The Methodist Tax Justice Network unwraps Cadbury’s silver lining

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As I mentioned last week, the Methodist Tax Justice Network protested about Cadbury's tax affairs in Bournville, Birmingham, last Saturday. I invited  Matthew Jones of that Network to write about it, and this is his report:

Visit Cadbury World, and you’ll be informed that they are a firm with a history strongly influenced by its Quaker roots. However, the ethics of the forefathers seemed a long way away when both the Financial Times and The Guardian recently revealed an average payment of 6% tax on profits of £100million between 2000 and 2010.  A company whose rose-tinted image as a community-centred, ethical business had already been damaged by their new owners’ re-location to tax havens in Dublin and Switzerland, now find themselves faced with a historic scandal which threatens to shatter their image once and for all.

Methodists, Anglicans and Quakers gathered outside Cadbury World at 10:30 on Saturday morning, under the Methodist Tax Justice Network banner, to raise their voices against Cadbury’s past, present and future tax avoidance strategies. We were joined Rev. Peggy Mulambya Kabonde, general secretary of the United Church of Zambia. This was an ecumenical and global gathering, united by a passion for tax justice.

Talking to a number of Bournville residents, both on that morning and throughout the weekend, we had three common reactions.

The first was outrage and disbelief — “how could the company that have employed my family for years have done this?”; “How can I justify receiving my wages and pension from them now?”; “You’re wrong, it must be Kraft, not Cadbury.”

The second was confusion as to whether it was Cadbury or just Kraft/Mondelez operating in the Bournville plant, what they were doing there, and how long it would be before they were taken over again or moved to Ireland, Switzerland or the US.

The third was a reluctant awareness that the practices of the modern Cadbury are a million miles from the Quaker principles of its founders. People had their suspicions, but were nevertheless disappointed to see them confirmed.

These are dark economic times for Birmingham’s local communities. In his spending review, George Osborne announced that Lord Heseltine’s proposal for a £50bn pot of funding for community regeneration through Local Enterprise Partnerships had been reduced to just £2bn per year over five years. The last thing communities like Bournville need now is to hear that their largest local employer has been avoiding its most basic financial contribution to society. The community’s response has been passionate — but what of a response from Cadbury?

On Tuesday morning BBC Radio West Midlands phoned Rev’d David Haslam, convenor of MTJN, for an interview about the protest and our network’s call for a boycott. We were told that Cadbury would be issuing a live response at 10:50am. However, this promise was not fulfilled. Cadbury had, that morning, pulled out of responding live on air, and instead issued a statement of the most generic variety. “In common with all global business,” they said, “Mondelez pays corporation tax based on the laws of the countries in which we operate. We comply with all applicable tax legislation in the UK.” David’s interview and the statement can be heard here (at about 1 hour 52 minutes into the programme).

This is incredibly disappointing, but also patently untrue — and the scandal goes far beyond Bournville. Recent reports from India published in the Wall Street Journal revealed that Cadbury managed to avoid paying $46m in taxes by building a ‘phantom factory’ in the state of Himachal Pradesh, to gain a tax exemption for companies with newly operational plants in the state before 31st March 2010. Cadbury couldn’t have begun commercial production before January 2011.

The lack of a real response from Cadbury suggests they are waiting for this to blow over, and do not believe that enough will be made of the allegations to waste time bothering to respond. This could be a huge mistake on their part. A company relies on the trust of its consumers. At a difficult time for local communities like Bournville, Cadbury has broken that trust, and failed to reinvest its profits into the society it’s supposed to support. Until we hear a proper response and see some transparency from Cadbury, we need to keep up the pressure on them. By boycotting their products and writing to their management, we can make Cadbury listen to the people that they have so sorely let down.

I warmly welcome this protest - and the follow up actions and publicity that have resulted.

Business is not an amoral activity; it has to be fundamentally ethical. Cadbury is failing that test. The world needs to be reminded of that, often.

NB: Updated at 13.40 on 3/7/13