The head of the City watchdog has admitted that he met with Saudi Aramco in early 2017, before the regulator published proposals that have been criticised for watering down governance rules in order to attract what would be the world’s biggest initial public offering when the oil company lists some of its shares.
It is the first public admission from the Financial Conduct Authority that it met with the oil giant before coming out with its proposals in July. The acknowledgement came as two parliamentary select committees wrote to the FCA to demand answers about the level of government influence over the proposals, as London vies with cities such as New York to win the Aramco flotation.
“We can confirm that we held conversations with Saudi Aramco and their advisers in light of their interest in a possible UK listing in the early part of this year. We emphasised during those conversations that we were reviewing the Listing Regime,” Andrew Bailey, the head of the FCA, wrote in a letter published on Friday to the Treasury and Business, Energy & Industrial Strategy committees.
The FCA said in July that it was planning to create a new category within its “premium” listing that would exempt companies controlled by governments from some rules. The announcement came after prime minister, Theresa May, and the head of the London Stock Exchange, Xavier Rolet, travelled to Saudi Arabia to press for London as the venue for Saudi Aramco’s planned IPO.
Mr Bailey had previously denied to the FT that he had come under pressure to change the rules. He wrote in the letter published on Friday that there had been no meetings with ministers over the drafting of the proposals, although he informed a Treasury minister 48 hours before publication.
Nicky Morgan, the head of the Treasury committee, said:
Questions remain about the level of political involvement in the consultation. The UK’s world-class reputation for upholding strong corporate governance mustn’t be watered down.
She promised to quiz Mr Bailey further later this month when he appears before the select committee.