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UPDATE 1-UK business minister attacks unbridled capitalism
September 21, 2010 / 11:53 PM / 7 years ago

UPDATE 1-UK business minister attacks unbridled capitalism

* Business Sec attacks excesses of capitalism

* Review to examine corporate incentives and pay

* Prompted by concerns over Kraft takeover of Cadbury (Adds reaction)

By Tim Castle

LIVERPOOL, England, Sept 22 (Reuters) - Britain’s Business Secretary Vince Cable attacked the excesses of capitalism as he announced plans to review rules on corporate governance following public anger over the sale of chocolate maker Cadbury to U.S. food group Kraft KFT.N.

In comments which angered the country’s business lobby, Vince Cable said: “Capitalism takes no prisoners and kills competition where it can,” according to extracts of a speech he is due to deliver to the Liberal Democrat party conference.

The Lib Dems are the junior partners in Britain’s Conservative-led coalition government which took office in May.

Cable, a former economist who is known for speaking his mind, on Tuesday criticised bank bonuses in comments which risk alienating parts of the pro-business Conservative party.

The review, starting in October, will consult over the economic impact of takeovers, shareholder responsibility, corporate incentives and pay, said Cable.

Critics have said February’s $18 billion Cadbury’s takeover was driven by investors seeking a quick return and was not in the long-term interests of Britain’s economy.

“Short-termism and shareholder disengagement are an increasing problem for our economy,” Cable said in a statement.

”Short-term investors and financial gamblers value a quick buck above all else, for example, by driving company boards into accepting takeover bids that make no economic sense.

The review will examine whether the way in which directors are paid unduly encourages takeover activity, Cable’s officials said. It will also consider ways of making shareholders more engaged in a company’s future.

However, it was Cable’s language which caught the eye.

The Confederation of British Industry said Cable was using “emotional” language to discuss corporate responsibility.

“The case for corporate takeovers is that they allow control of poorly run businesses to pass into more efficient hands,” said CBI director general Richard Lambert.

“Mr. Cable has harsh things to say about the capitalist system: it will be interesting to hear his ideas for an alternative.”

The government sought to play down the row, saying that the prime minister’s office had been aware of the speech in advance.

“It’s not an attack on capitalism itself, it’s an attack on the excesses of capitalism which few people would argue with,” a Downing Street source said. (Additional reporting by Estelle Shirbon in London; Editing by Angus MacSwan)

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