HOWZAT

BOTH the City and British retailers have been on the lookout for any smoke, let alone fire, from the direction of Baugur. Even today, it is natural to be suspicious of any stranger riding into town flourishing a chequebook of other people’s money to buy everything in sight. Who are these people? Where is the money coming from? Is it real and will it last?

Retailers are doubly suspicious when a single party is so eager to buy a series of businesses that others have given up on. Baugur has ranged from food retailing to fashion via health food. The last time that this happened, when Stephen Hinchliffe built up the Facia group, it ended in tears.

Reports from Iceland that long-mooted financial charges had been brought against six leading figures connected with Baugur therefore received a ready audience and occasioned much sage nodding of heads. The charges appear to relate to a 1999 acquisition when, an informant claims, funds charged to Baugur were put to personal use. The central figure is Jon Asgeir Johannesson, who founded the company 18 years ago and is its chief executive.

The charges will not formally be spelt out until late August, so the revelations are unhappily timed for Baugur. The company is a critical part of the consortium that was about to mount a takeover bid for the Somerfield supermarket group. Yet this has happened before: police raids connected to the same matter three years ago obliged Baugur to pull out of a bid for the Arcadia group, leaving the field to Philip Green.

The private equity houses and other private entrepreneurs connected to the consortium have to decide whether they still wanted the key equity contribution of Baugur, which has not been charged with anything. Many others are going to have to decide for themselves what they think of Baugur. It could take two years to find out if the false accounting charges stand up or whether Baugur just became too big for its splashy boots in the small pond of Icelandic politics. Being a big media owner in Iceland, as Baugur is, gives you power over others, but is also likely to win you implacable enemies.

The behaviour of Baugur as a company, and Mr Johannesson personally, may decide whether they are given the benefit of doubt on their innocence or simply suffer from doubt. What they need to do is simple: if they have nothing to hide, they should hide nothing. A transparent glass hides no dark secrets.

Stay tuned

YESTERDAY’S increase in the price of shares in ITV was perplexing because bid speculation that lay behind the rise has been knocking around for weeks. The thought that the broadcaster could fall prey to a bold bid from overseas has been blessed with credibility for months.

The 3.6 per cent share price rise is not the only peculiarity. It is also hard to fathom who would want to fuel the rumour. You can count ITV executives out of the equation. Our oldest commercial broadcaster values its independence highly and does not need the bother of firefighting bid gossip.

Potential bidders, meanwhile, have every reason to keep shtoom. The greater the excitement now the more a bidder would have pay to get control — or the less generous any firm offer would look.

One explanation is that the bid rumours are being put about by someone attempting to make trouble for ITV, or Charles Allen, its chief executive, for a peculiar personal reason. But while the provenance of the bid rumour is puzzling, the share price reaction suggests that investors think ITV is vulnerable to a takeover.

• A MONTH ago Christian Noyer, Governor of the Banque de France, echoed his predecessor Jean-Claude Trichet, who now runs the European Central Bank, in labelling the proposition that Italy could leave the euro to beat recession as “absurd”. Now M Noyer has admitted that it is perfectly possible to leave the eurozone, albeit “not without difficulty”. This remark sent the newly weak euro to its lowest for 14 months against the dollar. If Messrs Noyer and Trichet wailed more about a euro break-up, they might push it down to a level at which no one would want to go.

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