Jeremy Warner's Outlook: Sir Martin cannot bid for Aegis himself but he can sure try to keep Publicis from buying it

The BCCI legal gravy train rolls on; Another raid on the savings industry
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Sir Martin's already powerful position in European media buying was always going to rule him out from buying the whole shebang. He could have sold bits and pieces off to address the concerns of competition regulators, but it would have been messy, costly and in the end hardly worth the candle. He'd like to buy Aegis, and would pay handsomely for the chance, but he'd never be allowed.

What he might be able to buy, however, is Aegis's fast-growing market research arm Synovate, worth perhaps as much as £400m. By backing the Hellman & Friedman approach, he gets that opportunity. More important still, the manoeuvre throws a big spanner in the works of his Paris-based rival Publicis. If Sir Martin can't buy Aegis, then by backing Hellman & Friedman he might just ensure that Publicis can't either.

Sir Martin and the Publicis chairman, Maurice Levy, have long been bitter rivals. They fought over Young & Rubicon and then later over Cordiant too. On both occasions Sir Martin outmanoeuvred his French counterpart. Is it to be third time lucky for M. Levy? He'd be unwise to count on it.

Publicis has 140p a share on the table, equal to about £1.57bn in total. The Hellman & Friedman/WPP combination might have slightly more, but it will still be some way distant of the 160p a share the Aegis board is demanding. For the time being, there is an impasse on valuation, and it may well be that Aegis will end up remaining independent. The board has already turned down a similar offer, made about a year ago, from Omnicom.

Quite where this leaves the French corporate raider Vincent Bolloré is anyone's guess. Since August, he's accumulated quite a position in Aegis shares, but nobody really knows what his game might be. Is he in league with Publicis? Odd if he was, given that he is also chairman of Publicis's smaller French rival Havas. Or might he be prepared to back Sir Martin's counter proposal?

Aegis is the last quoted advertising business of any size which it is still possible to buy. The company's adviser, Greenhill, hopes to capitalise on that scarcity value by engendering an auction. But they need to turn up the volume if they are to get anywhere near the 160p asking price. M. Levy is keen to win some battles against Sir Martin's ever expanding empire, but he won't overpay for the privilege.

The BCCI legal gravy train rolls on

The liquidators for the Bank of Credit & Commerce International (BCCI), Deloitte & Touche, have again been trying to persuade the Bank of England to settle their claim for malfeasance in connection with BCCI's fraudulent collapse 14 years ago. Yet unless they are prepared to pay the Bank's costs, which at the last count were £100m and rising, they might as well save their breath.

Mervyn King, the Governor the Bank of England, is passionate about this issue, and he won't settle for anything less than full satisfaction. When Equitable Life dropped its case against Ernst & Young for an allegedly false audit, both sides agreed to walk away with their costs. That sort of a deal wouldn't be good enough for Mr King. He's perfectly prepared to see the court proceedings, already nearly two years old, through to the bitter end in the absence of a grovelling climbdown by the liquidators, and fully expects to win when they reach it.

Negligence would have been a different matter. Though the Bank has never formally admitted negligence in its supervision of BCCI, the evidence is compelling, and if this were all the liquidators had to prove, Mr King would have paid up and settled years ago. But perhaps unfortunately it has never been possible to sue the Bank for negligence. In an effort to protect the taxpayer from a tidal wave of compensation claims, Parliament has seen fit to surround its executive with all kinds of legal immunities.

Yet it is possible to sue for malfeasance, or outright dishonesty. Even in the most heinous of regulatory failures, proving such a case is difficult verging on the impossible. In essence, the liquidators have to show that the Bank deliberately went out of its way to disadvantage and help defraud BCCI's depositors. It is easy to see why Mr King could never accept such a charge. The idea that countless Bank of England officials conspired over a period of years to keep the BCCI fraud from the public is plainly ridiculous. Negligence is one thing; dishonesty quite another. Even today, years after the event, and with the Bank of England stripped of the supervisory powers it had back then, the allegation stabs at the heart of the Old Lady of Threadneedle Street's integrity as a central bank.

The liquidators have known this all along, yet encouraged by a host of successes in recovering money on behalf of creditors, they forged ahead, vainly assuming that the legal juggernaut would eventually force the Bank to cave in and pay at least a little of their £850m claim. The whole thing has proved a wonderful gravy train for the lawyers. Nobody else will gain a sausage. This is a case that should never have been brought. The sooner the liquidators swallow their pride and abandon the chase, the better.

Another raid on the savings industry

We all know that the Chancellor is desperate to find new sources of taxation to feed the black hole in the Government's finances, but does he really need to raid the already beleaguered savings industry to obtain them?

Well obviously he does, for the news that the Treasury is to hit the industry for anything up to £1bn in extra taxes was snuck out without consultation under cloak of darkness as an apparently innocuous and unimportant piece of anti-tax avoidance legislation.

The Treasury said last night that the figures being bandied around in the City were a gross exaggeration of the likely impact, but that's not what the industry thinks. Legal & General alone reckons it might cost as much as £500m in additional taxation. Other quoted insurance companies seem to be less badly hit, but some foreign-owned life companies are said to be severely affected. The already limited attractions of these islands to the savings industry have just suffered another body blow.

The Treasury insists that because the industry has been deliberately trying to avoid tax, it didn't need to consult. Yet what's being attacked is not a sneaky, faintly dishonest wheeze for the purpose of paying for the chief executive's Mediterranean yacht. It is a practice that has been going on for years with the apparent blessing of the Financial Services Authority, which allows the monies so saving to be used for capital adequacy purposes.

The move therefore has important implications for solvency, and is bound to affect some savers. Even if there is merit in what the Treasury proposes, the right approach would have been to establish the implications first. Instead, we have yet another stealth tax, and if the damage isn't nearly as great as the Government's raid on the tax privileges of the pension funds eight years ago, the effect is much the same.

This is a Chancellor who professes himself a true believer in the merits of tax competition between European states, yet he speaks with forked tongue on these matters. For many companies, the existence of apparently tolerated forms of tax avoidance is a key element of tax competition and therefore an important ingredient in choice of location. Surprises like this do nothing to support the case for investing in Britain.

j.warner@independent.co.uk

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