The British economy is in dire need of growth and investment, but at what cost? A court case due to be heard later this month will again highlight the extraordinary lengths the country appears prepared to go to attract foreign money.
The case centres on the sacking of the former chief executive in London of the Kuwait Investment Office, or KIO, the world’s oldest sovereign wealth fund. Saleh Al-Ateeqi was fired in July 2022 and brought a lawsuit for unfair dismissal. He was ousted he says because he blew the whistle about the fund’s alleged unlawful practices and mismanagement in London.
But an employment tribunal found that Britain regards the KIO as an arm of the Kuwaiti state and as such, it enjoys diplomatic status, so they did not have jurisdiction to hear his claim. Al-Ateeqi is appealing.
Sovereign wealth funds are among the biggest investors in the world. They speak for trillions of pounds – to a level that would cause even Elon Musk to pause. Yet relatively little is known about them, how they operate and who they serve. And in the case of Al-Ateeqi, whether they are playing by the same rules as other investors.
The case also speaks to a bigger question about the usual rules being bent by countries prepared to use their diplomatic and financial muscle to get what they want – and the extent to which the British government allows it.
There is China’s new ‘mega-embassy’ at Royal Mint Court on the edge of the City, which has been waved through despite strident security protests. China is currently refusing to cooperate with a judicial review brought by the Royal Mint Court Residents Association, which argues that the government’s decision to approve the embassy failed to properly address the key objections raised during the planning process.
Or take oil-rich Bahrain, which has gone all the way to the Supreme Court to argue it has the right to install surveillance software in the computers of Bahraini dissidents in the UK. The Supreme Court has yet to rule in that case which it heard as far back as last November.
Before the war in Ukraine brought in new sanctions, illicit Russian money, obtained via crime and corruption, flooded into Britain via anonymous shell companies. Despite repeated warnings from anti-corruption campaigners, they seemed to turn a blind eye to its provenance, failing to block what amounted to blatant, large-scale money laundering.
As for the KIO, there have been three previous cases involving dismissed executives in the UK where Kuwait sought the cover of diplomatic immunity.
Today, the KIO’s assets in the UK include the plum More London office and retail complex at Tower Bridge, the 26-storey Willis Building in the heart of the City, a major site at 60 Threadneedle Street also in the City and substantial stakes in Associated British Ports and London City Airport.
They are investments in profit-making ventures, yet Article 3 of the Vienna Convention on Diplomatic Relations could not be clearer that money-making is incompatible with the function of a diplomatic mission and is therefore not covered by diplomatic immunity. Yet the Employment Tribunal nevertheless went ahead and found in Kuwait’s favour.
In regard to Al-Ateeqi, the Foreign Office confirmed: “The UK is firmly committed to the Vienna Convention, which sets out international agreement on diplomatic relations.”
The Foreign Office has also previously referenced “the KIO’s commercial activities as a sovereign wealth fund”. That would also suggest the fund may indeed not be covered by the Vienna Convention and therefore brings into question whether it can seek the sanctuary of diplomatic immunity.
Certainly, Al-Ateeqi’s remit appeared to be that of a commercial investment manager and not as some sort of financial ambassador in London to further economic relations.
His case, however, follows that of Simon Hard, the ex-head of fixed income at the fund. Hard was accused by the KIO of raising salaries and bonuses without permission, which he denied. He sued for unfair dismissal and the fund refused to obey a court order to supply material, insisting they were immune and the court had no jurisdiction. Their appeal was rejected in 2022. The case was settled.
Soon after, the Foreign Office then named 20 members of staff from the KIO it said had diplomatic protection. Simon Hard was one, along with Saleh Al-Ateeqi.
The fund also uniquely appears in the published Diplomatic List, the Foreign Office’s register of those embassies and their associated offices to be granted diplomatic status in London. The list contains no other sovereign wealth fund or overseas state investment fund.
In Al-Ateeqi’s case, the tribunal similarly recognised the KIO is separate from the Kuwait state. But the tribunal still went ahead and followed the Diplomatic List and afforded the fund office protected status. It is a mess.
Why this kind of situation is tolerated is a mystery. Unless, perish the thought, there is some unpublished policy residing in the Foreign Office which dictates that where money and overseas investment in Britain are concerned, the normal rules of international law don’t apply.