As for foreign – mainly US – private equity deals, there has been a long list disasters including Debenhams, Southern Cross care homes, Poundworld and Cobham. Some egregious episodes are less well-known.
One unsavoury case was the takeover of Silentnight by Florida private equity outfit HIG, which was accused of deliberately pushing the mattress-maker into insolvency to avoid taking on commitments to pensioners. KPMG, the audit firm, was fined £13million recently for its part in the affair.
Of course there are counter-examples but these debacles should not be waved airily away. Lord Grimstone pooh-poohed concerns raised specifically about the rash of takeovers by foreign private equity of companies such as Morrisons.
We should not fear overseas investment, but grasp it, according to him. Better still would be a dose of healthy scepticism.
There is a vast difference between a genuine investor and a rapacious predator, whether the sharks are private equity or corporate, foreign or British.
Speaking of fines in the bean-counting world, KPMG is not the only one in the frame.
Watchdog the Financial Reporting Council (FRC) is baring its teeth after coming in for criticism over its previously ineffectual approach towards the accountancy firms.
EY is the latest in the dock, with a penalty of £3.5million for neglecting to challenge the bosses of Stagecoach when checking the books in 2017.
The FRC is also investigating its audits of London Capital & Finance and NMC Health, both of which went under in a swirl of fraud allegations. However, the regulator itself is in a less than ideal state.
The Government wants to transform it into a powerful new body named Arga – or should that be Aaargh – the Audit, Reporting and Governance Authority.
Its erstwhile boss Simon Dingemans, who was paid £150,000 a year for a three-day week, left over a year ago to take a job in private equity.
The interim chair, former Standard Life Aberdeen heavyweight Keith Skeoch, is leaving in October. There is unlikely to be a permanent replacement by then.
In the meantime, the quality of audits leaves a lot to be desired.
The FRC’s annual inspection found that between a quarter and a third of those by the biggest seven firms were below-par.
That is unacceptable. Audit fees for big companies run into the millions each year, yet shareholders are too often being short-changed.
There is a pressing need for a strong accountancy regulator with the ability to raise standards. If Arga is to be a credible body, it needs to get off to a strong start.
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