Yahoo Finance Tech boss ‘felt like he was bribed’ to move company from UK to China
The former boss of the British microchip company Imagination Technologies has claimed Chinese investors seemingly offered him what “felt like a bribe” to move the company to China.
Ron Black told an employment tribunal case that he was told he would make “a lot of money” if he transferred Imagination’s technology and its employees out of the UK to China.
Mr Black resigned from Imagination in 2020 amid an attempt by China Reform, the state-owned investment company that is Imagination’s key financial backer, to take over the company’s board.
He is suing the company for $257m (£203m) for unfair dismissal, alleging he was forced out for blowing the whistle.
The company claims Mr Black was removed for orchestrating an executive coup over a disagreement about strategy.
Imagination, which designs processors for smartphones, cars and smart devices, was bought by Canyon Bridge, a private equity firm backed by state-owned China Reform, in 2018.
Mr Black said that after being hired in late 2018 he was called to meet China Reform representatives at a late-night meeting at a Beijing tea house in March 2019.
Mr Black said he was pulled aside by Lining Wang, an executive at the investment firm, and encouraged to move the company’s operations to China as well as liaising directly with the state-owned investors.
‘I would “make a lot of money” if I agreed’
“He told me privately that I (meaning Imagination) should stop working through Canyon Bridge and report directly to China Reform, and begin to transfer Imagination’s technology to China, using the company’s British engineers to train new Chinese engineers, and then to lay off the British engineers to reduce cost,” Mr Black wrote in a witness statement.
“He added that I would ‘make a lot of money’ if I agreed to do these things,” Mr Black added.
“He was asking me to facilitate a wholesale transfer of Imagination’s IP and ultimately its business to Chinese entities.”
Mr Black said he had reported the conversation to Ray Bingham, Canyon Bridge’s lead partner and Imagination’s chairman.
“I said that Mr Lining Wang’s suggestion that I could make a lot of money felt like a bribe,” he wrote.
“If the Chinese state could control Imagination’s business strategy and agenda it would enable them to make technology transfers.
“That in turn would mean all the sensitive technologies … would be in the hands of the Chinese government,” Mr Black wrote.
Mr Bingham and Imagination Technologies dispute Mr Black’s version of events and say he in fact sought deeper relations with China.
Mr Bingham wrote in his witness statement about Mr Wang’s purported comments: “I suspect these were personal and unreliable comments.
“Ron would have known that this did not represent any view of the senior players in China Reform.”
He also said Mr Wang was “relatively junior”.
Imagination said that Mr Black had pursued an investment that would have seen the company’s base moved to China.
Documents in the case suggest that Imagination came close to a $300m investment from THG, a private equity company backed by the Tianjin municipal government.
The full investment would have seen Imagination domicile in China as a condition of the deal and potentially float its shares in Shanghai.
‘His plans focused on growth in China’
“His plans as CEO focused on growth in China and even a possible business move to China,” Imagination said.
Mr Black said he would have resisted moving the company.
Imagination, founded in 1985, is one of Britain’s most high-profile semiconductor companies. Its customers include Apple.
It was bought by Canyon Bridge for £550m in 2017 after falling into financial difficulties.
The buyer’s Chinese connections meant US authorities forced the company to sell off its American business, but the deal was not blocked in Britain.
The Government has since brought in strict national security legislation that has resulted in a string of Chinese takeovers of UK companies being blocked. During the first full year of the new laws, which came into force in January 2022, 15 deals were blocked, eight of them involving Chinese buyers.
Beijing has been investing billions in growing its domestic semiconductor industry amid a US trade war and as microchips become central to advanced weapons and artificial intelligence technology.
China Reform attempted to install four new directors in 2020 in a move that prompted Mr Black and several Imagination executives to resign.
The company backtracked on the appointments after Oliver Dowden, then the culture secretary, intervened.
Mr Dowden demanded a meeting with Mr Bingham amid fury from Conservative MPs, leading Imagination to cancel the appointments at late notice.
Mr Black says he then withdrew his resignation, which was accepted by the company but subsequently not honoured, and that he was sacked for whistleblowing.
“The Claimant’s blinkered approach and inability to co-operate meant that he was not doing his job as CEO,” Imagination said.
