Blog Archives

Plutocracy in the news: the FT has at last noticed that the political-corporate revolving door is spinning at an even more alarming rate

A few days ago Anne sent a link & expressed concern about the news that Dave Hartnett, formerly HMRC chief, has secured a new job at Deloitte.

revolving doorrevolving doorHer misgivings were echoed by Margaret Hodge MP, chair of the public accounts committee, which criticised Mr Hartnett for agreeing the deal with Goldman Sachs, which waived up to £20m of interest penalties on offshore bonus payments.

Earlier, David Hencke of Exaro News reported that Ed Lester, former chief executive of the Students Loans Company,had been appointed by the Department of Business, Innovation and Science to head the troubled Land Registry – despite the SLC’s poor performance, including:

  • problems with lost documents,

  • equipment failures,

  • difficulties with the online application system,

  • and answering only 5% of peak time phone calls.

An accelerating trend

Now the FT politely notes “The trend of ministers and officials leaving for the Big Four seems to be accelerating. PwC announced last week they had recruited Alan Milburn, the former Labour health minister, to advise on change in the NHS, sparking anger from local union leaders”.

Opening with Hartnett, it continues with Paul Kirby, who returned to KPMG after heading the Number 10 policy unit, and Neil Sherlock, the former adviser to Nick Clegg, who has moved to a senior post with PwC, adding that some time ago former home secretaries Charles Clarke and Jacqui Smith also made the move as consultants for KPMG.
Number-crunching:

The analysis from publicly available data shows 18 people have left top positions for KPMG, Deloitte and PwC, a sign of the symbiotic relationship between government and the companies at the centre of recent tax avoidance rows”.

Following the money:

The findings also show the companies themselves have spent a total of more than £1m paying for staff to work within the main three political parties, fuelling claims of a “revolving door” between politics and tax planning . . . Since the 2010 general election the three main UK political parties have received £1.14m in kind from three of the biggest accountancy firms: KPMG, Deloitte and PwC. PwC has given £503,442 to Labour in the form of multiple secondments. It has also given £289,619 of advice to the Liberal Democratsand £12,634 to the Conservative party”.

Under the last two governments, big money has increasingly skewed the decision-making process in favour of the corporate world – meanwhile the electorate suffers higher utility bills and other essentials rise in price, further enriching the few.

 

Government ‘sweetheart’ tax deals and yet another revolving door reward for failure

Yeah, we’re all in this together? 

So said the reader who recommended the Guardian article by Rajeev Syal which reveals the scale of the government’s “sweetheart” tax deals – individual secret agreements drawn up between tax officials and corporations to settle disputes.

Another whistleblower revelation

A leaked document sent by Dave Hartnett, the former head of tax at HM Revenue and Customs (HMRC), to David Gauke, the exchequer secretary at the Treasury, discloses a figure of £4.5bn for four settlements.

Conflict of interest: the government’s civil servant too close to the corporate world

dave hartnettTwo years ago the Telegraph and others reported that Dave Hartnett, during his service as ‘permanent secretary for tax’ at HM Revenue & Customs, was entertained 107 times by some of the UK’s biggest banks.

These included law firms and accountancy firms and other corporates, amongst them, Goldman Sachs, JP Morgan, Ernst & Young, KPMG, PriceWaterhouse Coopers and Deloitte.

Revolving door

In January he was hired by HSBC to help to enforce the highest standards in dealing with international money transfers.

The leaked document describes deals in excess of £1bn as “not uncommon”.

The disclosures about the multibillion-pound scale of the government’s deals come from a seven-page memo sent by Hartnett in December 2011 as he asked for public support from Gauke in the face of growing criticism in the media and parliament.

Margaret Hodge, the chair of the Commons public accounts committee, said: “If we got £4.5bn in, how much did we not get? That is what taxpayers will want to know, and I’ll be raising this with HMRC through the committee.

Whistleblower protected? No: treated like serious criminal

Separate documents disclosed in the Guardian show that tax officials used intrusive investigative powers designed to help them catch serious criminals to try to prove that the whistleblower who uncovered one of the first sweetheart deals, involving Goldman Sachs, had spoken to the Guardian.

Read more about HMRC’s draconian action against its whistleblower and deals with Vodafone and Goldman Sachs here: http://www.guardian.co.uk/politics/2013/apr/29/sweetheart-tax-deals

 

Government has never tried to recover legal costs from promoters of tax avoidance schemes and continues to award them taxpayer funded contracts

Despite the evidence of fraudulent schemes, no major accountancy firm has ever been disciplined by any professional accountancy body

Professor Prem Sikka writes that Her Majesty’s Revenue and Customs (HMRC) is investigating some 41,000 tax avoidance schemes, but there is still no investigation of the industry that designs and markets aggressive tax avoidance schemes . . .

Now the public accounts committee (PAC) chair Margaret Hodge has PwC, Ernst & Young, KPMG and Deloitte in her sights. The PAC should investigate the role of these firms in organised tax avoidance. An earlier internal HMRC study estimated that these four firms “were behind almost half of all known avoidance schemes” . . .

Despite the evidence, no accountancy firm has ever been disciplined by any professional accountancy body and despite spending millions of pounds to quash predatory schemes, the UK Treasury has never sought to recover the legal costs from the promoters of the schemes. Instead, the big accountancy firms continue to receive taxpayer funded contracts . . .

No government will be able to effectively tackle tax avoidance without shackling the designers and enablers.

Read the whole article here: http://www.guardian.co.uk/commentisfree/2012/dec/08/predatory-practices-accountancy-firms

 

Why does the government expect the taxpayer to compensate for Deloitte’s failure? Deloitte can afford to pay for its mistakes.

An accountancy website reported on 30th January that an employment tribunal has ruled that, when acting as administrators to Woolworths after its collapse in 2008, Deloitte failed in its legal duty to consult the union USDAW.    

More than 24,000 former Woolworths employees have been awarded up to £67.8m in compensation, ending a three-year battle following closure, but the compensation will not apply to 3,000 employees who worked in smaller branches where fewer than 20 redundancies were made. 

Responsibility for the compensation payments rests with the taxpayer through the government’s Redundancy Payments Office 

NOTE 

Deloitte – which describes itself as possessing the broadest and deepest range of skills of any business advisory organisationwas also in the news this week over its dealings with the MG Rover company and its parent, Phoenix Holdings.