The FCDO’s role in blocking foreign asset stripping in the UK

Foreign Affairs Committee Closed Inquiry
Opened: 7 Apr 2020 Closed: 28 Apr 2022 Parliament page
This inquiry will examine how the FCDO assesses whether a potentially hostile party is seeking to secure significant influence or control over a UK company and in what circumstances the FCDO should intervene. The Committee will also focus on what safeguards are required in the forthcoming National Security and Investment … Read more
14 Recommendations
4 Conclusions
3 Reports
8 Oral sessions
17 Letters
8 Events
Activity timeline 31 events
28 Apr
2022
Report published
5 Apr
2022
Report published
12 Jan
2022
Correspondence
25 Oct
2021
Report published
28 Jul
2021
Correspondence
15 Jul
2021
Correspondence
14 Jul
2021
Report published
7 Jul
2021
Correspondence
9 Jun
2021
Correspondence
23 Mar
2021
Oral evidence
26 Feb
2021
Report published
23 Feb
2021
Oral evidence
Oral evidence sessions 8 sessions
23 Mar 2021
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Foreign Affairs Committee
Chris Rampling · Foreign, Commonwealth and Development Office Jacqui Ward · Department for Business, Energy and Industrial Strategy Paul Scully Rt Hon James Cleverly Sarah Mackintosh · Department of Business, Energy and Industrial Strategy
23 Feb 2021
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Foreign Affairs Committee
Dr Ashley Lenihan · Georgetown University Michael Formosa · Renaissance Strategic Advisors Paddy McGuinness · Brunswick
1 Dec 2020
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Foreign Affairs Committee
Christopher Mackmurdo · Legatus Hazel Moore · FirstCapital Russ Shaw · Global Tech Advocates & Tech London Advocates Sophia Gaston · British Foreign Policy Group
24 Nov 2020
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Foreign Affairs Committee
Andy Sellars · Compound Semiconductor Catapult Roger Barker · Institute of Directors Roger Barron · Paul Hastings Veronica Roberts · Herbert Smith Freehills
3 Nov 2020
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Foreign Affairs Committee
Azeem Azhar Grace Cassy · CyLon Ventures Professor Nick Jennings Professor Shaowei He
13 Oct 2020
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Foreign Affairs Committee
Matthew Rous · China-Britain Business Council Professor Ciaran Martin · Blavatnik School of Government, University of Oxford Professor Deeph Chana · Institute for Security Science and Technology, Imperial College London Ting Zhang · Crayfish.io
8 Sep 2020
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Foreign Affairs Committee
Chris Cummings · The Investment Association Elisabeth Braw · Atlantic Council John Fingleton · Fingleton Professor Jeffrey Henderson · University of Bristol
5 May 2020
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The FCO’s role in blocking foreign asset stripping in the UK
Dr Ron Black · Imagination Technologies John Rayfield · Imagination Technologies Ray Bingham · Imagination Technologies Sir Hossein Yassaie · Imagination Technologies
Recommendations & Conclusions
18 results
1 Conclusion Not Addressed
Sixth Report: Striking the balance…
If the Government is not more coordinated and able to think long-term in its approach...
If the Government is not more coordinated and able to think long-term in its approach to foreign investment, we risk losing our most innovative companies overseas, with harmful consequences for our national security. (Paragraph 13) Critique of the National Security … Read more
Government Response
The government's response refers to a committee recommendation (not provided in the item) regarding the clarity of national security risks in legislation, which it rejects, stating it is deliberate not to define 'national security' to allow for rapid responses to evolving threats.
Foreign, Commonwealth & Development Office
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2 Conclusion Acknowledged
Sixth Report: Striking the balance…
The Bill in its current form does not provide sufficiently clear guidance on how national...
The Bill in its current form does not provide sufficiently clear guidance on how national security should be understood. This is likely to hinder targeted application of the new law, with adverse repercussions for the UK’s national security and economy. Read more
Government Response
The government acknowledges the committee's observation by reiterating its deliberate decision not to define ‘national security’ in the Bill, citing the need for flexibility to respond to evolving risks.
Foreign, Commonwealth & Development Office
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3 Recommendation Rejected
Sixth Report: Striking the balance…
We recommend that the new legislation should be as clear as possible about what may...
We recommend that the new legislation should be as clear as possible about what may or may not constitute a national security risk in the context of foreign investment. Failure to provide greater clarity would be likely to have significant … Read more
Government Response
The government rejects providing a definition of ‘national security’ in the Bill, stating this is deliberate to allow for rapid responses to evolving technological, economic, and geopolitical risks.
Foreign, Commonwealth & Development Office
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4 Recommendation Accepted in Part
Sixth Report: Striking the balance…
Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and...
Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and guidance on the factors that should be considered as part of national security assessments. We recommend that the new legislation and accompanying guidance should clearly … Read more
Government Response
The government does not believe defining 'national security' is appropriate, but points to the Bill's explicit references and the Secretary of State's Statement (which will be consulted on) as sources of guidance for businesses on how the call-in power will be used, thereby providing clarity on relevant factors.
Foreign, Commonwealth & Development Office
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1 Recommendation Accepted
Third Report - Sovereignty for sal…
The takeover of Newport Wafer Fab by Nexperia represents the sale of one of the...
The takeover of Newport Wafer Fab by Nexperia represents the sale of one of the UK’s prized assets to a strategic competitor, at a time when global chip shortages means that the products manufactured by NWF are of vital national … Read more
Government Response
The government notes the recommendation, states it prioritises national security, and confirms the National Security Adviser is currently conducting a review into the acquisition of Newport Wafer Fab by Nexperia. Further comment is deferred until the review concludes.
Foreign, Commonwealth & Development Office
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2 Recommendation Deferred
Third Report - Sovereignty for sal…
We recommend that the Government calls in the acquisition of Newport Wafer Fab by Nexperia...
We recommend that the Government calls in the acquisition of Newport Wafer Fab by Nexperia for review and imposes appropriate mitigating measures, as a matter of urgency.
Government Response
The government notes the recommendation and states that the National Security Adviser is currently conducting a review into the acquisition of Newport Wafer Fab by Nexperia, and it would be inappropriate to comment further until this review concludes.
Foreign, Commonwealth & Development Office
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3 Recommendation Acknowledged
Third Report - Sovereignty for sal…
It is vital that there is continuous monitoring of the investment and technology landscapes to...
It is vital that there is continuous monitoring of the investment and technology landscapes to catch non-notified transactions, as well as monitoring for changes to board compositions or ownership models, which may not serve the UK’s security interests, after the … Read more
Government Response
The government agrees that regular market monitoring to identify national security concerns should be a key part of the new regime but does not detail specific additional monitoring mechanisms or multi-departmental inputs.
Foreign, Commonwealth & Development Office
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4 Recommendation Acknowledged
Third Report - Sovereignty for sal…
Ongoing monitoring of the global technology landscape by the FCDO should inform any future changes,...
Ongoing monitoring of the global technology landscape by the FCDO should inform any future changes, as needed, to (a) the sectors subject to mandatory notification under the National Security and Investment Bill, and (b) the factors to be taken into … Read more
Government Response
The government noted the recommendation, stating FCDO will be involved in future revisions of mandatory notification regulations to keep pace with technological changes but did not commit to FCDO's ongoing monitoring proactively informing changes or reporting on it in the annual report.
Foreign, Commonwealth & Development Office
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5 Recommendation Accepted
Third Report - Sovereignty for sal…
For the FCDO to add value to the NSI regime, it will be important that...
For the FCDO to add value to the NSI regime, it will be important that the Department has the necessary skills, expertise and structures to effectively support the ISU. If the Government continues to behave in the same ways and … Read more
Government Response
The government agrees that the FCDO has a key role and states a dedicated FCDO team has been established to support the ISU, raise awareness, and build capability. They are actively identifying and securing necessary short and long-term capabilities.
Foreign, Commonwealth & Development Office
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6 Recommendation Accepted
Third Report - Sovereignty for sal…
The FCDO should demonstrate leadership on the foreign relations aspects of foreign investment decisions.
The FCDO should demonstrate leadership on the foreign relations aspects of foreign investment decisions. Supporting the ISU’s work in this area is a key responsibility of the FCDO. It will be vital that the Department has the right expertise both … Read more
Government Response
The government agrees with the FCDO's leadership role in foreign investment decisions and has established a dedicated FCDO team to support the ISU, raise awareness, and build FCDO capability in this area, both in the UK and overseas.
Foreign, Commonwealth & Development Office
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7 Recommendation Accepted
Third Report - Sovereignty for sal…
We support the Government’s decision to keep the NSI Act agnostic of geography or type...
We support the Government’s decision to keep the NSI Act agnostic of geography or type of actor, so that investments are judged on a case-by case rather than country- 30 Sovereignty for sale: the FCDO’s role in protecting strategic British … Read more
Government Response
The government accepted the recommendation, stating that FCDO will contribute its expertise and assessment of foreign governments' strategic intent to inform NSI screening and assessment processes.
Foreign, Commonwealth & Development Office
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8 Recommendation Rejected
Third Report - Sovereignty for sal…
We recommend that 10 percent of Investment Security Unit staff should be secondees from FCDO,...
We recommend that 10 percent of Investment Security Unit staff should be secondees from FCDO, to ensure that FCDO expertise can be drawn upon on a day-to-day basis. (Paragraph 44) Cooperation with like-minded partners and allies
Government Response
The government rejects the specific recommendation to mandate 10% FCDO secondees, stating it is not necessary as the ISU already draws on relevant expertise across government and FCDO has a dedicated team for coordination.
Foreign, Commonwealth & Development Office
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9 Recommendation Accepted
Third Report - Sovereignty for sal…
Given the complex and transnational nature of the global investment landscape, the UK cannot operate...
Given the complex and transnational nature of the global investment landscape, the UK cannot operate alone on this matter. The Government should cooperate on FDI screening with other countries with whom we share values and strategic objectives. We recommend that … Read more
Government Response
The government states that the FCDO already works closely with several like-minded countries, promotes its work internationally, and cooperates with Five Eyes and G7 partners on investment security.
Foreign, Commonwealth & Development Office
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10 Recommendation Accepted in Part
Third Report - Sovereignty for sal…
With cross-Government working comes a need for cross-committee scrutiny.
With cross-Government working comes a need for cross-committee scrutiny. If the Government is to succeed in achieving an “integrated” approach to UK security and foreign policy as set out in the Integrated Review, Government departments must be held to account … Read more
Government Response
The government states the BEIS Select Committee should primarily oversee the ISU and commits to providing information and publishing a MoU for their scrutiny. It will continue to inform other relevant committees but does not grant them the same level of direct oversight.
Foreign, Commonwealth & Development Office
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11 Recommendation Deferred
Third Report - Sovereignty for sal…
We acknowledge the Secretary of State’s concern about the workload entailed by involvement of multiple...
We acknowledge the Secretary of State’s concern about the workload entailed by involvement of multiple committees in scrutinising the ISU but would argue that this should not be a barrier to effective scrutiny. FAC’s important contribution to UK national security … Read more
Government Response
The government rejects the Foreign Affairs Committee's implicit request for necessary information for its direct monitoring of the ISU's effectiveness, stating that the BEIS Select Committee is the appropriate body for primary oversight and will be furnished with the required information.
Foreign, Commonwealth & Development Office
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12 Recommendation Rejected
Third Report - Sovereignty for sal…
We recommend that the Chairs of the Foreign Affairs Committee, Intelligence and Security Committee and...
We recommend that the Chairs of the Foreign Affairs Committee, Intelligence and Security Committee and Science and Technology Committees are also provided with private briefings on the activities of the ISU on Privy Council terms, to ensure that Government decisions … Read more
Government Response
The government believes the BEIS Select Committee is the primary body for ISU oversight and will ensure other relevant committees are appropriately informed, but does not accept the recommendation for specific private bi-annual briefings for the named committee chairs.
Foreign, Commonwealth & Development Office
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1 Conclusion Acknowledged
Sixth report - Sovereignty for sal…
In the absence of any evidence to the contrary, we have no choice but to...
In the absence of any evidence to the contrary, we have no choice but to assume that the NSA review that the Prime Minister said he had initiated has not, in fact, been started. In its response to this report, … Read more
Government Response
The government states that the Secretary of State for Business, Energy and Industrial Strategy must take decisions relating to national security in a quasi-judicial manner based on facts and evidence, with advice from the Investment Security Unit and potentially the National Security Advisor.
Foreign, Commonwealth & Development Office
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2 Conclusion Acknowledged
Sixth report - Sovereignty for sal…
The Government has explicitly recognised the criticality of semiconductors to the UK’s national security and...
The Government has explicitly recognised the criticality of semiconductors to the UK’s national security and wider global interests; likewise, the Chinese Government’s ambitions to achieve self-sufficiency in semiconductors and the means by which it aims to achieve this are well … Read more
Government Response
The government recognises the geostrategic importance of the semiconductor industry and states that the Department for Digital, Culture, Media and Sport are undertaking a review of the sector.
Foreign, Commonwealth & Development Office
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Government Response AI assessment · 18 of 14 classified
Accepted 5
Accepted in Part 2
Acknowledged 5
Deferred 2
Not Addressed 1
Rejected 3
Total 14 recs + 4 conclusions
Correspondence 17 letters
12 Jan 2022 Correspondence with the National Security Adviser relating to the acquisition of Newport Wafer Fab by Nexperia, dated 17/12/2021 and 08/12/2021
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28 Jul 2021 Correspondence with the Secretary of State for Business, Energy and Industrial Strategy relating to Newport Wafer Fab, dated 22/07/2021 and 13/07/2021
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15 Jul 2021 From committee Letter to the Prime Minister relating to the takeover of Newport Wafer Fab, dated 13/07/2021
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7 Jul 2021 Correspondence with the Secretary of State for Business, Energy and Industrial Strategy relating to the takeover of Newport Wafer Fab, dated 30/06/2021 and 18/06/2021
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9 Jun 2021 Correspondence with the Secretary of State for BEIS on Newport Wafer Fab and the National Security and Investment Act, dated 28/05/2021 and 20/05/2021
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27 Jan 2021 Correspondence with the Danish Ministry of Foreign Affairs regarding national security implications of technology, dated 15/12/2020 and 21/01/2021
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18 Nov 2020 To committee Letter from the Secretary of State for Business, Energy and Industrial Strategy relating to the Government’s proposed reforms on national security and investment, dated 11/11/2020
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18 Nov 2020 To committee Letter from the Economic Secretary to the Treasury relating to Action 19 of the Economic Crime Plan, dated 11/11/2020
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18 Nov 2020 Correspondence with the Foreign Secretary and the Secretary of State for Business, Energy and Industrial Strategy relating to regulations under the Enterprise Act 2002 (also published as BFA0022), dated 9/11/2020 and 15/10/2020
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1 May 2020 Correspondence from Foreign Secretary regarding Imagination Technologies Group, dated 30/04/2020
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1 May 2020 Correspondence from Imagination Technologies evidence to inquiry on asset stripping, dated 30/04/2020
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14 Apr 2020 Correspondence from Canyon Bridge on Imagination Technologies, dated 13/04/2020
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11 Apr 2020 Correspondence to the CEO of Imagination Technologies, dated 8/4/2020
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11 Apr 2020 Correspondence to Canyon Bridge on Imagination Technologies, dated 8/04/2020
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11 Apr 2020 Correspondence to the Secretary of State DCMS on Imagination Technologies, dated 09/04/2020
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11 Apr 2020 Correspondence to the Prime Minister on Imagination Technologies, dated 3/04/2020
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7 Apr 2020 Correspondence to Imagination Technologies on board membership, dated 7/04/2020
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