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Unite warns of national security risks in Vodafone-Three merger

Written by Wed 27 Sep 2023

Unite the Union has scrutinised the Vodafone-Three merger, urging the UK Government to assess the connection between Three’s partner company and China.

In the report, Unite the Union said CK Group, Three’s parent company, has connections that could risk national security.

The union claimed that if the merger is approved, CK Group will have ‘significant control’ over the privacy and security of 27 million UK mobile customers.

The report also said that CK Group could also gain access to sensitive Government contracts, including the NHS and Ministry of Justice. Unite the Union said this will ‘create huge risk of exposing sensitive data’ to the Chinese state.

“If a merger creates the technical or human means to collect valuable data, then the security services of any nation-state, Chinese or otherwise, are likely to make use of it,” said Alexi Drew, digital security expert in the report.

Unite suggested that domestic laws and company policies may not effectively prevent nation-state intelligence agencies from accessing data, which can become available through corporate mergers and acquisitions.

The Vodafone-Three merger is estimated to be valued at between £12 billion ($15 billion) and £15 billion ($18.9 billion).

In support of Government targets, the combined business will invest £11 billion ($13.4 billion) in the UK over ten years. The aim is to create one of Europe’s most advanced standalone 5G networks.

Potential Exposure to UK Government Communications

Concerns were raised over the potential exposure of sensitive UK Government communications to Chinese state monitoring.

Vodafone is currently a strategic supplier to the UK public sector. It has major contracts with organisations such as the Ministry of Justice, the Ministry of Defence, and the NHS 111 helpline.

Concern Raised Over ‘Cosy’ Relationships With China

A ‘cosy’ relationship between Rishi Sunak’s Government and CK Group’s senior leadership were highlighted in the report.

Unite the Union said CK Group actively collaborates with the Chinese state in some of its repressive policies.

“The Li family, which controls the company, has strongly backed pro-Beijing hardliner John Lee as Chief Executive of Hong Kong, and vocally supported the introduction of the National Security Law – which among other things, gives police the power to snoop on telecoms in Hong Kong,” said Unite the Union the report.

The report also said top CK Group executives sit on Chinese Government committees and have access to the inner circle of the Chinese political elite.

Worries over MP Involvement in CK Group

The report highlighted two of Rishi Sunak’s MPs have been on the CK group payroll.

Former Justice Secretary Sir Brandon Lewis currently receives £30,000 a year from CK Group. He advises CK’s subsidiary, Civitas Investment Management, which deals with real estate investments.

Lewis joined Civitas in June 2023 during CK’s takeover of the company, which was completed in July.

Former Transport and Justice Secretary Chris Grayling has been paid £300,000 by CK Group since 2020. The MP’s Interests Register stated he served as a “Strategic Adviser” for CK subsidiary Hutchison Ports Europe.

This position was held from 1 September 2020 to 31 August 2023. Grayling worked seven hours per week for CK and received an annual payment of £100,000.

Government Meetings with CK Group

In February, Sunak met with Hutchison Whampoa, a CK Group subsidiary. This meeting took place at the UK Investment Council where CK Group wields influence over UK investment and trade policy.

The following month, UK Government officials met with CK Group Chairman Victor Li and Managing Director Canning Fok. They discussed the merger of Three and Vodafone, three months before its official announcement.

In May, British Minister for Investment Dominic Johnson met with Victor Li and Canning Fok. They discussed CK Group’s investment plans in Britain.

The merger was announced a month later.

The report questioned: “This raises the question: can we trust the Government to give this reckless merger the scrutiny it deserves?”

How Will the Vodafone-Three Merger be Decided?

The decision on the merger rests with the Investment Security Unit (ISU). The Government moved the ISU from the Department for Business, Energy, and Industrial Strategy to the Cabinet Office in February.

Rumors suggested that the motivation was to give the Prime Minister’s office more control over the process.

While the Business and Trade Select Committee oversees the ISU, it can only scrutinise individual cases under ‘exceptional circumstances’.

Investigations occur retrospectively, leaving no opportunity for parties to appeal or present their case. A recent report from the Intelligence and Security Committee strongly criticised this process.

“The fact that the Government does not want there to be any meaningful scrutiny of sensitive investment deals… is of serious concern.

“Effective Parliamentary oversight is not some kind of ‘optional extra’ – it is a vital safeguard in any functioning Parliamentary democracy,” said the Intelligence and Security Committee of Parliament in a report on China.

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Written by Wed 27 Sep 2023

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