This article of mine has been published on the Guardian's Comment is Free site this afternoon:
The news that HM Revenue & Customs used privileges granted to it under the Regulation of Investigatory Powers Act of 2000 (Ripa) to investigate Osita Mba, the lawyer and whistleblower who drew attention to the Goldman Sachs tax settlement (among other cases) is deeply worrying for a number of reasons.
First, as I have learned during the time I have known Mba, he is a deeply ethical man. He may have broken ranks precisely because he felt the law was not being complied with, but I am sure he was wise enough to have known that the case would have fallen apart if he broke the law in the process. Yet HMRC seemingly failed to appreciate that. Was the possibility that Mba might have acted entirely ethically and within constraints he knew existed beyond HMRC's comprehension? We should all worry about ethics being degraded within the HMRC.
Second, the allegation against Mba was that he had leaked to a newspaper (the Guardian) a document that it was known had already been supplied by him to the public accounts committee (PAC). Did the possibility that the many people involved in the PAC might have passed the document on to the press not occur to HMRC?. . Taxpayer confidentiality is not the issue here. It is the management of HMRC that is under scrutiny, and rightly so. The evidence that Mba supplied to the PAC showed that HMRC senior management had gone off piste (to put it politely) in settling tax cases. The information they didn't want made public was about their own conduct and the PAC rightly highlighted this.
Third, there's the matter of the use of the Ripa. HMRC's internal guidance on its website on the use of Ripa is withheld from the public because the issue is considered so sensitive. What we do know from other guidance is that it "applies to a wide-range of investigations in which private information might be obtained. Cases in which it applies include: terrorism, crime, public safety [and] emergency services." That guidance also says that "when public authorities, such as the police or government departments, need to use covert techniques to obtain private information about someone, they do it in a way that is necessary, proportionate, and compatible with human rights." I think it very unlikely that such guidelines were followed in this case. The crime being investigated was not serious: that Mba had leaked information was known, and acknowledged. The data was in the public domain and the impact was of consequence only for HMRC senior management. In that case, in my opinion, the use of Ripa was not necessary, was not proportionate and was not compatible with human rights.
Fourth, this pursuit of Mba suggests that HMRC's senior management think the authority is their own personal fiefdom, and that they can use its powers to defend their position. HMRC is a public service, and yet it is one that appears to increasingly be run by and for the benefit of big business, one whose management logic of privacy, counter attack, and the use of law to oppress criticism now appears to prevail. Could this culture of pursuing an individual who wished to uphold tax law have been fostered by the fact that the non-executive board is drawn exclusively from senior business people, many from the big four firms of accountants? Would it have happened if a culture of facilitating and cooperating with big businesshad not been introduced by the former permanent secretary for tax, Dave Hartnett, in 2006?
Someone claiming to be a senior tax inspector wrote (anonymously) on my blog recently: "I have said previously that the HMRC Large Business Service's philosophy is one of "customer facilitation" in other words "help" them to get their tax right rather than challenging them robustly by carrying out in depth transaction analysis (as used to happen). The relationship has become too cosy — evidenced by the preponderance of ex-private sector individuals on the HMRC board — we no longer have an impartial service."
I wonder if Ripa is now being used to trace him or her?
I am appalled by what has happened to Mba. But we have to remember he acted for a reason, which was to show what is going wrong in HMRC.
The version I submitted concluded with this (which made it too long):
Corporate interests appear to be capturing its management and their philosophy. As a result it appears far too likely that HMRC is now facilitating the tax arrangements it is actually meant to regulate and assess. Worse, the culture of corporate secrecy, using every instrument of the law whether appropriately or not, to suppress information flows and accountability now appears to prevail in an authority where transparency must be paramount if a corresponding and necessary openness from taxpayers is to be encouraged to beta tax avoidance and tax evasion.
There is something rotten in the state of HMRC. The inappropriate use of RIPA in this case requires investigation, and action if necessary. But more importantly the management and culture of HMRC needs radical reform if we are to have the tax authority we need in this country. We're a long way from having that right now.
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Dear Richard,
Well done for your support for Mr Mba. I also work at HMRC and I can tell you that Internal Governance – the dept that conducts these investigations – has a track record of bullying and enforcing an insidious chill, even against union reps. It’s good to know that if any of us should pluck the courage and follow in Mr Mba’s footsteps people like you will stick up for us. The lack of accountability in HMRC has created deep seated decay, incompetence and corruption.
Richard, I also believe it will be good to ask HMRC to disclose the number of times they’ve used RIPA against staff members. The figures they disclose when journalists have asked in the past do not distinguish between staff and members of the public. In fact the media invariably assume the figures given all relate to the public!
Sorry Richard I know this is not be the place but did you see this? You will probably find it interesting.
http://news.yahoo.com/irs-eyes-u-accounts-caribbean-bank-220646016.html
Indeed – but too much blogging already today, sorry
Thank you for the interesting topic. I am commenting to your blog as part of a Business Ethics assignment with the Open Polytechnic of New Zealand so it may be longer than a normal response but I hope that you do not mind the comment anyway.
Point 1:
You have stated Osita Mba is a deeply ethical man, the question is did he act ethically towards the HMRC?
Norman Bowie In his book Business Ethics claims that “whistle blowing violates a prima facie duty of loyalty to ones employer. (The Open Polytechnic of New Zealand, 2013).
Osita Mba violated this loyalty to the HMRC; he breached the confidentiality of the Commissioners for Revenue and Customs Act 2005 section 18(1) which states that
(1)Revenue and Customs officials may not disclose information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs. .
From the disloyalty stand point, the standard theory on whistle blowing gives us three points to look at when deciding if the whistle blower was actually justified in the act of whistle blowing on their employer.
They are-
1. To what degree of harm or suffering will be caused by the company’s policies or practices to the wider community.
2. When the employer has been informed of the employee’s objection to polices or practices’ which is or are causing harm and the employee believes that no action will be taken.
3. The employee has exhausted all other avenues within the organisation to prevent the continuance of these procedures or practices.
The standard theory on whistle blowing says whistle blowing can be a moral requirement if in addition to the three points above two other points can be proven by the whistle blower.
They are-
1. The whistle blower has to be able to show that they have access to information which when shown to an impartial observer will convince them to the validity of the whistle blowers claims.
2. The whistle blower believes that their actions will help to prevent harm to others but also at the same time only creating a minimal risk to themselves.
Utilitarian’s would ask which option for action will help produce the greatest amount of happiness and the least harm (The Open Polytechnic, 2013). Osita in his decision to come forward would have had to look at what actions to take or if he should take any at all, and what the consequences of his actions or in-action would be to himself, to the HMRC, to the people who worked for the HMRC, and also to the public of the United Kingdom before he acted.
By coming forward Osita has decided to try and prevent more fraudulent actions being taken by the HMRC, Osita would have taken into consideration what damage/s were being inflicted on the United Kingdom and its tax payers and more importantly how often was this occurring, and if he did speak out what were the chances of it being followed through with by the appropriate authority?
Coming forward brought pressure to bear on Osita himself from his employer, from members of staff and also from board members of the HMRC involved. Osita would have been looking to try to decrease the overall cost to the public by ensuring that the right people would have to take note of this situation and any similar situations occurring in the future involving the HMRC. This had possibly been happening for some time and was costing the tax payers and the government millions of dollars in lost revenue, this could have been used both externally in helping to pay back debts to other countries, or internally for use on such things as healthcare and the betterment of transport to name just a few.
I am sure that Osita would have taken into account all of the possible consequences of his actions when making his decision to come forward even though he was also possibly going against the Revenue and Customs Act 2005 when he did so.
As you have stated Osita being a lawyer would have fully understood the ramifications of breaking the law in this situation as it could definitely have affected his case.
Point 2:
I have found a web site which gives weight to your idea regarding this not being a tax payer confidentiality issue, I think you may be interested in if you have not seen it already, it is on the
Parliament U.K. web site-
The title of the piece is HC 1531 Public Accounts Committee Further written evidence from Osita Mba.
IN THE MATTER OF THE PUBLIC INTEREST DISCLOSURE ACT 1998
HM REVENUE & CUSTOMS’ PROCEDURES FOR SETTLING TAX DISPUTES
In this piece a case has been highlighted that involves the HMRC which shows some of the concerns raised by Osita Mba, it was the case of the Commissioners of Inland Revenue v National Federation of Self-Employed and Small Businesses Ltd (1981).
Lord Diplock said “if it were established that the Board were proposing to exercise or to refrain from exercising its powers not for reasons of ‘good management’ but for some extraneous or ulterior reason, that action or inaction of the Board would be ultra vires and would be a proper matter for judicial review if it were brought to the attention of the court by an applicant with “a sufficient interest” in having the Board compelled to observe the law”.( Commissioners of Inland Revenue v National Federation of Self-Employed and Small Businesses Ltd (1981)
Lord Diplock in this case also noted that the scope of taxpayer confidentiality is limited to “information about individual taxpayers’ affairs that has been obtained in the course of their duties in making assessments and collecting the taxes”. Therefore, it does not necessarily permit HMRC to withhold information about its official conduct (which is protected by Official Secrets legislation that applies to all other Departments) from Parliament and the public “for reasons of taxpayer confidentiality”. (Commissioners of Inland Revenue v National Federation of Self-Employed and Small Businesses Ltd (1981)
In conclusion whistle blowing in an internal situation can be looked at as a tool for improving a businesses procedures and standards.
External whistle blowing can be used as a tool to keep businesses honest in all of their affairs.
Monk has made some good points. The “Big Four Lap Dog” sorry HMRC should be forced to disclose the number of times that they have used RIPA against staff members.
While on the subject of the Big Four, I can’t resist drawing readers attention to the debacle Matt Taibi has highlighted in his Rolling Stone Magazine blog attached:-
http://www.rollingstone.com/politics/blogs/taibblog/while-wronged-homeowners-got-300-apiece-in-foreclosure-settlement-consultants-who-helped-protect-banks-got-2-billion-20130426
Guess who are named among the “helpful” consultants. Oh yes, none other than several members of the “Fab Four” PriceWaterhouseCoopers, Ernst & Young and Deloitte & Touche!
Thanks for taking the time to get this to a wider audience through CiF, Richard.
Richard, this written evidence by HMRC to the Treasury Select Committee in 2011 (no 2. Q204-205) will interest you. http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/731/731we13.htm
It states, amongst other things, that:
“Where staff are suspected of either accessing or deliberately disclosing information without authorisation, Internal Governance will investigate and oversee disciplinary proceedings that may lead to dismissal. Depending on the nature of the incident it is also possible for staff to be prosecuted if they have breached the Data Protection Act and/or the Commissioners for Revenue & Customs Act. SINCE 2007 HMRC HAS HAD 35 SUCH CASES WHERE FRAUD HAS BEEN INVESTIGATED, ie STAFF SUSPECTED OF DELIBERATE UNAUTHORISED DISCLOSURE.
2007-08 4 investigations
2008-09 8 investigations
2009-10 14 investigations
2010-11 9 investigations (April to Sept)”
What is striking from the passage in upper case is the fact that it is HMRC’s policy, which they are happy to put before a select committee and in the public domain, that any unauthorised disclosure — even disclosures under the Public Interest Disclosure Act (PIDA) — is FRAUD! I imagine this was why they were happy to use RIPA against Mr Mba even though he claimed protection under PIDA on a matter of obvious public interest.
It’s great you’re taking this on. As I stated above, this written evidence was submitted to the Treasury Select Committee and they accepted it without any fuss!
Thanks….
Noted