It's late on Friday as tired bankers and lawyers put the final touches to an IPO. Finally the senior...
It's late on Friday as tired bankers and lawyers put the final touches to an IPO. Finally the senior banker walks nervously to a room occupied by young men and women with purple hair and dogs on pieces of string Ã the bank's standing committee of animal rights activists. He lays the IPO proposal before them. "Is this one okay?" he asks timidly.
Far-fetched? Not judging by what's happened to a company called Huntingdon Life Sciences Group, the pharmaceuticals testing business. In the history of the City of London, few more shameful chapters have been written.
Huntingdon tests new drugs on animals on behalf of big pharmaceutical companies such as GlaxoSmithKline, to check whether they are safe. It has stood firm under relentless attack from animal rights activists, who are now trying a different route: they're targeting the company's financiers, who turn out to have nerves of jelly and spines of cotton wool.
Merrill Lynch, HSBC Holdings, WestLB Panmure, TD Waterhouse Group and Credit Suisse First Boston all cut financial links with Huntingdon, driving it to the brink of collapse.
Dresdner Kleinwort Wasserstein, the London unit of Dresdner Bank AG, and Winterflood Securities said recently they would no longer make a market in Huntingdon's shares because of threats and intimidation against their staff. Charles Schwab is now considering stopping clients from trading in Huntingdon stock. In effect, there is now no market in the company's shares. It may lose its listing on the London market.
Let's make sure we get this straight. The financial markets aren't prepared to make a market in the shares of a company just because a group of animal rights activists don't like it. In effect, the activists can decide who can and cannot raise capital in the markets.
Where will that lead? Will Goldman Sachs get animal rights activists to check every merger to make sure no mice are hurt? Will Deutsche Bank AG run each bond issue through a committee of environmentalists to make sure it is tree friendly?
This is not so much a slippery slope as an ice slide into chaos.
Nobody agrees with unnecessary cruelty to animals. Yet, at the same time, only a handful of extreme activists think testing new human drugs should be stopped. That has not stopped bankers from backing down in the face of intimidation.
So why is business so reluctant to defend itself? If Dresdner Bank, CSFB and Charles Schwab Ã organisations which have profited mightily from the principles of rationality, science and free markets Ã won't do it, who will?
The Government, in fairness, has done what it can to protect Huntingdon and other companies like it from animal rights activists. It gave the police power to break up demonstrations outside people's homes and it dropped the requirement that directors of public companies disclose their home addresses, which will make it harder for activists to track them down.
We can sympathise with executives at Dresdner and Winterflood and the rest. The tactics used by animal rights activists are violent, ugly, and inflammatory.
Nobody goes into the financial markets because they want to fight a crusade, they do it because they want to make lots of money without working too hard or taking too many risks. But sometimes fate plays out like that. As the scriptwriter of any western could tell you, a man doesn't always choose a fight, sometimes it chooses him. When the challenge presents itself, you either take it or duck it.
Too many businesses are ducking it. Why is that? One reason is that businessesmen, by instinct, don't believe in confrontation. In business, as in diplomacy, everything is a negotiation. When confronted by people who believe in moral absolutism, they retreat in bewilderment.
Second, businessmen are moral cowards. They profit from the enlightenment tradition of liberal thinking but they are not willing to defend it.
That isn't good enough. Many big issues of our time are essentially matters of commercial ethics: Is it right to test drugs on animals? Should globalisation be allowed to triumph over local traditions? Are the rights of shareholders always more important than the rights of workers? These are the questions over which blood is now spilt.
Government will defend the freedom of companies to operate. So too will policemen, lawyers and occasionally even journalists.
In the end, however, it is up to business to defend itself. A system that is not willing to man its own barricades, nor join its own battles, will eventually find its support evaporating.
Matthew Lynn via the Bloomberg London newsroom
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