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The surrender of the board of Royal Mail owner International Distribution Services (IDS) to the blandishments of Czech billionaire Daniel Kretinsky is a national disgrace.
An IDS board, stuffed with the great and the good including chairman Keith Williams and senior independent director Sarah Hogg, should have fought against this travesty.
It is betraying the heritage of one of the nation’s most venerated institutions with a history dating back to 1635.
More concerning, it is bad business and bad for Britain. The trajectory of former public utilities falling into the hands of financially driven, uncaring ownership has been disastrous.
The same public which so abhors the ownership structure of Thames Water, where billions of pounds of dividends and interest payments flowed overseas, cannot watch events at Royal Mail with equanimity.
At risk: The £3.6bn Royal Mail deal will be paid for by putting a chunk of debt onto IDS’ balance sheet. The consequence of that will be a huge interest bill and a rush to dispose of assets
The £3.6billion deal by Kretinsky’s EP Group will be paid for by putting a chunk of debt onto IDS’s balance sheet.
The consequence of that will be a huge interest bill and a rush to dispose of assets including the profitable European parcels arm GLS.
A debt burden can only lead to investment being cut and the enterprise becoming less competitive.
Supermarket groups Morrisons and Asda have gone backwards since falling under private equity control.
The IDS board will wave in the air a series of commitments made by Kretinsky as a guarantee that core values and union contracts will be respected. Hooey!
In private hands and operating behind locked doors, without formal scrutiny by stakeholders, Kretinsky and his backers will have licence to do what they like, especially when five-year pledges vanish.
Enforcement of such agreements, even if legal action is taken by regulators, always is too late.
Equally alarming as the cowardice of a sub-octane IDS board is the attitude of our supine politicians. In their desire not to be seen as not interfering in free markets there is a curious complacency.
The indifference of politicians was responsible for the loss of Arm Holdings to New York. A focused board saved AstraZeneca, now one of the nation’s most valuable enterprises, from being swallowed by rival Pfizer.
When I first broached the prospective Royal Mail sale with Chancellor Jeremy Hunt in Washington last month he sounded less than enthusiastic. Indeed, he still insists that it will have to be examined on national security grounds.
The Tories have given birth to the National Security and Investment Act and if still in government, they could have stopped this deal in its tracks.
My fear is that it will fall through the electoral cracks. Kretinsky’s team have been busy buttering up Labour.
The party’s naive business spokesman Jonathan Reynolds insists that a Labour government will ensure the Czech billionaire’s assurances will be obeyed.
There is not a cat in hell’s chance.
Labour should make it clear now that it will not countenance such a transaction.
It cannot be in favour of taking the railways back into state ownership, because of alleged mismanagement, while selling off the Royal Mail. If Keir Starmer is really the patriot he claims, he now has the chance to show he means it.
Rishi Sunak has a unique chance to show Britain, in keeping with the US and France, he is willing to repel overseas marauders.
Star Chambers
All is forgiven. Anglo American’s chairman Stuart Chambers has shown backbone in holding out against the assault from Aussie-based BHP.
What is even more impressive, he has done so in the face of urgings from Blackrock to keep on talking and a subsiding share price.
Anglo’s biggest ally in the defence of the realm has been South Africa over almost a century of corporate history, including bold behaviour in the apartheid era.
In particular it will be much more able to divest quoted offshoots Anglo Platinum and Kumba Iron Ore than BHP, which would have faced considerable regulatory and tax obstacles.
London-quoted Anglo must now show that its go-it-alone strategy works.
Best hope an early exit from iron coking coal. Several buyers, including Glencore, are in the wings. A sale would be a convincing early win for Chambers, chief executive Duncan Wanblad and investors.
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