Virgin’s secrecy is recipe for distrust

There is something almost Orwellian in the decision by Virgin Mobile that the documents supporting its effort to get a public listing for its shares should not be made available to the public.

That this aversion to publicity should come from a company owned and controlled by Sir Richard Branson – a man whose career has been built on the manipulation of the media – only makes it more bizarre.

When the draft prospectus supporting the issue came out last week, newspapers were told they had to sign a confidentiality agreement before they could have a copy. The excuse is to prevent circulation in America – but that is spurious because the US rules date to 1932 and have never been a problem before. And while the mechanism which made the ban possible was the recent incorporation into the Financial Services Authority rules of various bits of European legislation, no one seems willing to admit that this ban was an intended outcome.

The immediate reaction of several City observers was that, while lawyers were roundly blamed, the drivers of the ban were the investment banks, as part of their drive to secure ever greater control over the flotation process.

No one expects the research produced by investment banking analysts to stress anything negative about a flotation. That leaves only the press to challenge a company’s claims.

Obviously, it is potentially bad news for the PR industry if the banks successfully create an environment where all company flotations can legitimately take place without any public scrutiny. But it is more important than that. Financial institutions are widely distrusted by the public and the only long-term antidote to that is greater transparency. It is truly odd to see them hurtling as fast as possible in the other direction.

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