36 2GM Wednesday January 26 2022 | the times
Business
A powerhouse American technology
group is said to be preparing to abandon
its takeover of Arm, the British micro-
chip designer, amid resistance from
regulators. Nvidia has told partners
that it does not expect the deal to be
completed, according to Bloomberg.
It agreed to buy Arm from SoftBank,
the Japanese technology conglomer-
ate, in September 2020 in a $40 billion
cash-and-shares deal. Now SoftBank is
stepping up preparations for an initial
public offering of Arm as an alternative
to a takeover, the report said.
A spokesman for Nvidia said: “We
continue to hold the view... that this
transaction provides an opportunity to
accelerate Arm and boost competition
and innovation.”
A spokesman for SoftBank said: “We
remain hopeful that the transaction
will be approved.”
Shares in Nvidia, which have risenNvidia ‘ready to drop its bid for Arm’
strongly since the deal was announced,
increasing the value of the takeover,
closed down 4.5 per cent at $223.24 in
New York. Other semiconductor
shares were also weaker amid a wider
pullback in technology stocks. Trading
in Tokyo of SoftBank’s shares had
closed before the report was published.
Arm, founded in 1990 as Advanced
RISC Machines in a joint venture
between Acorn Computers and Apple,
was sold in 2016 to SoftBank. It employs
about 7,000 people, of whom 3,000 are
in Britain. Its technology is used by chip
makers, including Samsung and Apple,
and its designs are used in smartphones
and other connected devices. It is a big
player in the semiconductor industry
that underpins critical infrastructure.
The takeover has triggered scrutiny
from regulators around the world.
Britain ordered an in-depth investi-
gation in November after the Competi-
tion and Markets Authority raised con-
cerns. Nadine Dorries, the digital andculture secretary, said at the time that
“Arm has a unique place in the global
technology supply chain and we must
make sure the implications of this
transaction are fully considered”.
Last month the US Federal Trade
Commission moved to block the deal,
saying that it would give Nvidia control
over technology and designs that
competitors relied on to create their
own chips. Many Arm customers com-
pete with Nvidia and fear that they
would have to pay higher prices under a
new owner. The European Commis-
sion is scrutinising the deal, which also
requires approval from China.
Mike Clancy, general secretary of
Prospect, the technology and engineer-
ing union, said: “Arm is one of the UK’s
most important tech companies and
the government must make sure that
jobs and spending on research and
development are fully protected
regardless of the company’s future
ownership.”Alex RalphMusk in line
for $35bn
Tesla payday
Callum JonesElon Musk is in line to reap in excess
of $35 billion of stock awards in the
coming months despite the slide in
Tesla’s shares.
The world’s second richest man is set
to secure five tranches of share options
in the maker of electric cars over the
next year, according to analysts, as the
company steps up production and
meets targets tied to his controversial
compensation package.
Musk, 50, chief executive and self-
proclaimed Technoking of Tesla, does
not take a salary from the company.
Lucrative pay arrangements approved
in 2018 set him up for as many as a
dozen batches of stock options, how-1
Lord Agnew of Oulton, the
former minister who resigned
this week over “schoolboy
errors” in tackling fraud in a
£47 billion pandemic loans scheme,
has said the government must do
more to hold banking giants to
account to mitigate losses for
taxpayers. Meanwhile, Boris
Johnson has been accused of
letting Britain become a “haven for
kleptocrats and money launderers”
after the prime minister quietly
ditched an anti-fraud law. Page 102
Airlines and travel operators
are experiencing a surge of
bookings after testing for fully
vaccinated travellers was dropped.
Jet2, Tui and Thomas Cook have
all reported a rush of bookings,
with flights during the February
school half-term and Easter
holidays in high demand. Page 143
Klarna is to launch a credit
card in Britain, allowing
customers to use its “buy now,
pay later” service at high street
stores as well as online. The
Swedish company said that the
move would give consumers the
flexibility to pay for purchases at a
later date “without the inherent
risks of interest and revolving
credit”. Page 224
Microsoft beat expectations
in the latest quarter as more
businesses shifted towards
remote work, fuelling the growth
of its cloud computing division.
The giant technology group’s
revenue and profit increased by a
fifth amid robust demand for its
services from companies and
consumers. Page 355
Corbin & King, the London
restaurant group behind the
fashionable Wolseley on
Piccadilly, has been placed in
administration after a bitter
dispute between its founders and
its Thai owner. Page 356
Britain is more attractive to
global financial services
businesses as a place to
expand than at any time since the
Brexit referendum, according to
poll conducted by EY, the financial
services company. Page 357
Elon Musk is in line to reap in
excess of $35 billion of stock
awards in the coming months,
despite the slide in Tesla’s shares.
The world’s second richest man is
set to secure five tranches of share
options in the maker of electric
cars over the next year as the
company steps up production and
meets targets tied to his
compensation package.8
Rising inflation caused
interest payments on
government debt to treble in a
year to reach record levels for
December. The government paid
£8.1 billion in interest in December,
200 per cent above the £2.7 billion
bill a year earlier, according to
estimates from the Office for
National Statistics. Page 389
Alan Jope, the boss of
Unilever, has said that there
are no plans to offload brands
or divisions after announcing 1,500
job cuts. Pages 40-4110
Royal Mail plans to cut
700 managerial jobs in a
restructuring that has
forced it to lower its profit outlook
for the year. Page 41Need to know
Billions lostto scammers
who milked
Covid relief
Flaws in the system for
issuing bounce back
loans were an open
invitation for criminals,
reports James Hurley
The bounce back loan scheme was
supposed to help businesses struggling
to survive amid the fallout of Covid-19
restrictions. For many it has worked as
intended, proving to be the difference
between a shot at recovery and going to
the wall. Yet the scheme also had an
inherent vulnerability: it was open to
abuse from opportunistic small-time
scammers and organised criminals.
Amid growing anger and incredulity,
the scale of that flaw is now emerging.
About one in four UK businesses
applied for a bounce back loan and the
funds provided, £47.4 billion of credit
via 1.6 million loans, is close to the
annual defence budget. Significant
losses were inevitable, but the £17 bil-
lion or so that may never be repaid
represents an enormous blow to the
public purse. As much as £5 billion of
that sum is thought to have been taken
by fraudsters.
Banks were encouraged to lend
swiftly to small companies via a 100 per
cent state guarantee on their losses, un-
derwritten by the taxpayer. According
to a startling claim from Lord Agnew,
the Treasury minister who resigned in
the House of Lords on Monday over the
failure to get to grips with the scheme,
£1 billion has already been paid out on
the state guarantee, more than
£250 million of which is estimated to be
to cover fraud losses.
Billions of pounds more will be
claimed by banks to cover losses in thecoming months. To see where tax-
payers’ money is going, the Insolvency
Service’s record of recent bankruptcy
and debt relief orders for insolvent
individuals offers a glimpse.
Steven Davison, 42, used a £35,000
bounce back loan — ostensibly for
Broadway Sandwich Bar and Catering
in Blyth, Northumberland — to fund
gambling losses, “garden improve-
ment” and a new business that ceased
trading within six months.
Keith Hamblett, 51, from Washing-
ton, Tyne and Wear, secured a £28,000
loan despite the fact that his fruit and
veg business had ceased trading. He
bought a £2,400 watch with the funds
and spent thousands on living costs.
Ehsan Masaud, based in Manchester,
obtained two £50,000 bounce back
loans for his Kip McGrath tutoring
franchises. The 33-year-old transferred
£71,600 of the funds to an online
trading platform, where he lost the lot.
Others abused the scheme to channel
money to partners or to support cur-
rency trading losses.
In his resignation speech, Lord
Agnew said that official oversight of the
scheme had been “nothing less than
woeful” and he accused the Treasury,
the business department and the
British Business Bank, the state devel-
opment agency that runs the pandemic
schemes, of “arrogance, indolence and
ignorance”.
He isn’t the only one who is exasper-
ated. Last week, a judge demanded an
explanation from authorities about
how two members of an organised
crime gang had been able to secure
£145,000 of bounce back loans.
This included £50,000 lent to
Asif Hussain, 44, a serial fraudster who
had 48 previous criminal convictions,
and £95,000 in two loans to Ibraaz
Shafique, a gang member. Themaximum loan was supposed to be
£50,000.
Judge Anthony Cross, QC, senten-
cing six men at Manchester crown
court for their part in a conspiracy to
steal and export expensive cars, said
that it “defies belief” that Hussain was
granted a loan. “The most basic of
checks would have revealed the fraud,”
he said. “The public are entitled to an
explanation as to how these loans were
obtained.”
The British Business Bank finds itself
firmly in the line of fire, although its
former chief executive is within his
rights to say “I told you so” to ministers.In May 2020, Keith Morgan, who was
the bank’s boss, wrote to Alok Sharma,
who was the business secretary, setting
out his concerns that bounce back
loans risked putting vast sums of tax-
payers’ money at risk.
Among his reservations was a fear
that the scheme was vulnerable to
abuse by “individuals and organised
crime”. He issued formal objections on
the grounds of “propriety, value for
money and feasibility”.
He was overruled, but the mess
described by Lord Agnew provides
significant vindication, even if a large
portion of the former minister’s anger isThe ringleader of a gang of car thieves received a bounce back loan even though