Ethics » Tax Research UK

To comfort the afflicted – will the Church live up to its calling?

Ethics Comments Off

Feb 012012

Giles Fraser has undoubtedly redeemed himself since leaving St Paul’s. As he says in the Guardian this morning:

The task of the church is to comfort the afflicted and afflict the comfortable. For far too long the posh bits of the church have comforted the comfortable and allowed those struggling on in poor parishes to comfort the afflicted. The Church of England has never had much stomach for afflicting anyone (except, of course, homosexuals).

With a few tents and shedloads of determination, those who have huddled outside the cathedral in the freezing cold have acted as sentinels for an idea of social justice that can be found on almost every page of the Bible but which the church has too often lost sight of.

Which is why the American author Chris Hedges has posed the challenge thus: “The Occupy movement is the force that will revitalise traditional Christianity or signal its moral, social and political irrelevance.”

Well said that man.

Now will the Church and its members realise that their role is a 168 hour a week one, not just a nice warm glow on Sunday morning? That’s the challenge for the CoE. It’s not the Church on Sunday bit they find hard: it’s making their understanding of Church relevant to work on Monday that’s the challenge for them. And they’re failing still at St Paul’s.

Changing the culture of greed

Banking, Conservatives, Ethics 20 Responses »

Feb 012012

So Sir Fred Goodwin is now just Fred. I suspect it is a crushing blow to his ego. I suspect he’s a man for whom ego is important. And let me be clear, for him and his family I feel a little sorrow: I don’t revel in other’s hurt.

But I don’t regret the change of heart: the decision to grant Fred Goodwin and others knighthoods and peerages because they commanded the assets of public companies for personal gain without due consideration for others was an error of judgement, although a collective one of which all senior politicians were guilty.

Now it is time to make the gestures and do something much more important, and that is to really move on and change capitalism. Cameron shows no sign of doing that; he just makes the gestures.

Real change is needed. It starts with accountability and transparency. Backing country-by-country reporting would be a serious sign of commitment to that. It moves on to demand that companies are tax compliant – which is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.

And it continues by recognising the rights of employees, customers and society.

When business people are rewarded for their responsibility to society and not their greed I will be happier. But we’re a long way from there as yet.

Do as you’re told, don’t say what you think: London 2012

Ethics 12 Responses »

Jan 302012

This was drawn to my attention today by Alex Andreou and I copy this from his blog:

I was interested to see the following announcement in today’s London Evening Standard:

It caught my eye, buried even though it was in the Jobs section. What byelaws, specific to Trafalgar Square and Parliament Square, could our dear Mayor be drafting in such a hurry? So, I had a look. You can find the full text of the byelaws here.

I found that, buried among various rules making it a criminal offence to feed birds or fly kites (yes, you read that right), it contained some astonishing and highly undemocratic rules effectively stifling peaceful protest. No doubt Boris Johnson is thinking of the upcoming Olympics and what an embarrassment it would be to have poor people protesting near tourists. The byelaws make it an offence, inter alia, to

- erect or keep erected any tent or similar structure

- display any sign

- make or give any speech or public address

and astonishingly even

- fail to comply with a reasonable direction given by an authorised person to leave the square.

It is my belief that this is an outrageous and unprecedented attack on our freedom as citizens. The notice explains that any objection to the confirmation of the Byelaws may be made by letter addressed to Carl Schnackenberg, Department for Culture, Media and Sport, 2-4 Cockspur Street, London SW1Y 5DH, or by email to: Carl.Schnackenberg@Culture.gsi.gov.uk.

I have written. Will you spare five minutes to make your sentiments known?

Amazing.

Big Brother is in town.

Limited liability is permeable after all – shareholders can now pay for a company’s crime

Corruption, Economics, Ethics 27 Responses »

Jan 132012

A couple of days ago I suggested that limited liability should be removed from a company in the event that it abused certain standards if they were made contrary to law. So, for example, if the maximum ratio of high to low pay in a company was made subject to a law and that ratio was breached I suggested limited liability should be withdrawn from the shareholders of the company, and that the principle should be extended to other issues, such as failing to file accounts and tax returns.

The idea was, almost inevitably, pooh-poohed by the nay-sayers as impossible to implement. But they’re wrong. Within a couple of days the idea has clear legal backing. As the FT reports this morning:

The UK’s fraud investigator intends to confiscate shareholder dividends paid by companies convicted of criminal offences, after it won approval for a landmark court action.

The Serious Fraud Office won a civil recovery order on Thursday against the principal shareholder of a company that had admitted corruption .

Mabey Engineering Holding agreed to repay the £131,201 dividend it received from Mabey & Johnson, which built bridges in Iraq and admitted corruption and breaches of UN sanctions in 2009 . Two former Mabey & Johnson executives went to prison after the company reported their behaviour to the SFO. The agreement, approved by the High Court and seen by the Financial Times, marks the first time that the SFO has tried to recover proceeds of crime by targeting dividends paid in the UK.

While the sum confiscated by the SFO is relatively small, lawyers warned that the precedent it set was potentially huge.

“Under the existing proceeds of crime legislation, the SFO is actually able to do this, which is an alarming proposition for innocent third-party investors,” said Jonathan Fisher QC, a barrister specialising in financial crime. “Intellectually it’s unassailable but if it happened on a large scale it could undermine people’s pension funds.”

Precisely so, and exactly as suggested. The principle of limited liability has been breached here and the shareholder made responsible for the crime of the company.

Now let’s do it more often.

Why Cameron’s high pay plans have not a hope of working

Conservatives, Economics, Ethics, Uncategorized 17 Responses »

Jan 092012

I was amused (in a depressed sort of of way) to read the Observer’s headline yesterday saying:

David Cameron to curb ‘fat cat’ pay with people power

It takes some considerable stupidity (no point beating about the bush here) to suggest that when the market has failed (as it has) that individual shareholders can be given the power to put things right.

Let’s think about why that isn’t going to happen. The last survey of share ownership in the UK was prepared by the Office for National Statistics in 2010 based on ownership in December 2008. It showed the following:

So Cameron says ‘people power’ voting against high pay is going to solve the problem. Let’s ignore how Blairite that sounds for a minute, let’s instead just look at the reality of it.

More than 40% of the FTSE is owned overseas. They’re not going to run to the defence of the UK economy.

Pension funds and insurance funds are for all practical purposes similar – and part of the same financial power hierarchy as the banks. So they’re not inclined to vote for change. Sorry to be so cynical – but this group have shown themselves time and again to persistently fail those whom they are meant to represent and to side solely with those who might pay their bonuses – many of which are based on inappropriate trading and, frankly, churning.

The same pretty much applies to the banks and all other financial institutions.

So in the vast majority of cases we’re down to charities and individuals. The trouble is those individuals are likely to be very wealthy. And first they don’t vote – their fund managers do for them and second whose wide are they on?

So maybe charities and the public sector can be relied on to support the call on most occasions.

So much for ‘Cameron’s people power’ but candidly it’s so ludicrous an idea he really must think we’re stupid to believe that all these people will vote against high pay.

And yes. I know the odd resolution has got support counter to this argument – but it’s so rare it’s simple proof of the rule. They’ve also almost never been won.

So Cameron is offering reform safe in the knowledge it will never harm his friends. How Tory is that?

Tony Blair’s opacity is a long way from anything good capitalism would demand

Accounting, Ethics, Uncategorized 17 Responses »

Jan 082012

The Telegraph and Observer both have commentary on the publication of Tony Blair’s accounts today and I’m quoted in both. That’s because a couple of years or so ago I won a prize from the Guardian for fathoming out why he structured his business affairs in seemingly bizarre and inexplicable fashion and so I a seem to have become the person to quote on the subject.

My original analysis is here. It’s not light reading. The key point was a simple one though, and that is that Blair adopted a massively opaque structure to ensure that much of his activity is hidden from view in an arcane and rare corporate structure called a limited partnership (which is not the same as a limited liability partnership) and by exploiting legal but dubious legal loopholes he has ensured contrary to the spirit of the law that it does not need to file its accounts on public record even though all its members are limited liability entities. It is the clear intention of the law that they should be published in that situation, but his lawyers or accountants found a way round that.

That has always raised the question, why does he need that secrecy?

Now further questions have arisen since in the pile of companies he owns is a management services company – which seems to supply most of its services to the limited partnership and is paid more than £10 million for doing so. Its total income in its 2011 accounts was £12 million, it had costs of £10.9 million and paid tax at a fair rate on the resulting balance of profit. But what papers have picked up on is the fact that in a management services company you would logically expect most costs to be for people – since they’re the management that’s being supplied, after all. But as the The Observer notes, largely quoting me:

Windrush Ventures Ltd spent almost £3m on staff, rent and other services but had total administration costs of almost £11m. “Just what is this company doing?” Murphy asked. “You would expect total costs to be around double the costs of employing staff. But in this case total administrative costs are £10.9m. That’s a very high ratio indeed.” He added: “We have no idea where this money is coming from or how it’s being spent. The structure seems designed to impose a veil of secrecy over its accounts.”

More than £7 million of those admin costs seem hard to explain in a management company. It would be a might lot of consultancy if that’s what’s being bought. And if it is – why is that the case, and who is benefiting? I think those are fair questions for a person in the public eye making his money as a result of public office.

As the Telegraph notes Blair’s defence is:

The Windrush accounts are prepared in accordance with the relevant legal, accounting and regulatory guidance.

It’s profoundly disappointing that he relies on such a legalistic defence. It’s up to him how much transparency he provides and he has op[ted for the absolute minimum he can get away with. When the debate now is about good capitalism he shows he is a long, long way from being anywhere near the demands for accountability that imposes. And that is why it’s fair to raise the issue.

The threat to democracy is very real and present right here in the UK

Ethics, Politics 7 Responses »

Jan 062012

I was pleased to see this from Philip Stephens in the FT this morning:

Hungary’s prime minister presents a reminder – should anyone on this continent need one – of the familiar trajectory from economic chaos to political authoritarianism. The European Union has had two grand projects since the fall of the Berlin Wall: the single currency and the advance of democracy eastwards. The euro is now in serious trouble. Mr Orban sends a powerful message about the perils facing democracy.

This week saw the introduction of Mr Orban’s new constitution. Suffused with ethnic nationalism, it reeks of an ambition for one-party rule. It promises repression of personal freedoms within Hungary and, through an extension of citizenship to Hungarian minorities elsewhere, threatens instability in ethnically-diverse neighbours.

The constitution has to be seen alongside a slew of new basic laws and the gerrymandering of the electoral system. Together, they bestow inordinate power on the ruling Fidesz party. The prime minister can claim to have won the 2010 election fairly. Now he is deploying a two-thirds majority in parliament to deny opponents the same possibility.

At least the realisation of what is going on is growing.

But we need to be aware that the threat is not just in Hungary.

Parliament cannot be dissolved without a two thirds majority here now.

The number of MPs have been cut to concentrate power.

And the Tories are blatantly seeking to gerrymander the electoral system in their favour.

Whilst the City of London runs a state within a state in the UK, aided and abetted by the abuse of the Crown Dependencies and their supposed quasi independence that is simply a mechanism for finance to undermine the rule of law and democracy in the UK.

The threat to democracy is very real – and present right here in the UK.

Democracy has in all but name already gone in Hungary – where next in the EU?

Ethics, Europe, Politics, Uncategorized 29 Responses »

Jan 042012

Paul Krugman posted this on his blog two days ago. I reproduce it as he clearly wants to give maximum coverage to the issue, as do I:

On New Year’s Day, the new Hungarian constitution became law. The Hungarian parliament has been preparing for this event by passing a blizzard of “cardinal” – or super-majority – laws, changing the shape of virtually every political institution in Hungary and making the guarantee of constitutional rights less secure. In the last two weeks alone, the parliament has enacted so many new laws that it has been almost impossible to keep up. And to top it off, there was also a huge new omnibus constitutional amendment – an amendment to the new constitution even before it went into effect. By one commentator’s count, the Fidesz government has enacted 359 new laws since it came to power 18 months ago.

All of the laws connected to the new constitutional structure kicked into action yesterday if they hadn’t already taken effect. As a result, with the new year, Hungarians began living in a new constitutional order. In this new order, all of the escape hatches that would permit reentry into a constitutional democracy have been bolted shut.

I would urge you to read the rest of the long blog in question. It’s important precisely because it is so scary, and precisely because what is happening is so close to what many have predicted could happen in the UK.

In effect a deeply neoliberal government has done all it can to completely gut the Hungarian constitution and leave single party rule in perpetuity. In the process it is silencing the opposition, rigging the judiciary, stacking all government positions with its place-people, over-ruling local government and ensuring a flat tax system for the benefit of the rich in perpetuity.

This is totalitarianism back in Europe.

And no one is raising a murmur.

Why, David Cameron? Where is William Hague saying that this is wrong? And why hasn’t Hungary been expelled from the EU for this?

Or is this the pathfinder case for what the right wing governments of Europe plan for us all? Certainly the Merkozy deal to outlaw Keynesian intervention looks like it.

Hat tip: Howard Reed

The biggest threat of 2012 is the end of democratic choice in Europe

Ethics, Politics 41 Responses »

Jan 012012

It’s hard to say what the biggest threat of 2012 is but I’ll nominate one all the same.

Andrew Rawnsley celebrates democracy in the Observer this morning but democracy counts for nothing if there is no choice on offer. That is the goal of neoliberalism, which has long seen democracy as a market impediment. But now neoliberals are seeking to enshrine their thinking in EU law by outlawing Keynesian intervention in the economy. That is the aim of the December 2011 agreement on the future economic management of Europe which effectively bans deficit funding even though this is the only known and proven mechanism for ending recessions. In effect the neoliberal leadership of Europe is as a result seeking to end democratic choice and the role of government in the management of the economy henceforth – guaranteed by international law that will over-write local choice. The only option that will legally be offered to electorates henceforth will be a right wing one. No other option will be allowed, by law.

I call that the biggest threat of 2012.

And it’s happening on our doorstep and with the implicit consent of our government - which has removed itself from the debate so that progress can be made on this measure designed to reward the 1% at cost to the 99% without the UK ever being heard to even make comment, let alone objection.

If you want some idea of the size of the mountain the left has to climb then this is it. In effect a totalitarian neoliberal regime is being built across Europe and the press isn’t even raising comment or objection.

Perhaps that’s the most worrying bit. It certainly proves that Rawnsley has entirely missed the point. Having democracy when there’s nothing to choose from is not democracy at all.