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Broken Britain 16: HMRC refuses to investigate money-laundering and tax fraud charges by largest Conservative donor

Three classes of British looting: which is the most culpable?

Professor Prem Sikka, Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex, draws attention to the case of the UK telecoms giant Lycamobile, the biggest donor to the Conservative Party, which has accepted £2.2m in donations since 2011.

Her Majesty’s Revenue and Customs (HMRC) has refused to assist the French authorities and raid Lycamobile’s UK premises in order to investigate suspected money laundering and tax fraud.

Economia, the publication for members of the Institute of Chartered Accountants in England and Wales (ICAEW) which covers news and analysis on the essential issues in business, finance and accountancy, reports:

Following an initial denial (left, Financial Times), Economia confirmed that in an official response to the French government dated 30 March 2017,  a HMRC official noted that Lycamobile is “a large multinational company” with “vast assets at their disposal” and would be “extremely unlikely to agree to having their premises searched”, said the report.

The letter from HMRC to the French government added, “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012”.

This is an ongoing saga: in 2016 Economia noted: “The Tories have come under fire for continuing to accept donations of more than £870,000 from Lycamobile since December, while it was being investigated for tax fraud and money laundering”.

In 2016 In May it emerged that KPMG’s audit of Lycamobile was limited due to the complex nature of the company’s accounts. Later, KPMG resigned saying it was unable to obtain “all the information and explanations from the company that we consider necessary for the purpose of our audit”.

HMRC: “has become a state within a state”.

Prem Sikka (right) continues, “The House of Commons Treasury Committee is demanding answers to the Lycamobile episode – but HMRC is unlikely to prove amenable”.

In recent years, the Public Accounts Committee has conducted hearings into tax avoidance by giant global corporations such as Microsoft, Amazon, Google, Starbucks, Shire and others. The hearings have not been followed by HMRC test cases.

The Public Accounts Committee has also held hearings into the role of the large accountancy firms in designing and marketing avoidance schemes and exposed their predatory culture. In a telling rebuke to PricewaterhouseCoopers, the Committee chair said: “You are offering schemes to your clients—knowingly marketing these schemes—where you have judged there is a 75% risk of it then being deemed unlawful. That is a shocking finding for me to be told by one of your tax officials.”

Despite the above and numerous court judgments declaring the tax avoidance schemes marketed by accountancy firms to be unlawful, not a single firm has been investigated, fined or prosecuted.

There are real concerns that HMRC is too sympathetic to large companies and wealthy elites.

A major reason for that is the ‘revolving door’, the colonisation of HMRC by big business and its discourses: its current board members include non-executive directors connected with British Airways, Mondi, Anglo American, Aviva, PricewaterhouseCoopers and Rolls Royce.

After a stint at HMRC many of the non-execs return to big business. Corporate sympathies are therefore not counterbalanced by the presence of ordinary taxpayers or individuals from SMEs and civil society.

Sikka ends: “In such an environment, it is all too easy to turn a Nelsonian eye on corporate abuses and shower concessions on companies and wealthy individuals”. Read more here.

 

Why should we care?

Because tax revenue pays for the services used by all except the richest, the education health, transport and social services, increasingly impoverished by funding cuts imposed by the last two British governments.

The Shadow Chancellor has twice called for more rigorous examination and tightening of processes at HMRC to ensure that corporations and wealthy individuals are free from political corruption and pay fair rates of taxes.

Will the next government elected be for the many, not the few?

 

 

 

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American blue collar workers are angry (The Times); Martin Wolf adds a growing and widespread sense that ‘elites are corrupt, complacent and incompetent’

pinn blue collar workers

Today the Times interprets unusual polling results in the United States. Like many American media commentators, it predicts that “blue-collar workers who are worried about the effects of globalisation on American jobs promise to shape the November election”.

In the Financial Times, analyst/economist Martin Wolf expresses a belief that the ‘native working class’ are seduced by the siren song of politicians who combine the nativism of the hard right, the statism of the hard left and the authoritarianism of both.

’A plague on both your houses’?

He writes: “The projects of the rightwing elite have long been low marginal tax rates, liberal immigration, globalisation, curbs on costly “entitlement programmes”, deregulated labour markets and maximisation of shareholder value. The projects of the leftwing elite have been liberal immigration (again), multiculturalism, secularism, diversity, choice on abortion, and racial and gender equality . . . As a recent OECD note points out, inequality has risen substantially in most of its members in recent decades. The top 1% have enjoyed particularly large increases in shares of total pre-tax in­come”.

pinn church v state moral missionDavid Cameron responds to church leaders’ attacks by saying that the reforms are part of a moral mission

Wolf continues: “In the process, elites have become detached from domestic loyalties and concerns, forming instead a global super-elite. It is not hard to see why ordinary people, notably native-born men, are alienated. They are losers, at least relatively; they do not share equally in the gains. They feel used and abused. After the financial crisis and slow recovery in standards of living, they see elites as incompetent and predatory. The surprise is not that many are angry but that so many are not”.

Wolf sees the electorate turning to ‘outsiders’ to clean up the system in Britain, the US and many European countries and advises ‘the centre’ how to respond:

  • People need to feel their concerns will be taken into account, that they and their children enjoy the prospect of a better life and that they will continue to have a measure of economic security.
  • They need once again to trust the competence and decency of economic and political elites.
  • There must be a fundamental questioning of its austerity-oriented macroeconomic doctrines: real aggregate demand is substantially lower than in early 2008.
  • The financial sector needs to be curbed. It is ever clearer that the vast expansion of financial activity has not brought commensurate improvements in economic performance. But it has facilitated an immense transfer of wealth.
  • Taxation must be made fairer. Owners of capital, the most successful managers of capital and some dominant companies enjoy remarkably lightly taxed gains.
  • The doctrine of shareholder primacy needs to be challenged. With their risks capped, their control rights should be practically curbed in favour of those more exposed to the risks in the company, such as long-serving employees.
  • And, finally, the role of money in politics needs to be securely contained.

Wolf concludes pragmatically: “western polities are subject to increasing stresses. Large numbers of the people feel disrespected and dispossessed. This can no longer be ignored”.

Self interest rules OK! The threat to the status quo is paramount – the ethical dimension totally ignored.

By implication a Nikkei/FT accolade for Jeremy Corbyn?

nikkei2 logoIs the Nikkei paying the tribute of alarm? Via its newly acquired FT, attempts are being made to downgrade Corbyn in its ‘World’ section.

paul2 levineNo doubt reacting to the impact made by the support of 41 economists – several with an international reputation – for Jeremy Corbyn’s economic proposals, Paul Levine (Professor of Economics, Surrey, right) has written a letter to the Financial Times with another long list of less well known signatories from British academia.

They ‘wished to register’ their opinion that the economic policies sketched by Jeremy Corbyn are likely to be’ highly damaging’.

Very true, many influential commercial and political vested interests would see a somewhat reduced income if policies for the common good were to be adopted.

These economists sent their message ‘to counter the impression’ that might have been given by the previous letter from “41 economists” that Mr Corbyn’s policies command widespread support in the mainstream of the discipline. Three points were made:

Deploring damage to ‘the climate for enterprise in the UK’ – aka reducing vested interest income

  1. Renationalising industries is highly unlikely to improve the performance of its targets, and very likely, if history is anything to go by, to make things worse. If compensation is paid, it will be a waste of fiscal space, even unaffordable; in case it is not, it will be extremely damaging to the climate for enterprise in the UK as other companies fear the government would get a taste for it.

Advocating more borrowing instead of resorting to debt-free QE

  1. “People’s QE”would be a highly damaging threat to fiscal credibility, and unnecessary, since at this time of very low interest rates and tolerable debt/GDP public investment — in many areas much needed — can be financed conventionally.

Condemning figures which are actually suggestions for democratically conducted consideration

  1. Figures put on money that could be found from ending “corporate welfare” and combating tax evasion are almost unbelievable.

ft nikkeiNow employed by the Nikkei, a large media/financial group in Japan, which recently bought the UK’s Financial Times, Chris Giles, its economic editor, repeated the gist of this letter. Tucked away for consumption in the World section, it was presumably intended to more widely discredit the disturbingly popular Jeremy Corbyn.

Will the common good prevail over vested interest? Hopefully.

Winning and misusing power or aiming to further the public good?

*John Lloyd, a contributing editor to the Financial Times does condescendingly concede, “There is a gap in the public debate for a credible argument on fairness, inequality and public decency” – adding that Mr Corbyn knows what he stands for:

  • more social spending,
  • more state intervention,
  • renationalisation of services such as rail
  • much less in­equality.
  • and the belief that the US is at the root of evils such as wars, the Ukraine crisis and Middle Eastern turmoil.

Lloyd: “As a candidate for high office, he would be politically and economically eviscerated, both at home and abroad”

jeremy corbyn (2)How? The usual material which feeds the press is lacking.

Unlike Blair and other MPs from both main parties he has not succumbed to the love of tainted money or fallen into debt.

He is apparently not attracted by extramarital or illegal sexual activities – having far more important and socially beneficial preoccupations.

Lloyd’s advice, pleasing to corporate advertisers and future employers is for opposition to move away from the ‘far left’ with its militant “populist, class-based resentment”

He sets a number of topics that misguided leftists should consider, moving to what he considers a more acceptable form of social democracy – accepting much of the status quo:

”Keep the capitalist show on the road but fight civilised battles for a larger share of its surplus for the lower classes”

One – less than inspiring – example is given: “Last week, campaigners and unions won a pledge from Andrew Cuomo, the Democratic governor of New York state, for a $15-an-hour minimum wage by 2018. The move may not be cost free: it might price some people out of work. But it aims to shift at least some costs from the backs of the poorly paid”.

His conclusion: “Mr Blair was right to say last week that Mr Corbyn would be a disaster.” And Blair was not?

blair economic migrant pinnAnd the Cameron government is not even further depriving the poor and disabled whilst benefitting the rich?

* Mr Lloyd’s journey (Wiki):

In the 1970s, Lloyd was a member of the Communist Party of Great Britain and later the British and Irish Communist Organisation. He then became a supporter of the Labour Party. Lloyd also supported the Ulster Unionist leader David Trimble, believing Trimble could help bring peace to Northern Ireland. In the 1990s, Lloyd was one of several prominent members of Common Voice, a British group that advocated voting reform. A strong supporter of the Blair government, he supported the 2003 invasion of Iraq, as well as the Cameron ministry’s 2011 military intervention in Libya. In August 2014, he was one of 200 public figures who were signatories to a letter to The Guardian opposing Scottish independence in the run-up to September’s referendum on that issue.

What is ‘at the heart of the malaise in British politics’?

Earlier this month George Parker of the Financial Times  asserted: “it is the state of the economy that remains at the heart of the malaise in British politics”, but his other reflections were nearer the mark.

george parkerHe said that: “Panic over the rise of the populists is spreading across the Westminster establishment, which is turning on itself in a round of recrimination bordering on self-loathing. With a general election less than six months away, British politics is about to enter a volatile and unpredictable phase”.

Another comment: “Polls suggest voters regard the Westminster class as out of touch and incompetent . . . Global events have exposed the inability of the British elite to identify risks, let alone deal with them. From the financial crash, through the rise of Russian aggression in Ukraine to the surge in Islamic radicalism in the Middle East, Westminster politicians were initially blindsided, then appeared impotent in their response”.

A serious indictment – and he should have added to it a reference to the fatally corrosive effect of the corporate–political alliances which skew decision-making in favour of the already rich.

occupy wall st cartoon corp money

This is seen as corruption by many, here and in America (see cartoon). It is noted that – in this particular – the Westminster class are far from ignorant and incompetent when adding to their incomes and those of family and friends – aka ‘feathering their nests’.

Mr Parker expresses the sense, among some British voters, that they are victims rather than beneficiaries of globalisation, which – Political Concern adds – has offered so many opportunities for leaders of corporations and governments to enrich themselves at the expense of the ‘rank and file’, vastly increasing economic inequality and environmental pollution.

He continues: “If the mood continues, the next election could see a remarkable rejection of traditional politics . . . neither of Britain’s main parties can expect to win an overall Commons majority in the election, which will be held on May 7. A period of instability and multi-party coalitions – possibly including minority parties as diverse as UKIP, the Scottish National party, Ulster unionists and the Greens – is a real possibility”. And adds:

Both Tories and Labour acknowledge that supporting UKIP has become a cry of pain from people who no longer feel they have a stake in the future and have lost faith in Westminster politicians to help them.

Many will watch with interest campaigns by ‘minority parties’: SNP, the Greens, NHAP, Plaid Cymru, in Cornwall Mebyon Kernow and UKIP, which still gives cause for concern.

Time for change!

Will future generations curse our indifference?

Yesterday, ‘An unethical bet in the climate casino’, by Martin Wolf, was published in the Financial Times. Wolf believes that the Republican victory in the mid-term elections will have big implications for the future of the US and the rest of humanity.

The US is the world’s second-largest emitter of greenhouse gases and among the highest emitters per head and Wolf thinks that “the most important consequence of this election may therefore be to bury what little hope remained of getting to grips with the risk of dangerous climate change”.

US executes world

A truism: ‘countries cannot keep bits of the atmosphere to themselves’ – moving off the world’s current trajectory is a collective task. Without US will and technological resources, the needed shift will not happen. Other countries will not – indeed cannot – compensate.

Many Republicans seem to have concluded man-made climate change is a hoax. If so, this is quite a hoax. Just read the synthesis report of the  Intergovernmental Panel on Climate Change. One is asked to imagine that thousands of scientists have put together a complex fabrication in order to promote their not particularly remunerative careers, in the near certainty they will be found out. This hypothesis makes no sense.

After summarising some of its findings, Wolf continues:

“If we continue on our path, the report adds, larger changes in climate are highly likely. The equilibrium rise in global average surface temperatures caused by a doubling of carbon dioxide concentrations relative to pre-industrial levels would be between 1.5C and 4.5C. But the concentrations of greenhouse gases have already risen by more than 40%. Likely consequences of further rises include disease, extreme weather, food and water insecurity and loss of biodiversity and valuable ecosystems”.

He sees no indication that humanity will move off the path towards ever greater emissions, with potentially huge and irreversible consequence.

Indifference to the fate of future generations

Those standing in the way of mitigating the effects of climate change and reducing the emission of green house gases are accused of indifference to the fate of future generations:

“Why should we bear costs of mitigation today for the benefit of those we will never know, even if that includes our own descendants? After all, the indifferent might ask, what have future generations ever done for us?

A strong moral argument, unlikely to prevail, Wolf:

“The ethical response is that we are the beneficiaries of the efforts of our ancestors to leave a better world than the one they inherited. We have the same obligation even if, in this case, the challenge is so complex.

“But, however strong such a moral argument may be, it is most unlikely to overcome the inertia we now see.

“Future generations, and even many of today’s young, might curse our indifference. But we do not care, do we? “

martin.wolf@ft.com

STOP PRESS:

Will Mr Wolf be reassured by the APEC Obama climate change agreement with Chinese President Xi Jinping that would cut both countries’ greenhouse gas emissions by close to a third over the next two decades?

The vote on the war in the Middle East: three sources

George Parker, political editor of the Financial Times: MPs sceptical and anxious over Isis strikes

ft.com logo“The vote was decisive and deceptive. An overwhelming majority of 481 gave the impression that the House of Commons was confident in its decision to send British forces to war in the Middle East for the fourth time in 15 years. In fact the mood among MPs was one of scepticism and anxiety – even fear . . .

“During the course of a sombre emergency debate, speaker after speaker stood up to back UK military action against the Islamic State of Iraq and the Levant, known as Isis, but expressed fears over whether it would work, and where it might lead, in almost the same breath.

commons debate middle east 9.14“The Conservative MP Ken Clarke gave voice to a political class scarred by the experience of previous interventions in Afghanistan, Iraq and Libya, all of which the former chancellor said had ended in disaster: “What happened in all those cases was that the military deployment produced a situation at least as bad as it had been before and actually largely worse”. Like many other MPs, he concluded that bombing Isis was the least-worst option.

“Yet his short intervention summed up the doubts reverberating around the chamber over what MPs were being asked to approve: the “almost symbolic participation” by the RAF in attacks on Isis targets in Iraq, but not Syria . . . the drift towards a wider engagement beyond Iraq stirred foreboding among MPs who remember the way UK forces in Iraq and Afghanistan were sucked into an open-ended conflict . . .

“In the upper house, just as in the Commons, the big majorities for British intervention in Iraq did little to disguise the pessimism over its chances of success.

“As Frank Dobson, the former Labour health secretary, put it: “If we look at the track record of the interventions of the French, the British and the Americans in the Middle East since the collapse of the Ottoman Empire, then the odds look as though we won’t succeed. Everything else has gone wrong . . . ”

The Herald reported SNP MPs’ refusal to support air attacks on Isis

herald logoAngus Robertson, the Nationalists’ foreign affairs spokesman, expressed revulsion at the militia group’s reign of terror, which includes beheadings, crucifixions and rapes, and agreed international co-operation was required. However, during an impassioned eight-hour debate, the Moray MP yesterday told the Commons that because there was no coherent plan to “win the peace” in the Coalition’s motion then SNP MPs would vote against it. He said there was “deep scepticism for the potential of mission creep and a green light for a third Iraq war”, given what had happened previously in Iraq, Afghanistan and Libya, adding, “The motion asks for a green light for military action which could last for years [but] there is no commitment in the motion for post-conflict resolution.”

guardian logoIn the Guardian, Simon Jenkins: “This is the moment in any war when peace goes dumb. The cause is just. The enemy is in our sights, and the provocation is extreme. Blood races through tabloid veins. It is white feathers for dissenters”.

“The new Iraq war has no strategy, not even tactics. It is a ` a token, a pretence of a strut on the world stage . . .

“The return to war will reinforce the politics of fear – which is the grimmest legacy of the Blair era in Britain. It has Cameron popping in and out of his Cobra bunker like a rabbit in a hole. Every government office, every train, every airport welcomes visitors to Britain with terror warnings and alerts. Cameron does this because he knows he can only get Britons to go to war by portraying Isis as a “threat to Britain’s national security”. Some Isis adherents may have criminal intent, but that is a matter for the police. Britain survived a far greater menace from the IRA without crumbling. Its existence is not threatened by jihadism. The claim is ludicrous. Cameron must have no faith in his own country.

“The contrast between Asia’s eastern and western extremities is now stark, the one booming, the other descending into catastrophic instability and medieval horror. It is impossible not to relate this to two centuries of western imperialism and meddling. It strains belief that further intervention – through the crudest of all forms of aggression – can bring peace and reconciliation”.

This weekend’s focus on the role of Prince Charles

Though in theory opposed to the concept of monarchy, the writer finds a head of state drawn from the present royal family infinitely more acceptable than one drawn from the suborned governing elite.

The Financial Times has directly or indirectly featured the prince’s work in articles this weekend:

prince charles text

At 1.30 – Radio 4 will ask if Prince Charles’ activism is compatible with the position of King: http://www.bbc.co.uk/programmes/b047w9kn

Implicit criticism comes from MP David Blunkett, whose portfolio in past years has listed directorships /involvement with many companies, including Oracle Capital Group, a wealth manager serving rich families around the world, DNA Bioscience, Entrust, a large U.S. security software firm and substantial payments from First Group.

The writer’s theory: vested interests – including those in the fields of modern architecture, conventional energy generation, intensive agriculture, pharmaceuticals and construction – are understandably afraid that if he becomes king and his ‘activism’ continues, their interests – and therefore profits – will be seriously affected.

‘Obama replaces Congress with plutocrats’ – what’s new?

Though the title of Christopher Caldwell’s Financial Times article belies the content, many in Britain and America have long been aware of the evidence that decision-making is already in the hands of corporates and their political allies.

The evidence is strongest in the pharmaceutical, ‘defence’, banking and agroindustrial sectors but proliferates elsewhere with service industries, including Capita, Serco and G4S.

Caldwell actually wrote that Obama’s proposed move to address the refusal by Congress to allocate money for pre-kindergarten education, is an alternative to gridlock and a harbinger of plutocracy.

In the president’s State of the Union address to Congress, he proposed to “pull together a coalition of elected officials, business leaders, and philanthropists” to do it: “With the support of the FCC [Federal Communications Commission] and companies like Apple, Microsoft, Sprint and Verizon, we’ve got a down payment to start connecting more than 15,000 schools and 20m students over the next two years, without adding a dime to the deficit.”

Caldwell sees this as an ominous development: “It is inviting politically connected entrepreneurs and corporations to assume a formal role in government, by virtue of nothing except their money”.

But is this not already standard practice in Britain, America and some other countries – the rule rather than the exception?

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Bill Gates’ myth

Bill and Melinda Gates published their annual January letter, no doubt well-read at the World Economic Summit in Davos. They said that ‘many people think the world is getting worse’ – and it demonstrably is, in terms of pollution, social instability and the widening gap between rich and poor.

MLK live togetherThe crumbs from Gates’ table are not the answer: Martin Luther King has it (opposite) – a complete change of outlook.

Economist John Kay in the Financial Times challenges Gates’ figures in terms which are not readily accessible to the average reader  but then looks beyond the globalised centres of major cities, similar everywhere: “You do not have to venture far from the centre of Nairobi or Shanghai, and only round the corner in Mumbai, to see sights unimaginable in Norway or Switzerland”.

Gates’ big myth – an assertion that people believe the world can’t solve extreme poverty and disease – is completely untrue.

Many people do believe that the world can solve extreme poverty and reduce disease – but not while the 1% and their corporate and political courtiers (one below) are making the decisions. “Every king needs courtiers, every computer billionaire creates a slew of computer millionaires”, notes John Kay.

WEF cameron

Nick Dearden agrees: “The policies dreamt up by those who meet in Davos are a direct cause of the current unprecedented rates of inequality”.

Writing in Red Pepper, Dearden sees the world’s 1% “mouthing concerns about poverty and climate change, while working on policies which fuel inequality” in Davos and believes that Bill Gates doesn’t want a higher minimum wage denting the amount of wealth on which his company can avoid taxes. He recalls Tidjane Thiam, chief executive of Prudential, calling the minimum wage a ‘machine to destroy jobs’. Broken BritainNo doubt alluding to the representatives of the banking hierarchy, Dearden sees some of the participants at Davos as being directly responsible for the crisis and austerity measures responsible for mental health problems spiralling across Europe. In Greece, suicides rose 37% from 2009 to 2011.

Others focus on military expenditure depriving the poor of basic necessities: india nuclear salvation

 The writer favours this approach:

JMK homespunDearden ends: “We need to do more than put these issues on their agenda . . . The corporate elite represented at Davos cannot be allowed to meet in luxury and pretend they have the answers to the world’s problems. They are the world’s problems”.

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