As the Guardian reported over the weekend:
A multimillionaire MP who enjoys a Downton Abbey lifestyle funded by historical family links to the slave trade has failed to publish accounts for four of his five companies since 2009, in potential breach of company law.
The Observer and Sunday Mirror revealed in December that Richard Drax was worth an estimated £150m, but had not declared ownership of a Barbados sugar plantation in his register of members' interests declaration.
Now Drax, the Conservative MP for South Dorset, is having to produce more than a decade's worth of missing accounts, which reveal hundreds of thousands of pounds of business transactions.
I could have left aside the Downton Abbey references, whether true or not. I could have ignored the sugar plantation on this occasion, except it shows that there might be a history of non-disclosure. What does interest me is that he blamed his accountant. And what also interests me is that such a persistent failing in company accounts filing was possible. To explain its extent it is necessary to quote the Guardian again:
Four of the companies had not provided any accounts in the last decade. As both of his unlimited companies were subsidiaries of a limited company, under section 448 of the Companies Act 2006 they all should have submitted accounts annually.
Concerns about a section 448 breach were raised with Companies House in late January. Over the last two weeks, some 50 documents from the four companies have appeared on the Companies House website, including a decade's worth of missing accounts.
Two limited companies, said to have been dormant from 2009, are now shown to have been active. The unlimited companies have now filed accounts, showing in some years hundreds of thousands of pounds' worth of financial activity. All had been approved by Drax annually as late as November 2020.
First, there would appear to be serious offences implicit in these disclosures. Representing that a company is dormant when it is not matters. And it might represent an offence. Accounts were presented that did not represent a true and fair view of the company's affairs. Prima facie that means that there is at least a case to answer.
The same is true with the unlimited companies. These are not one off errors. They are persistent failures to file.
But what matters are not the consequences for Drax (for whom blaming the accountant is not a defence) or the accountant (who may have professional indemnity insurance issues to worry about) but what this says about our UK company law system.
The UK has no company law regulator. Companies House is a registrar, not a regulator. It can prosecute, but does so rarely and usually for minor offences. Recent government proposals will not much change that. No one in the UK, including HMRC and Companies House, goes out to look for abuse of company law. And that is a massive failing.
I have long suggested that if we wanted to locate the shadow economy in the UK it is easy to do. Just look at all the claimed dormant companies that no one pays any attention to, and also look at the 400,000 or more companies a year that disappear without trace with no questions asked of them in almost any case, and you will find the shadow economy. It exists in plain sight, trading using licenced identities that are wholly unregulated and from whom no legal compliance of any firm is demanded, and so none is supplied.
It is as if the government wants to facilitate fraud and corruption.
Richard Drax appears (I stress, appears) to have shown how easy it is for a trading company to file dormant accounts without question being asked. The real question is how many others are doing that? I suspect it is at the very least many tens of thousands. It could be a great many more. And literally no one can say I am wrong because no one has ever done any work to find out.
The consequence is threefold. One is rampant criminality.
The second is that honest traders are undermined.
The third is a tax gap much higher than HMRC admit to.
And apparently no one in government cares.
Why not?
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I think that these goings on are a symptom of trying to keep matters as loose as possible to benefit higher up the food chain. If you have standards lower down (as at companies house), those principles could be a threat to maintaining dodgy money flows into Government itself. It’s about money and about accounting too I suppose.
Because as in the issue of colour or race, money is money, is power, it’s legitimacy no matter what, irrespective of who, how or what. It’s a valediction of a sort of mind set, of the right to belong to it. So money just needs to be able to flow from one thing to another. And as we know, that’s important for The Rich and for Power.
Money just is – it does not matter if you are black or an ex-Communist Russian stealing from your country – the fact that you have money is all that matters to the Tories. Wealth is the social and moral leveller for the Establishment. It is does not matter how you have made it or who you have taken it from or ripped off. Your money is welcomed – valued buy the Tories, because they know how to use it to maintain power. And whatever else you are is tolerated – being black, a member of a rogue state, a criminal, a thug – whatever. Because the money and ‘money power’ comes first.
What matters is that you’ve got it and what the Tories and their networks can do to make sure that the money supply can be maintained because of course the way they do politics now is dependent on co-opting the wealthy into their group. It’s expensive to operate a 24/7 disinformation and divide and conquer machine to disorientate the masses . And if you are a bit dodgy – well no worries – Boris and his mates will just over look a few things here and there just to get their hands on your cash.
But as I said, that lackadaisical approach has to exist everywhere in the economic and financial system because if not, the existence of robust principles of better regulated companies house could have caused the Tories a lot of problems – from the BREXIT campaign to even the last election (and more). So better to have no principles ANYWHERE. Nothing to latch onto. Companies house might now be nothing more than a nursey slope for the next up and coming get rich quick ‘entrepreneur’ who will become a donor to the Tory party.
We are living in a ‘murk-tocracy’ – a system that on the outside feels like a democracy, but when we look closer, it’s getting harder to see exactly what is going on and answer the question ‘Cui bono?’.
Yes – this could be just incompetence but I choose to think it is deliberate.
We British are past masters at this sort of stuff – subterfuge. Democracy by deception. The rich will tolerate us and our wants and we will tolerate them their wealth. Oh how English – better than being so beastly to each other like those Europeans what? Our democracy was in my view exactly that.
It’s just that since 2008, what we are seeing from Wealth now is that they have no pretence about a measured or polite way of lying to us because the ex-Communists and Fascists (back in vogue with the rich once more) are showing them how it is done in the 21st Century. 2008 rumbled the whole thing and they began to fight back. They had no choice really because having been allowed to gain so much by us in the first place for the last 30-40 years, they have so much to lose. Wealth changes people – they tend to de-couple from society physically and morally – everything is a money gathering opportunity to them – including a pandemic.
I feel that it does not matter how many times the economy fails in the future: They will get away with it because their wealth gives them the means. And the results for us after each crash will just get more and more harsh as other factors get the blame.
@PSR and Richard,
This reminds me of the classic exchange between F Scott Fitzgerald and Ernest Hemingway.
I’m not sure which way round it goes, but one of the two, probably Scott Fitzgerald, given the fascination wealth held for him (see ‘The Great Gatsby’), said:
“The rich are different than us!”
to which the other, probably Hemingway, responded:
“Yes, they’ve got more money!”
Maybe we should start calling money by it’s modern utility – lets call it ‘power’ instead – because that is what it is being used as – a source of power for the Rich to undermine society’s concerns and entrench their own rights.
‘Building Back Better’ is all about I believe how the ‘Money Power’ of the Rich can learn from the past and this time quash equality for good.
All the sci-fi movies we’ve been watching about aliens sucking the earth’s resources dry are right except for thing: far from being aliens from another planet, the financial and resource vampires are indigenous to the planet.
So yes Andrew – it’s old theme but I think that what we are heading for is a much worse iteration than that of the past.
And also tax havens, The City of London and the City Rememberancer and …
It all stinks to high heaven.
Hi Richard, I agree that the government wants to facilitate fraud and corruption. This is obvious from their deeds and we can obviously disregard their words. There is a longer history to this neglect however, which may interest you. As you have an interest in accountants, you may be interested to know that I recruited the first two forensic accountants employed by the Metropolitan Police, a change from the previous policy of outsourcing to the Big Four. Here is a short article about fraud, there is one on corruption out next week, published by Sussex Uni.
https://www.linkedin.com/posts/tristram-hicks-98a24b2b_the-fraud-squad-joke-activity-6781238083904921600-sVP2
Thanks
There is the Drax ‘lifestyle funded by historical family links to the slave trade’. Then there is the ‘police, crime, sentencing and courts bill’ which includes ‘plans to introduce a new criminal offence of trespass with the intent to reside’ (Briefing-on-new-police-powers-PCSCBill-and-CJPOA-002.pdf). This adds to the “5,200 enclosure Bills (that) were enacted by Parliament between 1604 and 1914 which related to just over a fifth of the total area of England, amounting to some 6.8 million acres.” (https://www.parliament.uk/about/living-heritage/transformingsociety/towncountry/landscape/overview/enclosingland/).
Here are some relevant words from the 1976 Peggy Seeger and Ewan MacCall song ‘Legal — illegal’
“It’s illegal if you are a Gypsy, To camp by the side of the road, But it’s proper and right for the rich and the great, To live in a mansion and own an estate, That was got from the people by pillage and rape …, That’s what they call a tradition.” (https://www.youtube.com/watch?v=3wbjZDtR2e0)
You may think some of the other verses have resonance today:
“Every time you pick up a newspaper, Every time you switch on the TV, You can bet your old boots , That at some point you’ll see, A high ranking copper or Tory MP, Calling on all who are British and free …, To stand up and defend law and order.
“It’s illegal to rip off the payroll, It’s illegal to hold up a train, But it’s legal to rip off a million or two, That comes from the labour that other folk do, To plunder the many on behalf of the few, Is a thing that is perfectly legal.
“It’s illegal to kill off a landlord, Or to trespass upon his estate, But to charge a high rent for a slum is OK, To condemn two adults and three children to stay, In a hovel that’s rotten with damp and decay, Is a thing that is perfectly legal.
“If your job turns you into a zombie, It’s legal to feel some despair, But don’t be aggressive, that is if you’re smart, And for Christ’s sake don’t upset the old apple cart, Remember your boss has your interest at heart, And it grieves him to see you unhappy.
“If you fashion a bomb in the kitchen, You’re guilty of breaking the law, But a bloody great nuclear plant is OK, The plutonium processing hastens the day, When this tight little isle may be blasted away …, Nonetheless it is perfectly legal.
“It’s illegal to carve up your missus, Or put poison in your old man’s tea, But poison the rivers, the seas or the skies, And poison the minds of the nation with lies, If it’s done in the interest of free enterprise, Then it’s proper and perfectly legal.
“It’s legal to join a trade union, And to picket is one of your rights., But don’t be offensive when scabs cross the line, Be nice to the coppers and keep this in mind …, To picket effectively that is a crime, Worse than if you had murdered your mother.
“It’s legal to sing on the telly, But they make bloody sure that you don’t, If you sing about racists and fascists and creeps, And thieves in high places who live off the weak, And those who are selling us right up the creek, The twisters and takers, the conmen, the fakers, The whole bloody gang of exploiters.”