ALEX BRUMMER: Bailey’s anger at suggestion he was responsible for LCF

Andrew Bailey is not easily ruffled. The Bank of England governor has been in the furnace of enough crises to know that the best response is to keep calm and carry on.

During his appearance before the Treasury Select Committee to answer questions on Dame Elizabeth Gloster’s damming report on the Financial Conduct Authority’s faulty policing of the London Capital & Finance (LCF), we saw a different Bailey.

The governor was visibly upset and admitted he was very angry at the way in which the Gloster report dealt with the issues of his responsibility and culpability for what had gone wrong at LCF.

Ruffled: Andrew Bailey admitted he was very angry at the way in which the Gloster report dealt with the issues of his responsibility and culpability for what had gone wrong at LCF

Bailey made it plain he was not unhappy about being personally named as responsible for the regulatory debacle. 

As chief executive, that was a given. But culpability was different, and that is why he had asked Dame Elizabeth to exclude his name and that of his fellow officials.

He pointed out that in the report into the collapse of HBOS, published under his leadership, he had allowed a second round of Maxwellisation – legal scrutiny and rebuttal of the contents – to avoid wrongly construed criticism. 

By the time the Gloster report arrived on Bailey’s desk, days before publication, he concluded with his QC that there was no point in challenging publication, which might have involved an injunction and the fuss that might have caused.

The confusing suggestion in Gloster’s report, of an attempt to suppress the name of Bailey and colleagues, has now been properly explained. It should lift a cloud over the governor’s reputation.

Running the FCA with its weak culture and responsibility for policing 60,000 firms, while keeping an eye on activities not strictly within its remit, was always going to be a nightmare.

Nevertheless, if the FCA had a robust culture and applied itself more urgently to events, blunders such as LCF might not have happened. One trusts that Bailey will feel better now that he has offloaded his disappointment and anger. 

He will be able to focus more clearly on the big decisions of supporting the economy, further QE and negative interest rates that could lie ahead.

But it is going to be hard to put his FCA legacy fully behind him while up to half-a-million investors in Neil Woodford’s investment empire, which imploded on Bailey’s watch, seek justice and reparations.

Chips flipped

Dialog Semiconductor is a curious mixture. It is a Reading-based designer and seller of micro-chips, with a British chief executive, Dr Jalal Bagherli, a US chairman and a Frankfurt quote.

Now it is facing a £4bn plus bid from £16bn Japanese chip maker Renesas Electronics, currently on an acquisition spree.

Dialog’s intellectual property, serving the car industry and Apple, is in the UK. The German quote is an historical accident, the result of a merry-go-round of ownership changes which saw it become a subsidiary of Daimler before passing through Apax private equity ownership and a German IPO.

The most important thing to say about this transaction is that most of the employees and R&D is in the UK, and Dr Bagerli is an outstanding UK tech entrepreneur. 

Overseas takeovers of this kind should not be allowed to go through on the nod. We know the uncertainty that was unleashed when Arm Holdings was sold off to freebooting Softbank. Stability of ownership is critical.

The Renesas offer for Dialog must be examined under the terms of the National Security and Investment Bill, last heard of in the Lords. 

It seeks to inoculate categories of UK enterprise against deals which are not in the national interest. 

Aside from other considerations, there are concerns that the buyer would need to make cuts at Dialog to make the economics of the deal work.

Better it should pull out.

Dogs of war

The free market Institute of Economic Affairs is good at debunking myths. In a research report released today, it found that critics of the UK’s pandemic responses have cited austerity and excessive globalisation as key factors and regard the NHS as irreproachable.

It notes that the Asian tigers – Taiwan, South Korea, Hong Kong and Singapore – are regarded as star performers in combating Covid but have lower levels of public spending than the UK, Italy Belgium et al, and do not have monolithic healthcare systems. 

It describes this syndrome as ‘Coronfirmation Bias’ and the charges made as ‘baseless’. Are you listening Labour?

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