Ex-Imagination Technologies boss tells UK Foreign Affairs Committee: Britain needs to stop overseas asset stripping

Other countries have it. Why can’t we?

The UK must introduce a framework to prevent asset stripping of homegrown tech businesses by foreign powers, former Imagination Technologies CEO Sir Hossein Yassaie has told the British Parliament’s Foreign Affairs Committee.

The committee is investigating whether foreign acquisitions of UK technology companies represent a risk to national security.

The appearance by Yassaie, along with other former and present members of Imagination’s leadership team, was spurred by a recent attempt by the firm’s Chinese owner, Canyon Bridge Capital Partners (CBCP), to perform a boardroom coup by attempting to add four directors to the board that would have given CBCP total control over the firm’s governance.

Imagination was bought in 2017 by CBCP, which is itself backed by China Reform Holdings, a private equity outfit with direct links to the Chinese Communist Party. Yassaie was worried about a potential seizure of the business by China Reform Holdings and urged MPs to probe the matter.

In his testimony, Yassaie argued for “due process” that would prevent sensitive technologies falling into the wrong hands, but without hindering the foreign investments that are critical to the UK technology industry.

The first step would be for qualified individuals to assess the technology and, crucially, what it could enable with regards to factors like potential military applications. During his his testimony, Yassaie cited the example of GPUs, which have civilian uses, but can also be used in defence and aerospace electronics, such as those included in UAVs and missiles.

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“Around that, we need to do an element-of-risk assessment,” he said. “And then, we need to figure out what governance and control we have,” he said. “If the technology is unique, only a small number of things can do it, and is powerful, then it’s important there’s sufficient control around ownership and governance.”

Yassaie added that it would be prudent to have a period where the UK government could take action on potentially risky acquisitions, noting that a six-month window would be “reasonable”, particularly given the complexity of some technologies.

Echoing the concerns of his former colleague, Dr Ron Black – who served as Imagination CEO between 2018 and April of this year before he resigned following the alleged coup by China Reform – said the UK’s legislation to protect companies lacks measures found in other territories, most notably the US.

“A lot of times in business, things are not clear until post-facto. Until after it’s happened,” he said. “But it’s almost always possible to know whether risks are increasing or decreasing. What is needed here is a risk assessment framework.”

This, he argued, would consist of three factors. The first would be whether there’s a risk of foreign control, particularly with respect to technologies that are unique. The following factor would focus on what risk foreign control would pose to the UK economy. Finally, any assessment should consider national security, particularly with regard to any threat to the Five Eyes security community.

Also appearing in front of the committee was current CTO and CEO of Imagination, John Rayfield and Ray Bingham.

In his testimony, Bingham emphasised the independence of Canyon Bridge from the Chinese state, describing the company as motivated “completely and totally on a commercial and business basis,” with the decision to acquire Imagination driven by business results and talent.

He denied that the equity firm, nor its backers, China Reform, was serving as “an apparatus of the Chinese state.”

Imagination Technologies, founded in 1985, became a leader in the semiconductor industry, developing chips to power graphics applications, as well as others used in mobile networks. During its 35-year existence, it has attracted interest from Silicon Valley giants like Intel and Apple, which both acquired stakes in the company prior to its acquisition in 2017 by CBCP. ®

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