Malta is now well and truly a country where nobody much cares about the nationality of corporate ownership. Several of the transactions that, over time, have taken place in our midst (and the ludicrous, at least in price terms, Mid-Med sale was only one of them) were not a case of basket–case rescuing. They were, rather, part of a steady transfer of both incompetently and competently managed companies into foreign ownership.

Only very few big businesses are run by a truly multinational elite- John Consiglio

Yet public comment about this feature has been, at the most, muted. Just to give one thematic example, how possible is it to argue that foreign acqusitions of Maltese corporates should always be matched by reciprocity? But the big picture of the purchase of Maltese assets (or even big sharholdings in them, pace Palumbo, Arriva et al) by foreign owners passes unnoticed.

In one sense such calm is unremarkable. It is merely the culmination of many years of enthusiastic welcome of foreign acquirers. The local unquestioned colonialistic acceptance went that foreign investors do a better job in Malta than the Maltese themselves. This approach is not a reality present only in Malta. Even London’s City was always happy that – even if key players were based elsewhere – it was the place to which the Japanese continued to go to do business.

There is however a European touch to this issue. The integration of European markets at one stage (around, say, 1999-2000) was leading to a rush to create national champions. The banking takeover battle in France, the Telecom Italia battle in Italy, and the Elf-TotalFina struggle were all examples of a desire to create national champions that would survive the process of global rationalisation.

To free-market economists such lack of excitement about this issue, often even refusing to acknowledge it is going on, is usually admirable. It is a reflection of the disappearance of barriers to international investors that allows some companies to make acquisitions, both huge and otherwise, elsewhere. In the process there is a similar lack of protest for the rather different reason that much global corporate might remains, or ends up, in particular hands.

Is such sang froid wise? Is there, in other terms, any reason to worry about the nationality of parent companies that control your economy’s business and businesses?

The conventional argument was that an economy in which a large part – or vital parts – of the corporate sector is/are controlled from abroad, is vulnerable to what Canadian economists call “branch-plant problems”. Placed at the end, or the inauspicious, part of the corporate supply chain, branch plants carry out low value-added activities. When was it last that a proper figure was extracted in Malta for the effective share of the locals’ share of the whole companies’ research and development budget? Would they, or are they, at risk of closure when there is a downturn? Or will prices simply be jacked up for the consuming locals (i.e. where they exist at all)?

A second, specifically European reason for worry is the possibility that when an acquirer comes from some country still wedded or keen on national champions, one may end up influenced by someone else’s industrial or operational policy. I remember very well the fear that lay behind Italy’s mistrust of the proposed Deutsche Telekom-Telecom Italia merger. Why should a country privatise its utilities if they are promptly purchased by a company still owned by a foreign government?

Again some economists hold that these are misplaced fears. Branch/plant worries apply to low value-added manufacture or assembly plants, but not to ones that have strong research and development and their own creative talents. Foreign industrial policy, they hold, is a fading bogeyman, since countries that retain such policies struggle to apply them at home, let alone abroad.

Another key question beckons: To what extent is it an exaggeration to think of faceless international financiers buying up a domestic economy? This, in the past couple of weeks, has been one of the criticisms being levelled at Senator Mario Monti, spicing it with references to his former Goldman Sachs pedigree. One view would be to beleive that the beneficial ownership of all big international companies has drifted into the hands of a common set of institutional investors, with most of their money being managed in New York or London.

But also integral to the debate are other genuine concerns. Things like corporate governance, market listing policies, takeover rules, accounting standards: how do they differ from one country to another?

Much of the research suggests that successful companies tend to have a singleness of purpose that comes from a common national culture and language. In reality there are only a very few big businesses which are run by a truly multinational elite. Certainly, if the ownership of Maltese companies – or even those in any other advanced developing country – drifts into other hands, the number of top jobs for our country’s nationals falls.

Which in reality means that the real risk of foreign takeovers probably comes down to the salaries, benefits, perhaps share options, of the next generation of company leaders? Is that a price that the Maltese are prepared to pay?

The author is a senior lecturer in the Department of Banking & Finance of The University of Malta.