Press freedom should be a matter of national security
A dictatorial regime bidding for this very newspaper should be sending shockwaves through Whitehall. If free speech is a key national interest in a democracy, why is protecting it not an issue of “national security”?
The laws requiring examination of buy outs on security grounds do not cover media. Can this and other cavernous gaps in the UK’s investment screening and economic crime fighting regime be leaving us seriously exposed?
This month, I read with astonishment that Iran used two of Britain’s best-known high-street banks, Santander and Lloyds, to evade sanctions. It wasn’t hard. The real owners happened to be sanctioned by the US for running millions to Iran’s Revolutionary Guards – who are funding a campaign of terror and hijacking focussed on British and American ships in the Red Sea. This makes Britain complicit in the financing of our enemies.
Lloyds and Santander denied they had breached their legal obligations under the sanctions on Iran.
The story underlines the point that our defence against economic crime is best described as all holes and no net. Last week, my Committee heard that laws to check the identity of new company directors will take at least 18 months. Some well-known loopholes like “limited partnerships” – which are actively marketed to Russian oligarchs – as a way to hide their money, won’t be closed at all.
And the battle against economic crime is hopelessly under-funded. The budget for Companies House was £89m last year. It is dwarfed by the £157bn cost of fraud alone to UK businesses small and large – a sum that is almost the entire budget for NHS England. No wonder the National Crime Agency told my committee that Britain is still one of the world’s favourite places to launder money.
We are not helped by the lack of a single centre of government that ensures concerted action. When we looked into the matter last week, we found an alphabet soup of at least 25 different supervisors and agencies responsible for enforcing the rules we have. Each has their own focus and competing priorities. And when we asked Minister Kevin Hollinrake the simple question “Who’s in charge?” on Tuesday, there was confusion and finally silence.
That is one big reason why we need a new Office of Economic Statecraft tasked with sorting out the intelligence, economic models, and plans for economic resilience. We cannot go on with a situation where we are sending the RAF 3,000 miles to strike Iranian-backed proxies in the Middle East, when less than three miles from Westminster, Iranian backed proxies are merrily doing business in the City of London.
But it is not just the freedom to trade on our shores that we offer our adversaries. It’s the freedom to wander in and simply buy our assets that they wish.
In theory, the National Security and Investment Act lets ministers screen takeovers and investments into strategically important UK firms. The Business Secretary has the power to call-in transactions for further investigation, and to impose conditions or block them, should they threaten our national security. But, this defence regime has not kept up with the times.
Over the last 13 years, foreign direct investment into the UK has grown, but so too has inward investment from offshore sources, dictatorships, and countries classed as only “partially free”. Indeed, investment from such sources has multiplied over five-fold to almost a quarter of trillion pounds.
Yet while our allies in the US and Europe are reinforcing their defences and protecting strategic assets with a “higher fence”, we risk lowering our guard. Our allies are bringing forward reforms that make it harder for those who do not share our values to buy firms that push the boundaries of technology, or amass data on citizens, or safeguard the media freedoms which are so essential to our way of life.
The proposal to merge the mobile phone operators Three and Vodafone is case in point, given the connections between Three’s owners CK Hutchinson with longstanding connections with the Chinese state.
The bid by Abu Dhabi-backed RedBird IMI for this very newspaper is another example. In both the EU and Australia, threats to media freedom are a trigger for a call in and review on national security grounds. Why should our defences be weaker?
Economic security is always a balancing act. We like free and open markets. But we can’t be naive about the risks of this. We can’t be as Ronald Reagan once put it, “innocents abroad in a world that isn’t innocent”. The trick, as US National Security Advisor, Jake Sullivan puts it is to build a “small yard with a hard fence”.
Right now, the Government risks building a big garden with a low fence. That’s a mistake. And that’s why the Business and Trade Committee has demanded a detailed plan to toughen up, not weaken the law. The UK should be open for business, but not open to abuse.
Liam Byrne is Labour MP for Birmingham Hodge Hill and chairman of the Business and Trade Committee.
