A bunch of MPs have put the boot into Kraft today over the controversial closure of Cadbury’s Somerdale plant. The business select committee report suggests that Kraft acted ‘irresponsibly and unwisely’ in promising to keep the plant open, leaving itself open to accusations of ‘incompetence’ or a ‘cynical ploy’. No arguments from us there. But ultimately, for better or for worse, their opinion doesn’t matter one little bit as far as Kraft is concerned. And we can’t help feeling that part of the reason the politicians are so aggrieved is that Kraft has made absolutely no effort to pretend otherwise…
The report, from the Business and Enterprise Committee, is highly critical about Kraft’s behaviour during the Cadbury saga. It suggests the Somerdale fiasco (Kraft promised to keep it open during the bidding process, only to perform a rapid U-turn after it sealed the deal) has done huge damage to Kraft’s reputation in the UK, which is surely true. Even if Kraft is right that the process was too far gone to reverse, it should never have suggested otherwise without being completely sure that the sums added up. So it deserves all the opprobrium it gets for that one.
The MPs also lend their support to the ongoing review of takeover rules, suggesting that the 2006 Companies Act needs to be revised. (Although perhaps the problem runs deeper than that: Unilever boss Paul Polman told the FT yesterday that public companies in general were too focused on short-term profits rather than long-term performance.)
However, elsewhere the MPs get onto dodgier territory. They demand further pledges on job cuts and more engagement with the unions – but now Kraft owns Cadbury, it can do what it wants without reference the politicians (whatever Lord Mandelson seems to think). Equally they reserve particular ire for Kraft boss Irene Rosenfeld, largely because she had the temerity to refuse to come and see them (she sent a minion instead). This may have been a blow to their precious egos, but realistically, why should she? They have no say in or influence over the deal, so there was no upside for her – she’d just have taken a very public kicking.
The MPs make some sensible points. And the case of Cadbury – where short-term investors effectively got to decide the fate of this iconic UK company – clearly highlighted some problems with the current system. But until the rules change, this is just more empty rhetoric from Westminster. Was this report – which doesn’t actually tell us anything we didn’t already know – really worth the time and expense?
In today's bulletin:
Brown calls Election - on the day tax hikes kick in
Jilted MPs slam Kraft over Cadbury Somerdale closure
US billionaire backs Virgin's crack at UK banking market
Fit notes help the economy return to full health?
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