38 Tuesday April 5 2022 | the times
Business
MPs on a leading Commons committee
have accused the prime minister of say-
ing he would conduct a national secur-
ity inquiry into the Chinese takeover of
a semiconductor factory — then doing
nothing about it.
Tom Tugendhat, the Conservative
chairman of the foreign affairs select
committee, has demanded that Boris
Johnson answers questions on Newport
Wafer Fab, the UK’s largest microchip
wafer fabricator, which last summer
agreed a £63 million takeover by Nex-
peria, a Chinese technology subsidiary.
Nexperia used to be part of the Phil-
ips electronics empire but is now con-
trolled by Wingtech Technology, the
Chinese smartphone manufacturer.
The prime minister is reported to
have instructed his national security
adviser Stephen Lovegrove to review
whether the deal would be against UK
interests amid criticism from the ToryPM accused over Chinese takeover
backbenches that Britain was selling off
its technology base to China.
However, Tugendhat believes that
no such review has taken place.
Publishing an update today on his
committee’s report into the affair,
Sovereignty for Sale, Tugendhat said:
“The prime minister’s assurances that
work [on the inquiry] is under way are
welcome. However, so few details have
been provided to the committee, that
we are left with the unfortunate conclu-
sion that no review has taken place.
“The committee is calling on the gov-
ernment to clarify the reasons why the
prime minister requested a review into
Newport Wafer Fab and why this
review has not begun.”
Tugendhat believes that under
powers in the National Security and In-
vestment Act, there should be an in-
quiry because the proposed sale would
be to “a company with links to the
Chinese Communist Party” and of
“prized assets to a strategic competitor[which] potentially compromises
national security”.
Kwasi Kwarteng, the business secre-
tary, has been under pressure to make a
statement on the affair. His officials
have said no decision has been made.
Newport Wafer Fab was set up in the
1980s when south Wales had plans to
become the “Silicon Valleys”. It has
been through the hands of several own-
ers, including a spell in receivership.
The report says: “The government
has explicitly recognised the criticality
of semiconductors to the UK’s national
security and wider global interests; like-
wise, the Chinese government’s ambi-
tions to achieve self-sufficiency in
semiconductors and the means by
which it aims to achieve this are well
documented. These factors, com-
pounded by the current global semi-
conductor shortage, mean that the gov-
ernment’s apparent failure to take this
matter seriously is likely to damage the
UK’s national interest.”Robert Lea Industrial EditorCost of living
crisis hits
new car sales
Robert Lea Industrial EditorNew car sales fell sharply in March, a
crucial month for the automotive in-
dustry, as the cost of living crisis engulfs
motorists, registration figures show.
Initial sales figures indicate new car
registrations in March with the new
“22” plate fell about 14 per cent year on
year to fewer than 250,000 in the
month.
March is the single most important
month for the trade, typically account-
ing for 20 per cent of all annual sales. In
the decade before the pandemic new
car sales in March came in, on average,
at 450,000.
The March fall is also a significant
reversal on the numbers reported for1
Ministers will today ask
government scientific advisers
to reassess the safety of
fracking in Britain as a cabinet
minister played down the risk of
earthquakes. Kwasi Kwarteng, the
business secretary, will write to the
British Geological Survey to
request a three-month review of
the evidence on fracking. Page 22
Thousands of British workers
will take part in a four-day
week trial in what is thought
to be the world’s biggest pilot
scheme. More than 3,000
employees at 60 companies will
take part in the scheme, running
from June to December. Page 193
The Easter getaway has been
marred by more disruption at
airports and bottlenecks in
channel ports. EasyJet cancelled 62
flights to and from the UK because
of crew absences caused by
coronavirus infections and BA has
scaled back its timetable. Page 204
Elon Musk has become
Twitter’s largest shareholder
after amassing a 9.2 per cent
stake in the social media platform.
Shares in Twitter rallied by a
quarter after a stock market filing
revealed the world’s richest man
had bought 73.5 million shares. His
investment was worth about
$2.89 billion on Friday. Pages 37, 405
Britain is not set for a repeat
of the 1970s and war in
Ukraine could lead to lower
inflation than previously expected,
a senior Bank of England official
said. Sir Jon Cunliffe, deputy
governor for financial stability, said
there was a risk the conflict could
lead to inflation undershooting the
2 per cent target. Page 376
Marks & Spencer has signed
a partnership with Dotte, a
two-year-old resale online
platform that allows families to
buy and sell children’s clothes. The
retailer will offer families that use
the service to sell their outgrown
Marks clothing a £5 voucher for
their next £25 shop, in addition to
the money from the sale. Page 377
The Financial Conduct
Authority and the Bank of
England are to start an inquiry
into the London Metal Exchange’s
nickel market, where trading was
suspended for a time last month,
and have pushed for an overhaul
of its board.8
Mazars, Britain’s seventh-
biggest accountancy firm, has
benefited from the push by
politicians and regulators to
reduce the stranglehold of the
so-called Big Four. It reported
record annual revenues last year
as it continued to take audit work
from its bigger rivals, Deloitte, EY,
KPMG and PwC. Page 409
Purplebricks, the online estate
agent, has had to delay the
formal appointment of Helena
Marston as its new chief executive
because she is yet to be signed off
by the regulator to replace Vic
Darvey, who left abruptly for
“personal reasons”. Page 4110
A “for sale” sign has been
hoisted by Ted Baker’s
board after the fashion
brand received a sweetened
takeover proposal from Sycamore
Partners, a US private equity firm,
and rival bid interest. Pages 42-43Need to know
Shock and ore
13 20 27 6March 8
The contract spikes to a
record $101,365 before
closing at $80,000. Trading is
suspended later in the
morning at $80,000 and all
trades that day are
subsequently cancelled,
including that day’s pricesMarch 7
Price of the LME’s
three-month nickel
futures contract
jumps to close at
about $48,000FebruaryExchange faces inquiry into
City regulators are to start an inquiry
into the turmoil in the London Metal
Exchange’s nickel market and have
pushed for an overhaul of its board.
The Financial Conduct Authority
and the Bank of England announced
that they would review the way the ex-
change and its clearing house handled
events last month, when chaotic trad-
ing forced it to suspend its nickel
market for more than a week.
It was revealed that the exchange had
“agreed the benefits of appointing addi-
tional independent directors to
strengthen its governance and will now
review the best way to achieve this in
the context of the skills and composi-
tion of its board”.
They said the affair had “underlined
questions raised in a recent LME
discussion paper on market structure,
particularly the role of transparency in
the LME and related markets”.
The exchange said it welcomed the
move and would commission its own
independent review into the events
leading up to the suspension.
Matthew Chamberlain, chief execu-
tive, said the exchange’s inquiry would
examine whether there has been
“abuse, looking at the specific trading
patterns and the specific positions and
seeing whether there has been behav-
iour that needs to be investigated
further”. It will also assess market struc-
ture to avoid a repeat of the fiasco.
The regulators’ intervention marks
the latest twist in one of the worst crises
to have engulfed the 145-year-old
exchange.
The LME, which operates the only
remaining open-outcry trading floor in
Europe, called the Ring, is central to the
trading of industrial metals. It is owned
by Hong Kong Exchanges and Clearing
and has been run since 2017 by Cham-
berlain, who is planning to leave at the
end of the month to join a cryptocur-
rency venture.
The price of the exchange’s three-
month nickel futures contract surged
amid concerns that supplies of the
metal would be disrupted by the war in
Ukraine as Russia is a big exporter of
the metal. The price rise was exacerbat-
ed by big short positions taken against
nickel, in particular a huge bet taken by
Chinese metals billionaire Xiang
Guangda through his business Tsing-
shan Holding Group.
As the contract rose, short-sellers
were forced to cover their trades by
buying back their positions, squeezingthe price even higher. The contract
briefly rose above a record $100,000 a
tonne on the morning of March 8,
prompting the exchange to suspend the
market and cancelled all trades and
prices that day before dealings came to
a halt. Trading restarted on March 16,
although the exchange has faced fierce
criticism from some in the market over
its actions.
The FCA and the Bank said: “After a
period of stability, the FCA intends to
review the LME’s approach to manag-
ing the suspension and resumption of
the market in nickel to determine what
lessons might be learned in relation to
the LME’s governance and market
oversight arrangements.”Analysis
I
t is not the first time a crisis at
the London Metal Exchange
has led to scrutiny of the board
(Ben Martin writes).
When the exchange was hit
by the $2.6 billion Sumitomo copper
trading scandal in 1996, the
Securities and Investments Board
called for changes to the
composition of its directors.
The criticism was that the
exchange, which was owned by its
members, was too clubby and its
board was skewed towards directorswho represented firms that traded
metals in the exchange’s Ring.
Now, however, the exchange
faces the opposite criticism: that
there aren’t enough independent
directors with metals industry
experience on its board. This has
been exposed by the nickel crisis
that hit the exchange last month.
The fiasco raised questions about
the stewardship of one of the
best-known institutions in the City.
“They need to have people on
there that understand the market,”Ben Martin Banking Editor