Microchip boss wins payout after being sacked when he raised considerations the Chinese authorities was attempting to take over his British firm

The chief executive of a leading British microchip company who was sacked after raising concerns that the Chinese government were trying to take over his company for ‘nefarious’ purposes has won an unfair dismissal claim.

Tech industry veteran Dr Ron Black was so concerned at the potential national security risks of moving Imagination Technologies’ HQ to the Far East he called in the GCHQ intelligence agency, an employment tribunal heard.

The £400,000 a year executive warned that Chinese control of the company could be ‘dangerous’ and voiced fears that the firm’s technology could end up being used in military weapons or for spying.

After threatening to resign over his ‘grave concerns’, Dr Black – and his wife who was also a senior executive at the company – were fired following the intervention of two China-based bosses.

Now he is in line for compensation after successfully suing Imagination and its owners for unfair dismissal and whistleblowing ‘detriments’.

The hearing in Watford was told the Hertfordshire company makes chips which can be used in vehicles, mobile phones, gaming and even military weapons.

In 2017 it was bought by Canyon Bridge, a private equity fund ultimately owned by the Chinese government, in a £550 million deal.

The tribunal heard that after losing Apple as a customer the firm had endured a ‘disappointing period’ and in January 2019 appointed Dr Black – who had a reputation as a ‘turnaround man’ – as CEO.

Keen to explore expanding into the Chinese market, in March of that year he met an executive at state backed investment fund China Reform – which had strong financial ties to Canyon Bridge – Lining Wang.

‘The meeting was informal,’ the tribunal heard. ‘[Dr Black] reported to [Canyon Bridge bosses] after the meeting that during the meeting [Lining Wang] had suggested to him that if [Imagination] were to transfer its technology and redomicile to China, that [Dr Black], personally, could make a lot of money.

‘[He] interpreted this as a bribe and reported it to the Directors. The other Directors considered that this conversation was not important as [Lining Wang] was not in a position of authority. No further action was taken on this.

‘From this point onwards [Dr Black] believed that China Reform R was not merely a passive investor and that his position as CEO was subject to scrutiny by it as well as the Directors of Canyon Bridge.’

The tribunal heard that in December that year China Reform suggested having four directors appointed to the Imagination board, a move Dr Black opposed as control of the company ‘would be ceded to the Chinese government’.

‘Being owned and controlled by the Chinese government will definitely make us more of a target for the US government and may even put us at odds with the UK government,’ he told bosses.

The tribunal heard that in March 2020 – the same month he was awarded a £400,000 bonus – Dr Black set up a meeting with a representative with government spy agency GCHQ ‘to discuss whether the Chinese control of [Imagination] would pose a national security risk’.

‘The result of the meeting was that [Dr Black] started to write a formal note to [the agent] to tell him of the position. However, this was never sent,’ the hearing was told.

‘The following day [Dr Black] met with the local MP. He reported…that the MP said that [China Reform] control of [Imagination] would not go down well with the UK government.’

On April 6 Dr Black sent a letter of resignation to a boss at Canyon Bridge calling into question the investment fund’s actions.

He wrote that he was ‘very worried that being controlled by the Chinese government will be fatal for the company’.

‘If Canyon Bridge and China Reform continue down the path of making Imagination a Chinese government-controlled company…[it will] trigger immediate exploitation by our competitors, and questions from our partners and customers, resulting in irreparable damage to the company’.

‘This explicitly said that he considered that redomiciling Imagination to China would be a breach of a director’s duties,’ the tribunal found.

‘[He] pointed out that…Chinese control of the company was not in the interests of [Imagination]. He also referred to the potential for scrutiny by the UK government as to whether there was a national security issue of the company being controlled by the Chinese government.’

The tribunal heard that the following day Dr Black tried to withdraw his resignation but that directors insisted on terminating his employment as well as that of his wife Ellen, then Vice President of Business Operations.

He took the company and the executives who run Canyon Bridge to the tribunal claiming unfair dismissal and that he had suffered detriments for making ‘protected disclosures’.

Of his whistleblowing, the tribunal said: [His] evidence was that if the technical knowledge of [Imagination’s] products were handed to the Chinese government, this could be dangerous, as they have military application.

‘It would also allow the Chinese government to add to the product, potentially with bug software or spy software…the directors had a duty to ensure the technology was not used for nefarious purposes.’

Although it found that many of Dr Black’s claims did not constitute protected disclosures, the tribunal did find that his April 6 letter and his warning that ‘redomiciling’ to China may amount to a breach of a director’s duty did.

It also found that he had been fired as a consequence by Canton Bridge bosses – US chairman Ray Bingham, Hong King resident Peter Kuo and Hong Kong and Taiwan citizen John Kao – who considered him ‘disloyal’.

Employment Judge Sally Cowen said: ‘The Tribunal were satisfied that the making of the protected disclosures on 6 April 2020 was the principal reason for the dismissal.’

Dr Black’s compensation will be decided at a later hearing.