Category Archives: Business

Britain, Business, Defence, Government, National Security, Politics, United States

Defence Secretary to be quizzed by MPs over hostile bid for GKN

TAKEOVER BID OF GKN THREATENS NATIONAL SECURITY

GOVERNMENT ministers face a grilling in the House of Commons this week over the hostile £7.4billion takeover bid for engineering giant GKN.

Theresa May is under pressure to intervene amid mounting concern about the impact the buyout could have on industry and national security.

Redditch-based GKN makes parts for the F-35 Anglo-American fighter jet, the Eurofighter Typhoon and the US’s B-21 stealth bomber, as well as car parts such as driveshafts for the automotive industry.

Its future has been thrown into doubt after the City turnaround group Melrose lodged a £7.4billion offer last month. GKN’s board is attempting to fight the deal. Melrose is known for asset stripping which often leads to large numbers of people losing their jobs through restructuring.

It has emerged that the Defence Secretary Gavin Williamson is set to be questioned about the bid when he appears this week before the defence select committee. Its chairman Julian Lewis said: “The committee have had correspondence strongly against and in favour of the hostile takeover bid and I therefore wouldn’t be surprised if the topic came up [during the committee hearing].”

There is growing concern across Whitehall about the impact this aggressive takeover of GKN would have, especially the long-term defence and security implications it may have for the UK.

The takeover already faces the prospect of wider investigations, with the business, energy and industrial strategy committee expected to scrutinise it further after initial questions were raised by chairman Rachel Reeves.

The Department for Business, Energy and Industrial Strategy is understood to be monitoring the situation closely, and a senior civil servant has been appointed to examine the impact of a takeover.

The US’s own committee on foreign investment will also have to examine any takeover, as will the authorities in France and Germany.

GKN dates back nearly 260 years and made cannonballs for the British Army during the Napoleonic Wars.

It now has around 6,000 employees in the UK among 58,000 worldwide. It is a key supplier to aerospace firms including Airbus, with bases in towns including Redditch, Luton and Telford.

Melrose specialises in buying underperforming firms and selling them on at a profit within three to five years. Liberal Democrat leader Sir Vince Cable has urged the Government to block the bid for GKN, calling Melrose an “utterly unsuitable owner”.

Speaking in the Commons earlier this month, the Prime Minister said: “Of course the Business Department will be looking closely at, and has been following closely, the issue. I and the Government as a whole will always act in the UK national interest.”

Concern about a GKN takeover has also been raised in the United States, where Congressman Neal Dunn has written to the committee on foreign investment urging it to block the bid.

He said: “In addition to concerns over who may ultimately acquire GKN, Melrose’s business strategy will undermine long-term investments in research and development and secure supply chains, which are critical to the major defence platforms GKN currently supplies.”

Any takeover would have to be considered by Germany’s federal ministry of economic affairs and energy and the French ministry of economy, according to documents made available by Melrose.

Melrose’s executive officers say that they “welcome any and all opportunities to explain to government why we [Melrose] believe a merger with GKN will create an industrial powerhouse of which the UK can be rightly proud”.

They added: “Melrose builds businesses to long-term health and prosperity and has an impeccable pension track record.”

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Britain, Business, European Court, Government, Legal, Politics

The practice of employers spying on staff?

HUMAN RIGHTS LAW

Employers need to take a ‘proportionate approach’ to monitoring their staff.

Last year, significant publicity was given to a European Court of Human Rights (ECHR) decision whereby the rejection of a claim was widely described as a charter for employers to snoop on their employees at work.

Following an appeal, however, a claim by Mr Barbulescu that his right to privacy at work had been violated has been upheld.

The case concerned a Romanian engineer whose employer asked him to set up a Yahoo messenger account. The employer laid down very strict rules against any personal use.

The company monitored Mr Barbulescu’s account and accused him of using it for personal reasons. The defendant disputed this but was then presented with evidence that he made extensive use of it to discuss aspects of his sex life and health with two of his contacts, namely his fiancée and brother. Mr Barbulescu was subsequently dismissed and he brought claims against his employer.

The Grand Chamber of the Court has now decided that Mr Barbulescu’s right to privacy under Article 8 of the European Convention was breached. The key part of the decision was that an employee’s private life at work cannot be reduced to “zero”.

The national courts had not taken account of relevant issues including whether Mr Barbulescu had received prior notice of monitoring or considered its nature and extent. Nor had they determined legitimate reasons justifying the monitoring or considered less intrusive measures. They had accordingly failed to strike the right balance between the employer’s rights to impose discipline and the employee’s right to privacy.

The case highlights the degree of necessity that employers should take when monitoring employees. Whilst that should amount to a proportionate approach, the decision of the Grand Chamber will have limited impact in the UK. This is because legislation and guidance already sets out the parameters of legitimate monitoring by employers.

But there is an overlap. UK workers may be becoming concerned about domestic developments. The EU withdrawal bill, while purporting to preserve all workers’ rights enjoyed by virtue of EU law, controversially excludes the Charter of Fundamental Rights which enshrines in EU law both respect for private and family life and protection of personal data.

While the British Government appear to have sidelined its plans to withdraw the UK from the Convention on Human Rights and from the jurisdiction of the Court which presided in the Barbulescu case, there are indications that these important issues may be revisited after we leave the EU.

Although existing safeguards will continue to apply and be strengthened through implementation of the European General Data Protection Regulation next year, these developments mean, despite UK parliamentary assurances, workers’ rights in the UK look like they are about to be subject (once again) to significant uncertainty.

 

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Business, Economic, Government

HMRC investigating some £25billion in unpaid taxes

TAX AVOIDANCE

BIG businesses could be forced to pay up to £25billion of underpaid tax in a major crackdown on avoidance.

Some of Britain’s largest firms are being investigated by HMRC for potentially dodging £24.8billion of VAT, corporation tax and national insurance payments last year.

It is enough to fund the NHS for nearly three months.

The investigations highlight the scale of efforts by powerful companies to avoid paying their fair share.

HMRC’s probes have snowballed as public anger at fat cat greed grows. The amount of suspected uncollected tax from the year to March is 14 per cent higher than the previous 12 months.

It is 31 per cent more than two years earlier.

Law firm Pinsent Masons, which uncovered the figures, say this means the taxman’s large business directorate is taking a more zealous approach. But tax investigations are the first stage in a tug of war between the exchequer and business and there is no guarantee the money will ever end up in Government coffers.

If HMRC experts have suspicions, they can examine a company’s books and then amass enough evidence to demand it pays up.

But many firms refuse and appeal the decision, leading to lengthy wrangling in the courts. Pinsent Masons said: “HMRC is broadening its horizons and putting in a far wider range of transactions under scrutiny. We are seeing an increasing number of challenges to arrangements that would previously have been regarded as routine and perfectly acceptable.

“The figures represent the amount of tax HMRC considers is underpaid. Not all its investigations will actually result in more tax being paid.” It follows a harder stance on tax from the Treasury after a string of scandals including last year’s Panama Papers debacle, when it was revealed that thousands of well-known figures around the world were stashing their money in offshore havens.

In November, Chancellor Philip Hammond announced plans to raise an extra £2billion by 2020 through a crackdown on tax avoidance.

The law firm said the anti-avoidance efforts were aimed at squeezing employers so ordinary families did not feel the pinch.

“The Treasury faces an unenviable choice – either cut public expenditure and services, or squeeze taxpayers for more money.

“Increasing tax revenue through investigations is often the more politically palatable option, particularly when the focus is on large businesses.

“However, HMRC is putting the affairs of more and more companies under the microscope as a result, increasing the costs for those businesses.”

A so-called “Google tax” was introduced in 2015 to try to stop large firms shifting their cash to overseas havens, and big businesses will soon be ordered to publish their strategies for limiting payments to the revenue.

Around two-thirds of all large companies are under investigation at any one time, and disputes can drag on for decades.

The amount eventually handed to the authorities is typically half of what was initially calculated and asked for.

Big firms handed over a record £49.5billion of corporate tax in the last fiscal year, up 12 per cent on the previous 12 months.

A HMRC spokesman said: “Tax under consideration is not tax owed or unpaid, it’s an estimate of what might be at stake if we didn’t investigate.

“By effectively enforcing the rules, HMRC has since 2010 brought in £53billion that would have otherwise gone unpaid and collected over £8billion from large businesses last year alone.”

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