2011 July » Tax Research UK

How to buy a football club: go offshore

Corruption, Secrecy jurisdictions, Tax Havens 3 Responses »

Jul 192011

From the Treasure Islands blog, with permission:

Last night I caught the tail end of a Channel 4 TV programme entitled How to Buy a Football Club, which exposed huge wrongdoing in the UK’s Premier League. The programme involved some excellent undercover reporting, some awful revelations about some of the biggest names in the business. Channel 4 have put together a short story explaining a few of the things in the programme – and one of them, onthis page, summarises some of the findings neatly.

“Opaque money from the far east and elsewhere that has been used to prop up football clubs crippled by unsustainable debt, with attempts to discover the real source of any cash lost in a maze of offshore accounts.”

Look at those jurisdictions that are fingered – several of which, likeJersey, Guernsey and the Isle of Man which routinely market themselves as somehow being ‘clean.’ Other major tax havens such as the British Virgin Islands, Bahamas, and Gibraltar are all part of the maze. Essentially, the large majority of clubs in the UK Premiership are now owned offshore. And of course secrecy is a major, if not the major, reason why. Here is one section from the story, highlighting the offshore angle:

“Our immediate point of contact is one of the biggest names in English football as a player – now working for a major Premier League club. Drinks are ordered. Shirts are exchanged, given to our Indian would-be businessman-buyer, to take home for the children. What is startling is that, as our undercover reporter lays out his card and intentions, nobody on the other side of the table makes the slightest attempt to check him out, see the colour of his money, investigate his background.

He could, pretty much, be anybody
. . .
We are offered a club to buy, One of the biggest names in the football league. Still nobody has made any apparent attempt to ask us who we really are or what we do. Where has our money really come from?”

That’s not all. The rules state that nobody may own more than one club (allowing more than one would obviously create all sorts of conflicts of interest – imagine what might happen when two teams under common ownership played each other, for instance.) And yet these businesspeople offer a deal to allow the investors to buy two or more clubs, via two offshore special purpose vehicles, a fund and a sub-fund.

“When we ask about how we can possibly buy another club, the CEO says: “The good thing about a football fund is, you can buy it and nobody will know.” Incredibly, they then joke about how funny it will be when one team plays another in England and everyone thinks it’s a fair competition. “So which team are you going to support? Team A or Team B?” And they laugh.”

All of which, as Channel 4 notes:

“breaches the rules. It strikes at the heart of the game.”

Are there two or more British football clubs owned by a single set of interests? I would be surprised if they weren’t. But we can’t find out. It’s just as Treasure Islands explained: routine market-rigging, courtesy of offshore.

You can watch clips from the programme here, and the full programme, if you’re in the right area, here.

Also note that Christian Aid did a most useful report on this a while back, and it provided a handy guide to the ownership of Premiership clubs on page 18. Just look at that list of tax havens. There are few clubs now that aren’t owned offshore.

NB: Also on Tax Justice Network

What if the Tea Party take over?

Uncategorized, USA 3 Responses »

Jul 192011

As Gideon Rachman notes in the FT this morning:

The Bachmann-Tea Party diagnosis of America’s problems gets things the wrong way around. The problem, as far as they are concerned, is corrupt politicians – and the solution is the constitution. In fact, if the politicians were operating in a better designed political system, they would probably do a much better job.

The Tea Party venerates the constitution while despising the political system it has produced. But logic and fundamentalism rarely go hand in hand.

Which is why the Tea Party are quite so scary: just suppose they did get the Republican nomination and won? Is anyone building a plan for what we do in that case?

Black Swans have to be considered after all – and this one isn’t even black – we know it’s possible which means it’s white.

Hackgate: The time for the Courageous State

Courageous State, Uncategorized 3 Responses »

Jul 192011

My book, with the title The Courageous State should be published in September: work on it is progressing well.

It may well prove to be extraordinarily well timed. It argues that we now have a generation of professional politicians with little experience beyond their university careers and Whitehall with almost all of them having been schooled in neoliberalism as if it is the one and only political philosophy to which they can subscribe. And yet, as I argue, that philosophy has a pernicious consequence. It tells them that everything they do in the high office that they hold is basically harmful to the well-being of the people who elected them. At best this leaves them conflicted, lacking in self-confidence, and paralysed with fear about action they should take. Cameron is a perfect example, of course. At worst it creates the paradoxical position where our leading politicians hold the very offices that they hold in contempt and view the staff that work for them with disdain, presuming all of them have chosen to work for the state in some act of grossly misguided folly. Osborne exemplifies such a politician.

But it’s timely for another reason. What I argue is that a Courageous State has to intervene to ensure the well being of those who live in a country. It has a duty to deliver real justice, and not just legal justice – although that is important and must clearly be seen to apply to all, without favour, which has not been the case recently, whether with regard to favour shown to the Murdochs or the wholly inappropriate prosecution of the Fortnum and Masons 145. Justice has also to be supplied to those who cannot access markets, to those who are old, infirm, young, disadvantaged by location, prejudiced against because of race, gender, disability or otherwise and to those who suffer as a consequence of the market’s externalities. This requires not just a courageous state, but courageous politicians, and a belief on their part in the democratic process and their obligation to represent those who put them in power.

What we are seeing unfolding at this time is very clear evidence that too many, and yes I include Labour politicians in this charge, have forgotten that obligation. They’ve been corrupted by power. Therefore forgotten what democracy is for. They have forgotten their duty to uphold the state itself so they pass it on in a fit state for a future generation.

In the process they have let the state be captured: captured by Murdoch, captured by the City of London, captured by wealth and captured by police force who are all too willing to show their bias.

As a result they have failed to regulate: regulation itself has been captured by self-interest, whether of the press, the City, the accountancy profession and a raft of other so-called self regulated structures, none of which have delivered what is expected of them.

And they’ve let that happen because they have undermined a necessary, indeed essential, part of a government, which is a well resourced civil service; able to form its own opinion, to offer independent advice to ministers, to act impartially, and to deliver regulation that is needed, backed up by strong and independent judiciary, reinforced by an honest police force, supported by effective national and local democracy, all representing part of a coherent whole that underpins the structure of our country.

This has been a failure of the political class. What is extraordinary is that Ed Miliband seems to recognise this. We have an opportunity for change. Hackgate is providing that. It’s the only silver lining it is delivering.

Since when was carrying a leaflet an offence? The remaining F & M prosecutions are the action of a police force in need of radical reform

Ethics, Uncategorized 2 Responses »

Jul 192011

As Nina Power notes in the Guardian this morning:

In Sir Paul Stephenson’s resignation as Metropolitan police commissioner on Sunday night, one of the things he claimed he was most proud of the Met for was “the professional and restrained approach to unexpected levels of violence in recent student demonstrations”.

Now the fact is that the recent student demonstrations were remarkably peaceful. It was a police policy of kettling – almost certainly illegally – that intimidated people into a position that fear provoked their response. Driving police horses into people doesn’t help either.

No, I’m not excusing vandalism in saying that: and of course there was some. There was also some stupidity - nothing excuses throwing a fire extinguisher off a roof or attacking cars, whoever might be in them (although the scale of offence in those two cases is remarkably different). But that’s not what Stephenson was talking about. He was talking about his force’s ability to break up demonstrations.

Remember, the Met’s good at this. As John O’Connor notes this morning in the Guardian:

The resignations of Sir Paul Stephenson and John Yates are the result of close associations between the police and News International that go right back to the start of printing at Wapping.

An assistant commissioner was in charge of police operations to ensure that the News International product got out on to the streets. There is no doubt that Rupert Murdoch and his senior executives were extremely grateful for the assistance given by the police, and many police officers have enjoyed an unhealthy, close relationship with News International since those days.

I am sure that is true. Now we are paying the price for it.

And we see that complete bias, misrepresentation and systematic abuse of justice in the case of the people arrested at Fortnum & Masons last March. As the Independent notes today:

Prosecutors have dropped more than 100 cases against activists who staged a sit-in at Fortnum & Mason four months ago in protest over the department store’s alleged tax evasion.

The Crown Prosecution Service (CPS) has thrown out all 109 charges of aggravated trespass under review, leaving just 30 of the original 146 UK Uncut protesters arrested for occupying the central London store still facing court. The CPS said yesterday it was not in the public interest to pursue the case against the majority of the campaigners.

They continue:

She added that the prosecutions were not in the public interest because protesters had not been involved in similar offences before, had played only a “minor role in the offending behaviour” and the court would be likely only to impose a “nominal penalty” on them.

Mike Schwarz, a solicitor for Bindmans, which represents about 110 of the protesters, said he thought it was “irrational” to drop cases against so many but to continue to prosecute 30 others, who were selected because they had banners, leaflets, or had been involved in similar protests previously.

I’ll return to that in a moment. First let me note what the Guardian reported yesterday, which is:

The Guardian can now reveal that the police admit deception in the lead-up to the mass arrest. Clark has confirmed she was told by her fellow commanding officers that everyone inside the building would be arrested. However, 10 minutes later at 5.50pm, Clark has admitted, she gave assurances to demonstrators that they would be allowed to leave unhindered.

On the video, which timestamps confirm was shot after 5.50pm, Clark can be heard telling a member of the crowd that the police were “getting ready to let you go”. In response to a question about whether there was a “kettle” outside, she replies: “No, we are getting ready to let you go.”

This is police corruption at play. Let’s not pretend otherwise.

And what of those who remain charged? They’ve been selected for having “banners, leaflets, or ha[ving] been involved in similar protests previously”. So what this comes down to is that these people are being charged for having exercised their right to protest. For, to put it at no more basic a level, of exercising their right to free speech.

A corrupt state – and as is readily apparent we have been living in a corrupt state – requires a corrupt police force to enforce its oppression of those who oppose it. This act – of prosecuting those who have protested – is that action of a corrupt police force seeking to oppress the right of free speech when undertaken by those who were not in any way violent in the course of their exercise of that right. All they did was go into a shop – something the shop did after all invite them to do by declaring itself open to all comers on its door.

No, I’m not sorry to see Sir Paul Stephenson go. This was a man who could not tell right from wrong – read John O’Connor’s whole article in the Guardian to see that – but who was willing to use his own distorted view of the entitlement of an elite of which he was apart to oppress those challenging it.

I’ve previously declared my support for the Fortnum & Mason 145 on the basis that they committed no acts of violence. I’m happy to do so again. More than that, I make very clear, I think it’s time to drop all charges and look at charges against Chief Inspector Clark for perverting the course of justice, which she clearly did.

The right to protest is fundamental to democracy. The Met’s former chief used his resignation statement to reiterate his pride in oppressing it. can there be any clearer indication of the Cowardly State we’re in?

Yesterday’s word cloud

Blogging Comments Off

Jul 192011

I just found Wordle – which generates word clouds, easily. So I banged in yesterday’s blog front page just to see what it looked like. This is the result:

That feels about right!

Although the Isle of Man isn’t that prominent every day.

Euro crisis this week?

Economics Comments Off

Jul 192011

The Euro leaders meet on Thursday this week. Their currency is falling apart all around them and, led by Merkel and Germany, they are doing nothing about it.

As Nils Pratley says in the Guardian:

Without firm action, investors will conclude that eurozone politicians – specifically the German chancellor Angela Merkel – simply lack the will or electoral authority to fight to save the single currency. It will be Rescue Thursday – or Black Friday.

That’s about it.

Are the Courageous, or are the cowards? Do they believe in their capacity to act, or not? That’s the question the markets need answers to because sound markets are always built on the foundation of Courageous States. If the euro leaders make clear they aren’t Courageous States then their currency fails. It’s choice, not chance, that will determine this.

We face financial meltdown – and this time we have a prime minister without an ounce of authority

Uncategorized 18 Responses »

Jul 182011

As the Guardian reports tonight:

More than £5bn was wiped off the value of three of Britain’s biggest banks on Monday as global financial markets took fright at the deepening crisis in the eurozone.

Like it or not, the next crisis on the scale of the collapse of Lehman Brothers is now imminent. I doubt we can avoid it.

But last time the UK had a man in charge who may have been unpopular but who had a brain big enough to handle the challenge with a Chancellor cool en0ugh to deal with the crisis. Brown and Darling led the world – even if briefly – and saved the world’s banking system by their actions.

This time we have a Prime Minister surrounded by scandal, immersed in controversy, shown beyond doubt to be of poor judgement and with few with any faith left in him. And he is supported by a Chancellor who has shown himself economically incompetent, whose policy is so very obviously failing and who has no record for sound decision making on which he can rely.

We’re facing another massive economic crisis, but this time we haven’t got the people in charge able to deal with it.

That’s exceptionally troubling.

Treasury Statement on VAT revenue sharing with the Isle of Man

Isle of Man, Uncategorized, VAT 4 Responses »

Jul 182011

The UK Treasury issued the following statement this afternoon:

Written Ministerial Statement

Isle of Man Indirect Tax Revenue Sharing

The Exchequer Secretary to the Treasury: (David Gauke): The Treasury has agreed a revision to the formula governing the sharing of joint indirect tax revenues under the 1979 Customs & Excise Agreement with the Isle of Man.

The new formula is intended to give the Isle of Man the revenue that they would collect if they ran their own indirect tax system, while providing the Isle of Man with generous transitional payments. In 2010 the Isle of Man changed the way that it measured its national income to more closely follow international standards. Under the previous formula this would have implied a significant increase in the Isle of Man’s share of joint revenues. The new formula provides the Isle of Man with a share of joint indirect tax revenues similar to that which the UK Treasury expected when the last formula was agreed in 2009.

The Treasury welcomes the recognition by Isle of Man Government that the previous revenue sharing formula was not sustainable and we are pleased that a new formula has been agreed, following negotiations. The Treasury hopes that it provides a stable and secure basis for the long term future of the Customs and Excise Agreement between the United Kingdom and the Isle of Man.

HM Treasury

18 July 2011

I do like the line:

The Treasury welcomes the recognition by Isle of Man Government that the previous revenue sharing formula was not sustainable

I think someone may have smiled when writing that.

I am delighted specific reference is made to the Isle of Man’s blatant attempt to manipulate the data on this issue. I brought this to public attention and the Isle of Man government was livid with me. I have been proven right, again and their flagrant attempts to abuse the UK have been rightly exposed and rejected.

As I have previously noted: my campaign on this issue is over. My case has been proven on all counts and accepted as the basis for action; justice has been done.

Now there are other issues to address, not least in the Isle of Man.

The foundations for the next financial crisis already exist

Economics 2 Responses »

Jul 182011

The FT published this at 2.40pm today:

Financial crises occur when debt levels are excessive and asset prices fall. The severity of the recession that ensues can then be mitigated by large increases in government deficits and large cuts in interest rates.

Today the conditions for the next financial crisis are already in place. Debt remains at pre-crisis levels and US equities and UK property are seriously overpriced. But the ability to mollify the next recession with large increases in government deficits and sharp falls in interest rates has vanished.

As regular readers here will know, I have long argued that the stock market is heavily overvalued. In my estimation of valuation in the range of 3,000 to 4,000 (and may be lower and, right now) seems of asking more realistic than the current high valuation which is inflated solely by pension funds having no imagination at all about where to place their cash, to the detriment of their members. And, as we all know, private debt remains excessive in the death of some governments, like the UK, remains entirely manageable.

So I agree with the FT. August continues to look as if it will be a financial, and now potentially in the UK at least, a political bloodbath.

I hope Ed Miliband has an economic agenda ready and waiting for a manifesto for this autumn, because I think he might need one. This government has no chance whatsoever of getting us out of this mess.