The only weakness is a certain moralism about what is an inevitable part of the capitalist process, although one which, he is right, can be regulated.
(Other financial columns this week note that in Europe the pressure is now on for transnational bank mergers.)
>From the Observer Sunday 12 Dec
>>>
But it is over takeovers, much the most
important source of income, that the
rigging is most evident. Consultants
KPMG recently reported that only one in
five takeovers showed better share price
performance after a deal than before and
that in the main bids and deals were bad
for companies.
Why, then, do so many take place? The answer is that they are easy. On average, 70 per cent of the shares in the top 250 British companies are owned by 20 or so insurance companies or pension funds who uniquely under British company law have no legal obligations to the companies in which they invest whatsoever.
Persuade 10 of these to sell and the company is yours. You can pay for it, as both Bank of Scotland and Royal Bank of Scotland propose to pay for Nat West, not with cash but by issuing your own shares. The fees can be set against tax. Most chief executives cannot resist the idea of running an even bigger company. Most pension funds and insurance companies cannot resist the temptation to sell for a short-term, cost-free gain; they have no obligation to do anything else. More billions for the bankers.
To unrig the market, company law should be reformed. Takeover fees should not be allowable against tax. A withholding tax should be introduced. Competition law should ferociously examine every takeover for its monopoly implications. And there should be 50 per cent income tax for earnings over £100,000, rising to 60 per cent for earnings over £200,000. I cry for the moon.
The great ideological trick is that these ideas are called rigging the market, while the truth is the opposite. The new director-general of the CBI, Digby Anderson, warmly supports the economic and social policies of this 'centre-Right' government. So, I learned last week, does Lady Thatcher, who tells friends it is continuing her agenda more effectively than John Major did. <<<
Chris Burford
London