The not-so Fantastic Dr Fox isn't helping anyone

EDITOR'S BLOG: It's only the second week of September and British business is getting a full frontal assault from government on multiple fronts.

by Matthew Gwyther
Last Updated: 12 Sep 2016

British business could be forgiven on this Monday morning for thinking the current government seriously has it in for them. First there was last week’s intemperate outburst by Liam Fox, the energetically Brexit international trade secretary, that UK companies have grown ‘too fat and too lazy’ and that some business leaders would rather slope off for a round of golf on a Friday afternoon than seek out new export markets.

A cruder - but nonetheless stingingly effective - caricature would be hard to draw. (Incidentally, there may be dozens of shots of Fox himself marching the front followed by the back nine in his Pringle sweater and plus fours, but he clearly hadn’t noted my blog about the difficulties the golf industry currently finds itself in. In truth these modern MAMIL bosses are far more likely to be chipping off early, mounting their carbon fibre road bikes and heading for the Surrey Hills. Either that or they are seeing their therapists and coaches for moral support.)

Dr Fox told supporters of the Conservative Way Forward group: ‘This country is not the free-trading nation it once was. We have become too lazy and too fat on our successes in previous generations. What is the point of us reshaping global trade, what is the point of us going out and looking for new markets for the United Kingdom, if we don’t have the exporters to fill those markets?’ The Times, by the way, is to be congratulated for getting hold of the tape of Fox propping up the bar.

Dr Fox’s ‘unguarded’ attack on the businesses he is supposed to represent angered entrepreneurs - Richard Reed, once of the Innocent parish, was completely incensed - ‘rather than deliver on the promises/ lies that he made to the country, he turns round and slags off people. I just think: "how dare he talk down the country that he damaged, how dare he?" He’s a terrible, terrible voice for British business.’ Well, he was a GP, Richard, so clearly he knows all about working practices in the nation’s boardrooms. Or maybe not.

Neither did the comments meet with much enthusiasm from Downing Street. Unlike Fox, Theresa May is far too cautious to go mouthing off over a few G&Ts at a Westminster drinks party - he also took the opportunity to slag off the Foreign Office and continue his turf war with Boris Johnson. Maybe this is the first of her cunning moves to watch Fox fail.

It’s hard to see his comments as anything other than deliberately inflammatory. Fox knows very well that the vast majority of UK businesses wanted Britain to stay in the EU to which they send getting on for half their exports. Why would they want to make life even more difficult for themselves than things already are? The leading Leaver appears to be settling some scores here.

Hard on the heels of The Fox comes a report that the government is considering prosecuting company bosses who fail to stop their staff committing fraud. These are similar to the plans to make boards liable if staff are actively involved in tax evasion.

Theresa May has made addressing poor corporate behaviour a cornerstone of her domestic action plan and has promised to end "boardroom excess" and make tackling corporate crime a key focus.
This initiative was floated in a recent speech by the attorney general Jeremy Wright QC who suggested the government would consult on extending the planned law on tax evasion which was a Cameron idea from earlier this year. Speaking not from a drinks party but an academic symposium in Cambridge, he reportedly said: ‘When considering the question 'where does the buck stop?' and who is responsible for economic crime, it is clear the answer is to be found at every level, from the boardroom down.’

It will be interesting to see how the Serious Fraud Office approaches the ongoing Tesco case in the light of this new harder government line. The real problem with such investigations is that on the rare occasion the SFO and the police score a hit on criminal behaviour in business it almost never gets anyone but one of the foot soldiers who is hung out to dry while the profits from the crime are still banked. Attempts to create an evidence trail that heads up the ranks is notoriously difficult. There is widespread disbelief that culpability doesn’t extend higher up the ranks to the generals who create the sort of culture - especially within financial services - that creates rule-bending and breaking in the first place.

This will be no easy task both to place into law and then to achieve prosecutions. ‘Failure to prevent’ is one thing but actively encouraging and abetting is another. Juries have enough trouble with ‘beyond reasonable doubt’ as it is.

But as Barry Vitou, partner in fraud and white-collar crime at law firm Pinsent Masons, said to the Times who also unearthed this story: ‘The present regime makes it practically impossible to hold corporate boards to account for corporate misconduct because evidence of that misconduct must be found at the highest level. In practice the evidence trail usually dries much lower down the corporate tree. There is no responsibility for the damage caused by failing to prevent economic crime nor incentives offered which motivate people to do the wrong thing.’ This all looks like more work for the new hordes of lawyers specialising in governance.

Both these stories are playing well to a nasty mood. It’s not a good time to be a big corporate boss. A long Summer of Philip Green and Mike Ashley and all their shenanigans has left a pretty bad taste. Yesterday the TUC continued its long-running campaign on executive pay. The TUC said its research showed top executives receive a year's worth of the minimum wage in just one day. In the latest round of fairness calculations it said the average FTSE 100 boss was paid 123 times the average full-time salary, and called for ‘reality in boardrooms.’ It made full use of Sir Martin Sorrell - who doesn’t use the WPP man these days to prove the point? - by noting that our highest paid CEO takes less than 45 minutes to earn what an average worker receives in a year.

So, we are back to yet another sustained attack on the Fat Cats - they lazily play golf while enjoying lashings of cream and encouraging their kittens to bite the heads of innocent mice who are on zero hours contracts to fetch the dairy products in the first place. One of these days business is going to wake up to the fact that this story will keep on recurring and severely damaging its reputation until it provides some more convincing explanations - or even, perhaps, tries to do actually do something about it.


Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events