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The psychopathy of the corporate personality; lessons for law from cognitive neurology
In cognitive neurology, ‘psychopathy’ does not mean ‘a tendency to kill someone’ as is common thought by the general public. ‘Psychopathy’ is literally a ‘suffering of the mind’, and is used by cognitive neurologists to refer to individuals who cannot understand the mental states of others. This inability to understand the mental state of another in your mind is thought to go to awry in autism, from the seminal work by Prof Uta Frith, at UCL (and who was awarded an Honorary Doctorate at Cambridge this year) and Prof Simon Baron-Cohen, Macurdy Professor of Abnormal Psychology at Cambridge. It is even thought an ability to monitor to your own mental state, in particular distinguish internally-generated mental states from those of other people, can lead to conditions such as schizophrenia, causing delusions.
Salomon v Salomon provides the pivotal House of Lords case in English law, establishing that the body corporate has a separate legal personality. The concept of a corporate having a personality allows it to commit crimes such as manslaughter and fraud. It is fitting that there should now be a term called ‘corporate psychopathy’ to describe the sickness of the organisational cultures of otherwise ‘successful’ corporates. Had Lord Denning been alive today, he would have been the first to ask his juniors to consider how best to pierce the corporate veil to bring relevant parties to justice. ENRON, News International and Barclays provides three horrific examples of the emergence of ‘corporate psychopathy’, where a company can be highly successful shareholder dividend generator, but is in fact morally and legally sick.
The shocking aspect about ENRON was that it was winning industry-level awards and highly profitable while being completely sick. In fewer than two decades, ENRON grew from nowhere to be America’s seventh largest company, employing 21,000 staff in more than 40 countries, however the firm’s success proved to have involved a giant scam. ENRON lied about its profits and stands accused of a range of shady dealings, including concealing debts so they didn’t show up in the company’s accounts. Kenneth Lay was ENRON’s former chief executive and chairman since 1986 refused to testify at the last moment after saying he had been pre-judged. That ENRON’s false accounting was not spotted sooner has prompted the accounting industry to take a hard look at itself. Strikingly, ENRON had like a malignant cancer had metasised to parts of the establishment. ENRON provided millions of dollars to finance Mr Bush’s 2000 election campaign. Mr Bush was a personal friend of Mr Lay, but has been quick to distance himself from any involvement with the firm.
News Corp provides another chilling example. A reporter and a private investigator who worked for the Murdoch-owned News of the World tabloid were convicted of phone-hacking in 2007. News International, Murdoch’s British newspaper arm, had said the hacking was limited to a single rogue reporter but more victims of hacking were revealed in 2009, suggesting the practice was widespread. On 15 July 2011, Brooks resigned as chief executive of News International, following widespread criticism of her role in the controversy. On 17 July 2011, she was arrested on suspicion of conspiring to intercept communications and on suspicion of corruption – making corrupt payments to public officials. On 13 March 2012, she was again arrested on suspicion of conspiracy to pervert the course of justice. On 15 May 2012, Brooks was charged with conspiracy to pervert the court of justice. Murdoch apologized in person to Milly Dowler’s family and his company took out full-page advertisements in British newspapers saying, “We are sorry.” Andy Coulson, who followed Brooks as editor of the News of the World, resigned after the 2007 convictions and was later appointed by then opposition leader David Cameron, Prime Minister, as his communications chief in 2007. Coulson was arrested on July 8 on suspicion of phone-hacking and corruption, and released on bail. Again, the comparisons are chilling. According to the Leveson Inquiry, Rebekah Brooks sent an effusive text message to David Cameron on the eve of his 2009 party conference speech, telling him: “Professionally, we’re definitely in this together”.
Bob Diamond is an Amercian banker, currently Group Chief Executive of British bank, Barclays Plc. He is also Chief Executive of Corporate & Investment Banking and Wealth Management, comprising Barclays Capital, Barclays Corporate and Barclays Bank. In early 2011, Barclays announced that Diamond would receive an annual bonus of £6.5 million in 2011, the largest of any CEO of a British bank. However, Diamond voluntarily gave up his bonus for 2012 after Barclays was fined £59.5 million by the FSA (£290m in total) “over the bank’s ‘serious, widespread’ breaches of City rules relating to the LIBOR and EURIBOR rates. The bank had been found to have lied, sometimes to make a profit, and other times to make the bank look more secure during the financial crisis. The UK’s Financial Services Authority (FSA), which levied a fine of £59.5 million ($92.7 million), gave Barclays the biggest fine it had ever imposed in its history. The FSA’s director of enforcement described such behaviour as “completely unacceptable”, adding “Libor is an incredibly important benchmark reference rate, and it is relied on for many, many hundreds of thousands of contracts all over the world.” Osborne has long been highly critical of City regulators for not spotting the accounting tricks used by Lehman Brothers to artificially inflate its balance sheet.
That there is something pathological in the corporate personality in the past of Barclays, what I have called “corporate psychopathy” has been vociferously criticised by Sir Mervyn King, the current Governor of the Bank of England: “That goes to both the culture in the banking industry and to the structure of the banking industry, from excessive levels of compensation, shoddy treatment of customers, to deceitful manipulation of one of the most important interest rates and now this morning to news of yet another mis-selling scandal.We can see we need a real change in the culture of the industry. And that will require two things – leadership of an unusually high order and changes to the structure of the industry.”
Mr Diamond gave the Today programme lecture in November 2011, saying that banks had to be “better citizens” and create a trustworthy culture.” (listen to this clip from the ‘Today’ programme on the BBC website); he proudly reported that, “the evidence of culture is how people behave when nobody is looking”. This is particularly horrific given the latest scandal news. What is worrying about ‘corporate psychopathy’ is that it seems to be supported by the mutual collusion of other corporates, who are often themselves healthy. For examples experts have claimed that under US law such transactions involved in the Lehman Brother affair could not be booked as sales. However, it is reported that crucially, City law firm Linklaters gave a legal opinion in 2006 that transactions booked under Repo 105 could be treated as sales under UK law. This appears to have enabled Lehmans to keep billions of dollars of debt off its US balance sheet.
There are some lessons to be learnt from cognitive neurology, most probably. One is that a psychopathic individual who has a complete inability to infer the mental states of others is incredibly hard to rehabilitate. Secondly, psychopathic individuals can function very well in other domains, some having extremely high IQs in fact. This is what makes it difficult in ascertaining the precise punishment for true ‘psychopathy’ as it is fundamentally a mental health issue. Instinctively, I feel that this makes it inherently difficult to know what precisely to do with a psychopathic corporate. Sure, you can dream up new methods of diagnosis and potential actions, as the US legislators did with their problem in the form of the Sarbanes-Oxley Act, but it is easily arguable that you are not treating the underlying cause.
The BBC analysis (this time on credit ratings) is wrong again
The journalist within the last hour (it is currently 10.21 on Saturday 6th August 2011), providing the analysis on the credit ratings for the BBC News 24, is wrong in my personal opinion, I’m afraid.
The inference from what he was saying that Britain’s credit-rating might be downgraded if the deficit reduction is not fast enough. It is misleading to have presented this as fact. The issue is in fact as Chuka Umunna clearly described it. If growth is too slow, and the UK does have a poor strategy for economic growth, it is widely believed as an expert opinion, the deficit could get worse, this poses problems for our credit rating. We potentially have to pay more people on benefits, but a slow economy is likely to mean lower tax receipts, and therefore the UK’s economy worsens. If our credit rating is lost, this will impact on our ability for our nation to borrow money in its current difficulties.
The BBC should be extremely careful to present its analysis is an independent, impartial and accurate way.
Unsurprisingly, the BBC journalists seemed unable to mention the problems with growth in the UK economic policy at all. They therefore appear like growth deniers.
Dr Shibley Rahman came top in the MBA in economics and marketing this summer.
My life is brilliant – from Cambridge to the City and corporate law
I thought to myself how beautiful the City of London is this morning. It represents all that I respect in London, hard work based on genuine commitment and intellectual talent. The City exudes this in abundance, with some exceptionally bright people. The sun is shining, as you’re bound to feel good about it, as London represents the competitive advantage of finance in the world for me.
It reminds me of that other great place, Cambridge. I have fond memories of Cambridge, as I obtained the second highest First there in Finals in Natural Sciences (Neurosciences) in 1996. I loved my Ph.D. there, and, like the City, there’s a real buzz to the intellectual energy and personal warmth in Cambridge.
As I sit here studying for my MBA, doing systems and organisations in the morning and leadership, I think, despite the challenges which I have faced which have been numerous and serious (including a 2 month coma in 2007 which I was extremely lucky to survive), I have an extraordinary fulfilling life.
So there! I am looking forward very much to my ultimate career in corporate law. I am merely a student, but as I’ve nearly finished my eighth degree successfully at the age of 37, I can genuinely say not for long!
Dr Shibley Rahman
I am finally discharged from Queen Square!
Monday was a highly emotional day for me. I was finally charged from the Neurorehabilitation clinic at the National Hospital for Neurology and Neurosurgery, Queen Square.
I must say that my medical team looking after me are fantastic. A dedicated team of clinicians, including neurologists at various stages of their training, the occupational therapists, the physiotherapists, and the speech-and-language therapy (SALT) people looked after me. My father and mother used to visit me religiously every day. My mother still has memories of coming to see me during visiting hours, with cooked food. My father passed away in November 2010.
The Hospital makes me extremely proud, as I practised neurology there long before I came alcoholic. I had the pleasure and honour of being on the movement disorders, cognitive disorders and dementia, neurogenetics and general neurology teams. I think the National Hospital for Neurology and Neurosurgery, Queen Square, is the best hospital in the world. Therefore, while it gives me great happiness in that I no longer have seizures (my last one was on admission in 2007) and I am now physically almost back to normal, it is of massive unhappiness I will probably never go there again.
I still actively research in dementia, working for a leading UK charity in Alzheimer’s Disease. I love it there, as I make contributions to their groundbreaking work on quality-of-life and wellbeing in dementia environments. I will be writing an open letter to the General Medical Council, having done my two degrees in law and MBA by that stage, with 57 months in recovery in 2013. The GMC can have a careful read of the transcripts now which provide that their Consultant gave in the hearing, that if erased my drinking would explode. This is exactly what happened, and it’s well known within medicine that you’re at extremely high risk of meningitis if you drink heavily.
I currently have the privilege of being able to complete my legal training, and I still have unanswered questions of my own about the treatment of sick doctors.
I look forward to the challenge. My father insisted that I should fight this fiercely, on a matter of principle. Thankfully, I have an excellent consultant. The BBC will be interested to follow my submissions particularly. I think both the medical and legal professions are wonderful, though, notwithstanding what I’ve said. I must thank the regulators for law for looking at my case fairly which allows me to pursue my current dreams.
The fallacy of the company : it's not the fault of Sky or the BBC, according to Dr Shibley Rahman
It doesn’t really matter if the BBC has made people’s lives misery due to inaccurate or incomplete reporting, or whether phone lines have actually been hacked or not – it’s all to do with the financial status of the company.
At the end of the day, the success of the company is primarily driven by profit, and the people in the company have as their prime duty the maximisation of wealth within legal boundaries. Whatever happens with Sky, and you can guarantee that there is more to come, or whatever happens with other equally large media organisations, they only really care about money. The irony is that whatever happens regarding secret bugging devices in flower pots for Mike Hollingsworth (as described by the man himself on BBC’s Any Questions), none of it really will affect the share price of Sky unless something drastic happens. The schism between morality, finance and the law is often underestimated, but comes back to bite you when you least suspect it.
Some of us are completely sick of attacks on our reputation by people who couldn’t care less apart from maximising their profit, but we’ve got used to it. Tough. It’s only the notion of enlightened shareholder value that keeps some of us sane, to keep us out of the Big Sweatshop Society inter alia.
David Cameron is wrong on the NHS corporate restructuring for these reasons
In an interview where David Cameron tried to tell John Humhrys he was wrong, Humphrys identified that Cameron was showing no leadership on the bankers.
The interview can be heard here:
http://news.bbc.co.uk/today/hi/today/newsid_9363000/9363655.stm
David Cameron is wrong about the NHS restructuring for the following:
It is wrong simply to focus on outcomes at the treatment end; much more could and should be done at the diagnosis end (health policy analysts find outcomes useful, but what they’re actually measuring are objective benefits). Much of the fundamental issue for the next decade will be the early diagnosis of the disease especially cancer, and there needs to be some focus on the efficacy of screening methods at the other end too (e.g.for colon cancer, breast cancer, COPD).
It is no good just talking about length of survival times, because there has to be a proper analysis of the quality-of-life and well being of patients with chronic morbidity including dementia.
The Doctors were not asking for the changes – the BMA is opposed to it, and to my knowledge the Royal College of Physicians shows little interest in it in a very positive direction. The King’s Fund certainly think it is a calamity.
2-3 years is a very short time to produce ‘the biggest reorganisation’ in the first time; it will involve £1.4 bn in the first year. John Humphrys was right to correct the figures that Cameron produced on the basis of actual evidence from the Kings Fund.
Satisfaction is at an all time high now with the NHS – this cannot be divorced from the record spending by Labour in the last parliament.
David Cameron denied the NHS IS getting better. This must means that he thinks that all aspects of it are getting worse. THIS IS A LIE.
John Humphrys asked that the NHS was in fact changing to a Federal Health Service. Cameron saying that there are already regional variations is frankly irrelevant. Humphrys is correct saying that an analogy between GPs and free schools is an extremely poor analogy; I am shocked that David Cameron is idiotic enough even to suggest it.
There’s no point Cameron trade-union bashing, as there are many ordinary nurses, doctors and other health-professionals who are non-Labour members who are highly critical of his insane policy.
If Andrew Lansley is so well respected, why does the whole of RCN disagree with him? The man is not well respected amongst the health professionals.
Dr Shibley Rahman Queen’s Scholar; BA (1st Class), MA, Bachelor of Medicine, Bachelor of Surgery, Doctor of Philosophy, Diploma of the Membership of the Royal College of Physicians (MRCP(UK)); FRSA, LLB(Hons).
Member of the Fabian Society.
Crucial part on VAT and jobs by the British Retail Consortium blocked by the BBC
As if Nick Clegg’s pledge on tuition fees wasn’t bad enough, do you remember this old chestnut?
Staggeringly, the crucial part on the effect of VAT on jobs in today’s BBC news story on the VAT (“VAT rise from 17.5% to 20%“) is missing. This account on the British Retail Consortium website is as follows. This is a crucial part of the story, as otherwise the Conservative spin on NI being the only jobs tax is simply lie and spin; the BBC, as an independent and partial broadcaster, should not be in collusion with lies and spin.
This is what Ed himself said on the matter, covered on ITN News, but non-existent on the BBC which prides itself on its balance and (lack of) bias.
Link to the site: http://www.brc.org.uk/details04.asp?id=1744
Here is the text of the British Retail Consortium’s original press release on the matter:
| VAT RISE WOULD COST 163,000 JOBS |
| May 27, 2010 |
| Increasing the VAT rate to 20 per cent would cost 163,000 jobs over four years and reduce consumer spending by £3.6 billion over the same period.
The biggest challenge facing the new Government is to reduce the budget deficit without damaging the recovery. Now, for the first time, independent analysis carried out for the British Retail Consortium (BRC) quantifies the economic impact of a range of possible VAT increases and of the National Insurance increases already announced by this Government. The research concludes there is no silver bullet that will allow the Government to raise large amounts of revenue without having a substantial effect on the economy. Employment, consumption and GDP would all be hit significantly by tax rises. The BRC is calling on the Government to follow through on its recent statements that public spending cuts will be prioritised over tax rises as a route to tackling the deficit. The BRC is also cautioning that halving the deficit over four years not three would better support the recovery. In its first year, a VAT rate of 20 per cent would reduce the deficit by £11.3 billion but by the end of that first year there would be 30,000 fewer jobs in the UK – across all employment sectors – than if there had been no increase. After four years that figure would be 163,000 fewer jobs. A year on from raising VAT to 20 per cent, consumer spending would be £1.6 billion less than it would have been and after four years, £3.6 billion less. Higher VAT means lower demand for goods and services as prices go up and companies’ margins are hit, meaning they have to cut costs to keep trading so employ fewer people or hold-back on job creation. The analysis commissioned by the BRC also examines the impact of a range of other possible VAT increases. A 19 per cent VAT rate would cost 99,000 jobs over four years while a 22.5 per cent rate would mean 317,000 fewer jobs over the same period. The new Government has said it will increase employees’ National Insurance Contributions by one per cent and employers’ by 0.5 per cent. That will reduce UK job numbers by 25,000 in the first year. The UK jobs total will be 109,000 down after four years. Consumer spending would contract by £948 million in the first year and £2.2 billion after four years. The Director of the BRC explained, “The budget deficit is serious. It has to be tackled but proposals must be judged against the implications for jobs and growth revealed by this new information. “The main tool has to be cutting non-vital public spending. Removing some of the previously-planned National Insurance increase and signals that the Chancellor will look for an 80:20 split between public spending cuts and tax rises are a welcome start. “Business growth will get the country out of the hole it’s in, led by retail. The Government must now deliver a route to stability that supports companies and customers by avoiding damaging tax rises.” The study has been carried out for the BRC by the Centre for Economics and Business Research (CEBR) using its model of the UK economy. The model assesses the initial revenue raising impact of the taxes then the follow-on consequences as they cascade through the economy. First round effects can include immediate reductions in spending by those most affected by a tax rise. Second round effects can include firms reducing employment and investment as costs or margins are hit. This feeds through to lower demand and lower productive capacity. Notes to Editors: The full BRC/CEBR report Reducing Public Borrowing: Balancing Spending Cuts and Tax Rises is available at : Media contacts: |
And what did David Cameron originally say to Jeremy Paxman?
Student protests are doomed (guest article by @fatcouncillor)
Guest article by @fatcouncillor
The recent student protests, have been a case study, in how not to win an argument.
At first glance, the students had a strong case. Certainly, trebling student fees would appear to be, grossly unfair. However, the contra-argument, goes that, as everyone else’s suffering cuts, it’s only right that the students themselves shoulder some of the burden. There are certainly valid arguments on both sides of the student fees debate.
For students, this was always going to be a difficult argument to win. The UK is now governed by a majority Conservative coalition whose mentality certainly appears to be one of ‘you pay for what you use’. So in order to win the argument, students needed to have a clear, focused campaign strategy in place, whereby they both garnered public support, and maintain pressure on the government.
Sadly or happily, depending on the side of the argument is that you are on, the wheels came off the student bandwagon, during the very first protest in London, when viewers of the BBC News Channel and Sky News were treated to the sight of students throwing missiles at the police, lighting fires, and breaking into buildings causing tens of thousands of pounds of damage. Those scenes were replayed time and again over the following 24 hours.
The students, through their leader, Aaron Porter, and other NUS representatives, then further undermined their argument, by claiming that the rioting and violence were carried out by a handful of anarchists, and that students were not involved. This argument was proven to be untrue by, amongst others, the Daily Mail, and the blogger, Guido Fawkes, who published photographs of NUS representatives and students clearly taking part in the riots.
Additionally, the assertions made by Aaron Porter, were contradicted by the rolling news video, which showed a significant number of placard carrying students directly involved in violence, fighting the police and property destruction.
It seems to me, the students were particularly badly let down by the NUS. When it became clear that it was indeed students who had rioted, Aaron Porter lost credibility, and I for one believe that Mr Porter was more concerned about his future political career than representing students.
After the first protest, the NUS should have taken time to develop a new strategy whereby the argument could be made without the protests disintegrating into violence and destruction. Instead the NUS stepped back from the protests and were replaced by a myriad of local committees and activists. While this clearly removed the focus from the NUS nationally, it also caused the fragmentation of the protests and a loss of focus.
There was no clear leadership, no strategic aims were being articulated, and the message was lost as student protesters began to conflate the tuition fees process with the general UK uncut anti-cuts protest. There are those on the left, such as Laurie Penny, writing in the “New Statesman”, who argue that this is a movement without leadership, and the old structure is no longer apply, and that in effect the world is a different place, and we had all better get used
to it.
However, it should be as plain as the nose on your face, that a group of people with a shared goal, need to have a leader and a strategy, in order to achieve that goal.
To fail to understand this causes two problems. Firstly, the people involved in the movement need leadership, so in that face of a vacuum, they create their own leadership structures. But, people being people, some of these leadership structures will be more about the leadership than the goal. The stated aims and goals of the movement will become difficult to recognise as each leadership group develops a subtly different set of goals.
Secondly, as the aims and goals of the movements are no longer clear, and in some cases contradictory, both the public, and politicians, will be confused as to what students are demanding. In these circumstances, all the government has to do, is to put forward a reasoned argument as to why the changes are necessary. The student argument is then lost, and the media focus moves away onto the next set of government cuts.
Quite how the student protest this is anyone’s guess. But one thing is for sure. The argument is lost, and the focus has shifted to books and laptops for children, how dreadful BBC’s Christmas programmes are been, and the weather.
There are those within the student leadership (the leadership of the group which has no leadership, remember?) Who are arguing that this is a repeat of the poll tax riots. In short, they are deluded. The poll tax riots united the electorate, with hundreds of thousands of people from all walks of life protesting and fighting the government. This has not happened in the students fees protests.
There is no broad support for protests. We did not seem masses of people taking days off to go to London to protest. It did not happen, and it will not happen. This argument is lost. The people on the streets required to get this government to revisit legislation which has already passed through both houses of parliament, will not materialise.
At best, we will see a ragtag of unions, the Socialist Workers Party, and students. And any future protest will be set in the context of violence and property destruction. It will achieve nothing.
Students have been betrayed because the people who they saw as their leaders are looking after themselves. And the people who are sprung up in place of the leaders are simply trying to make a name for themselves, and are using students and the protests to that end.
At some point, students will recognise this. But by then no one will care. This is not, and never has been 1968 all over again. Neither is it the poll tax riots. this is a group of students who have been badly let down by the leadership. At a time when they needed that leadership, what they got was self-interest and the usual suspects looking to make a name for themselves.
The argument is lost, but students don’t realise it yet
Shibley Rahman would like to thank the Fat Councillor for the effort that he put into writing this excellent article.
Media pluralism: Cable, Murdoch and the BBC
This is how BBC reported Vince Cable’s now famous ‘outburst’.
Vince Cable, like Nick Clegg, appears to have developed a bit of a Messiah syndrome recently, despite being 8% in the polls. Vince appears to have developed curious delusions of grandeur, thinking that he can make or break the coalition, and also that can break the Murdoch empire. This scoop was brought to the BBC by a whistleblower to the BBC Business Editor Robert Peston who to all intents and purposes appears to have practiced responsible journalism. Concerns remain that inside information from time to time leaks into the market, whether accidentally or intentionally, and may be misused: this is a particular issue in relation to inside information about mergers and acquisitions.
On the day the bid was announced in June, most commentators thought it would go ahead without much difficulty, subject to agreement on price. BSkyB was already seen by government and regulators as part of the Murdoch empire, even though News Corp held only 39 per cent of the shares. However, in September, there began a fierce campaign in the press and parliament arguing that the Murdoch empire would have even more power if it owned all the BSkyB shares. The plain facts are that today European Commission has unconditionally approved News Corp’s bid to acquire BSkyB. In a statement, Joaquin Almunia, EU Competition Commissioner, said: “I am confident that this merger will not weaken competition in the United Kingdom. The effects on media plurality are a matter for the UK authorities.”
To any reasonable observer, Vince Cable calling for war on Murdoch’s successful empire is rather extreme to say the least. Presumably, one shouldn’t read too much into his lack of impartiality by dancing with Alesha Dixon on the Christmas Day special of BBC ‘Strictly come dancing’.
The judgment which came back from Europe today had an emphasis on cross-border media pluralism. Traditionally, Europe’s media companies focused their activities on their national markets. However, in the last 10-15 years a number of media companies have grown significant business outside their primary markets. It has given rise to concerns that it will damage the freedom of expression and information in Europe that are vital both from a democratic and a cultural perspective. Cross-border media concentrations include several phenomena such as media conglomerates distributing their products in many countries, including broadcasts, companies operating directly or indirectly in the media market of more than one country and legal entities owning media companies in several countries. This is the issue which was primarily of concern to Europe. Presumably the BBC falls within the definition of a media conglomerate, and is not expected to partake in cartel and abuse of dominant behaviours itself.
News Corp wants to by the 61% of the pay-TV operator that is does not already own for £7.8 billion. However, independent directors at BSkyB, which operates the 24-hour channel Sky News and provides pay-TV, broadband and telephony services, have previously rejected News Corp’s offer as too low. News Corp officially notified the European Commission of its planned takeover bid on 3 November. The commission conducted an initial investigation before responding today. OFCOM will now examine the deal to investigate media plurality issues in the UK, focusing on content types, audiences, media platforms, control of media enterprise and future developments in the media landscape. Business Secretary Vince Cable will stay in cabinet despite “declaring war” on Rupert Murdoch, says Downing Street. However, he will be stripped of his powers to rule on Mr Murdoch’s bid to take control of BSkyB, which will be handed to Culture Secretary Jeremy Hunt. Jeremy Hunt will though the final say over whether the takeover should be allowed to go ahead amid concerns about press freedom and consumer choice. Note – OFCOM will analyse the legal and public interest issues carefully – not Jeremy Hunt on his own. OFCOM is expected to report back to Jeremy Hunt by 31 December 2010.
Jeremy Hunt will then decide whether to refer the issue to the Competition Commission. This is an independent body, which conducts in-depth inquiries into mergers, markets and the regulation of the major regulated industries, ensuring healthy competition between companies in the UK for the benefit of companies, customers and the economy. It is not the case that the Competition Commission can only block it altogether for Rupert Murdoch. Where an inquiry is referred to the CC for in-depth investigation, the CC has wide-ranging powers to remedy any competition concerns, including preventing a merger from going ahead. It can also require a company to sell off part of its business or take other steps to improve competition.
This was never going to be solely an issue for Vince Cable or Jeremy Hunt. However, it could be that Jeremy Hunt feels that this merger does not pose a threat to UK media competition. It has long been argued that the BBC that what the BBC offers is distinctive from commercial media outlets. If Jeremy Hunt then decides to side with the BBC, it could well be that Jeremy Hunt and the Conservatives do not get the media backing from the BBC and the main newspapers including the Sun that they desperately need in 2015 to gain public support and to win the 2015 General Election (assuming that the coalition lasts that long). Therefore, whilst Jeremy Hunt can overrule the decision by the Competition Commission, he will have to have very strong reasons for doing so – Rupert Murdoch may be very happy, or not.
As it happens, I hope sincerely that Rupert Murdoch wins this media battle, as I feel the people who should be taught a lesson they won’t forget are the BBC, not the News Corp. Not as inflammatory as Vince Cable’s message, but meant with the same conviction, I’m afraid.
(c) Dr Shibley Rahman 2010. Dr Shibley Rahman is an academic lawyer and company director who works in London.
Dr Shibley Rahman, PhD FRSA LLB(Hons)
Dr Shibley Rahman is an academic whose specialist interests include the behavioural variant of frontotemporal dementia, dementia generally, commercial law and business. He is a Queen’s Scholar, and obtained the second highest First Class Honours degree in 1996 at the University of Cambridge in neurosciences. He is disabled, having survived six weeks in coma in 2007 due to meningitis.
