Private Investor: BAe bust-up is bad for Britain and bad for me

I had thought that the great BAe-Saudi Arabian slush fund scandal (alleged) was none of my business. For about a minute. Then I realised what the affair might do to my shares in Rolls-Royce, a big supplier to BAe, and a likely casualty if things get any nastier.

They held up for a while, but, in the middle of last week, they started to slump, so now they're nearer the 400p mark than the 500p that they threatened to breach a few weeks ago. Disappointing.

I'm happy to say that I bought my shares at prices well south of 200p, and even below their original float price (in 1987) of 170p, after the 9/11 atrocities pushed the whole sector into meltdown. I had faith in the form, and I was right. Now, I see our own government almost blithely threatening the future of the rest of British manufacturing. It seems strange.

Just to recap: HMG and Saudi Arabia are having a bit of a bust-up about the supposed operation of a £60m "slush fund" by BAE Systems. The possibility of any corporate naughtiness being investigated by the Serious Fraud Office has severely embarrassed the Saudis. It could cost BAe £200m in earnings, if the Saudis start to boycott our Eurofighter warplanes and the like.

It would cost me, and many other small shareholders, a few quid as well, such is the importance of the defence sector and the weight that the Saudi budget carries. It is Bad News for British industry, what's left of it. Jobs, pensions, mortgages are at stake here.

My view, as a small shareholder in Rolls-Royce, is that we shouldn't be mucking around with this. I take the Alan Clark view - not a terribly principled one, but unarguable: if we don't sell these people weapons, then the French will.

If British companies, any British companies, do operate a "slush fund" - an imprecise term if ever there was one - then I can't see what the fuss is about. After all, it might just amount to a little bit of junketing, the sort of activity that happens on a daily basis in the world of business, and, I have to say, in journalism, too.

All small-scale stuff and unlikely to influence anyone's mind. If a British business executive buys a Middle Eastern contact "lunch", is that a crime? Well, I mean, it might be a crime, but is it wrong? The way of doing business in some parts of the world, so I'm told, requires a certain amount of lubrication of wheels and generous gifts to friends and business colleagues. It is their corporate way of life, and we ought to try to fit in with it, rather than impose irrelevant alien ideas from our own econo-culture. It's a multicultural approach, if you think about it.

I cannot imagine any other government agency in the world pursuing this sort of case in the way that the Serious Fraud Office has. Other arms-exporting countries decided long ago to support their national champions no matter what, and often in defiance of all sorts of intentional treaties and EU rules on state aid. It's enough to make one purchase shares in, say, Thales (the French mob who do quite well out of British defence contracts).

Well, I'm sticking with British manufacturing and Rolls-Royce because I just hope that this mad action by the SFO will be quietly put to death. If not then perhaps we should all think about selling up and sending the money abroad.

I am pleased to report yet another rise in the share price at the JP Morgan Indian Investment Trust - up to 318p a share, last time I looked. They've grown like topsy over the past few years, and I've been a regular investor through that excellent performance, as well as through the turbulence they've occasionally suffered.

If everything they say about the future of the Indian economy is true, and given that they remain one of the few retail vehicles for investment in the Indian subcontinent, I see no reason why I shouldn't continue with my small monthly savings scheme.

Rather more riskily, my eye has been taken by a "solar wafer" manufacturer called ReneSola, based in China but quoted in London. Again, if all the futurologists are correct, then solar- panel components in China should be the epitome of a new-age share. For now, I have neither the nerve nor the funds to invest, but I'll be keeping an eye on it. It would make a good hedge for my Shell shares, at least. What do I do if the Chinese start making aero engines?

s.ogrady@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Contracts Executive - City of London

    £35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

    Recruitment Genius: Call Centre Debt Collector - Multiple Roles

    £21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

    Guru Careers: Financial Director / FD / Senior Finance Manager

    Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

    Day In a Page

    Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

    US betrayal of old ally brings limited reward

    Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
    VIPs gather for opening of second Suez Canal - but doubts linger over security

    'A gift from Egypt to the rest of the world'

    VIPs gather for opening of second Suez Canal - but is it really needed?
    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

    Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
    The male menopause and intimations of mortality

    Aches, pains and an inkling of mortality

    So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
    Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

    'How can I possibly be on the list with these writers I have idolised?'

    Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
    Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

    Bettany Hughes interview

    The historian on how Socrates would have solved Greece's problems
    Art of the state: Pyongyang propaganda posters to be exhibited in China

    Art of the state

    Pyongyang propaganda posters to be exhibited in China
    Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

    Vegetarian food gets a makeover

    Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
    The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

    The haunting of Shirley Jackson

    Was the gothic author's life really as bleak as her fiction?
    Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

    Bill Granger's seaside-inspired recipes

    These dishes are so easy to make, our chef is almost embarrassed to call them recipes
    Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

    Tourists are limp, leaderless and distinctly UnAustralian

    A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen