George Monbiot recently pointed out that the Commons report on the Carillion fiasco is one of the most damning assessments of corporate behaviour parliament has ever published. It trounces the company’s executives and board and laments the weakness of the regulators.
But, as Prem Sikka said in his April article, it scarcely touches the structural causes that make gluttony a perennial feature of corporate life.
Both agree that the problem begins with an issue the report does not once mention: the extreme nature of limited liability. Sikka points out that this system, under which executives are only financially accountable for the value of their investment, has also benefited frauds and led to the self-enrichment of executives at the expense of workers, consumers, creditors, pensioners and citizens.
Monbiot adds that the current model of limited liability allowed the directors and executives of Carillion to rack up a pension deficit of £2.6 billion, leaving the 27,000 members of its schemes to be rescued by the state fund (which is financed by a levy on your pension – if you have one). The owners of the company were permitted to walk away from the £2 billion owed to its suppliers and subcontractors. (Left: the former Carillion chief executive Keith Cochrane in Westminster after appearing before the Commons work and pensions select committee)
Monbiot continues: “There is no way that fossil fuel companies could pay for the climate breakdown they cause. There is no way that car companies could meet the health costs of air pollution. Their business models rely on dumping their costs on other people. Were they not protected by the extreme form of limited liability that prevails today, they would be obliged to switch to clean technologies”.
So what is to be done?
Prem Sikka (right) proposes that the bearers of unlimited risks and liabilities should be given rights to control the day-to-day governance and direction of companies.
He advocates including employees and citizen/consumers on company boards – because both ultimately have to bear the financial, health, social and psychological costs associated with environmental damage, pollution, poor products, industrial accidents, loss of jobs, pensions and savings. Through seats on company boards, they could secure a fairer distribution of income, challenge discrimination, curb asset-stripping and influence investment, training and innovation.
Across the 28 European Union countries (plus Norway), most have a statutory requirement for employee representation on company boards – unlike the UK, Belgium, Bulgaria, Cyprus, Estonia, Italy, Latvia, Malta and Romania.
George Monbiot proposes a radical reassessment of limited liability.
He points out that a recent paper by the US law professor Michael Simkovic proposes that companies should pay a fee for this indemnity, calibrated to the level of risk they impose on society. He adds, significantly, that as numerous leaks show, companies tend to be far more aware of the risks they inflict than either governments or the rest of society. Various estimates put the cost that businesses dump on society at somewhere between 4% and 20% of GDP
His own ‘tentative’ and ingenious proposal is that any manager earning more than a certain amount – say £200,000 – would have half their total remuneration placed in an escrow account, which is controlled not by the company but by an external agency. The deferred half of their income would not become payable until the agency judged that the company had met the targets it set on pension provision, workers’ pay, the treatment of suppliers and contractors and wider social and environmental performance. This judgement should draw on mandatory social and environmental reporting, assessed by independent auditors.
If they miss their targets, the executives would lose part or all of the deferred sum. In other words, they would pay for any disasters they impose on others. To ensure it isn’t captured by corporate interests, the agency would be funded by the income it confiscates.
Monbiot then says “I know that, at best, they address only part of the problem” and asks, “Are these the right solutions?
- support them,
- oppose them
- or suggest better ideas.
He ends: “Should corporations in their current form exist at all? Is capitalism compatible with life on earth?”
Monbiot points out that the Leave campaigners have scarcely mentioned the European Union’s great bonfire of banknotes – not expenditure on quangos or relocating and running the institution but on farm subsidies at €55 billion a year.
Why? The leading Brexiters . . . denounce the transfer of public money from the rich to the poor but are intensely relaxed about the transfer of public money from the poor to the rich
Continuing “The leaders of the Remain campaign are no better”, Mr Monbiot points out that the payments would more accurately be described as land subsidies, as they are paid by the hectare. The poorest farmers who own or lease less than five hectares are excluded: “The more land you own or lease, the more public money you are given, so the richest people in Europe clean up. Oh, not just in Europe. Russian oligarchs, Saudi princes and Wall Street bankers have bought up tracts of European farmland, thus qualifying for the vast sums we shovel into their pockets”
These payments are not related to food production and surprisingly, though they are supposed to act as an incentive for environmental conservation, Monbiot comments that, in Westminster’s version of the European rules, ponds, wide hedges, reed beds, regenerating woodland, thriving salt marsh and trees sufficient to form a canopy are listed as “ineligible features . . . which need to be destroyed if farmers are to claim subsidies for the land on which they grow”. He describes the Common Agricultural Policy as “a €55bn incentive to destroy wildlife habitats and cause floods downstream”, noting that across Romania, farmers are beginning to realise that they can make money simply by mass felling of trees and destruction of wildlife, not for any productive purpose, but just to meet the European rules.
Monbiot ends, “I will vote In on Thursday, as I don’t want to surrender this country to the unmolested control of people prepared to rip up every variety of public spending and public protection except those that serve their own class . . .
People laughed when MP Neil Hamilton was found to have accepted money in a brown envelope – this is not the British way. But the bestowal of directorships and employment for family and friends is acceptable – ‘good form’ – lucrative and legal.
George Monbiot points out that many poor nations are plagued by the kind of corruption that involves paying bribes in that way, but adds that the British system already belongs to the elite.
He notes that Transparency International’s corruption index ranks Britain 14th – why not lower? His explanation: “the definitions of corruption on which the index draws are narrow and selective. Common practices in the rich nations that could reasonably be labelled corrupt are excluded; common practices in the poor nations are emphasised”.
A former minister ran HSBC while it engaged in systematic tax evasion, money laundering for drugs gangs and the provision of services to Saudi and Bangladeshi banks linked to the financing of terrorists. Instead of prosecuting the bank, the head of the UK’s tax office went to work for it when he retired.
The Private Finance Initiative has been used by our governments to deceive us about the extent of their borrowing while channelling public money into the hands of corporations. Shrouded in secrecy, stuffed with hidden sweeteners, it has landed hospitals and schools with unpayable debts, while hiding public services from public scrutiny.
Monbiot reminds us that state police forces are alleged to have protected prolific paedophiles, including Jimmy Savile, and – it is now reported – a ring of senior politicians. The BBC has sacked many of those who sought to expose him while promoting people who tried to perpetuate the cover-up. He cites other forms of corruption:
- our unreformed political funding system which permits the very rich to buy political parties;
- the phone-hacking scandal and the payment of police by newspapers;
- the underselling of Royal Mail;
- the revolving door allowing corporate executives to draft the laws affecting their businesses;
- the robbing of the welfare and prison services by private contractors;
- price-fixing by energy companies;
- daylight robbery by pharmaceutical firms and dozens more such cases.
Monbiot asks, “Is none of this corruption? Or is it too sophisticated to qualify?”
The power of global finance and the immense wealth of the global elite are founded on corruption, and the beneficiaries have an interest in framing the question to excuse themselves.
A ground-changing book called How Corrupt is Britain?, edited by David Whyte, was recently published. It argues that narrow conceptions of corruption are part of a long tradition of portraying the problem as something confined to weak nations, which must be rescued by “reforms” imposed by colonial powers and, more recently, bodies such as the World Bank and the IMF. These “reforms” mean austerity, privatisation, outsourcing and deregulation and tend to suck money out of the hands of the poor and into the hands of national and global oligarchs.
Monbiot believes that How Corrupt is Britain? should be read by anyone who believes this country merits its position on the Transparency International’s corruption index.
George Monbiot reports that the Scottish government is to consider breaking up large land holdings when they impede the prospects of local people. It will provide further help to communities to buy the land that surrounds them.
The Spanish system is described as being totally transparent, but Monbiot records that – in England – it took Land magazine several weeks of fighting official obstruction and cost almost £1,000 to find out who owned the land around its office. The old land registers had been closed and removed from public view.
Monbiot wryly comments that it is a different matter when landowners are applying for subsidies from the rural payments agency, which possesses a full, though unobtainable, register of their agricultural holdings.
We are asked to compare the Scottish government’s promise of “a fairer, wider and more equitable distribution of land” with the Westminster government’s vision of “greater competitiveness” – which leads to an increase in the size of land holdings.
Scotland is also to open up the question of property taxes, which might lead to the fair and comprehensive land value taxation system.
Flood-prone green field site now:
Monbiot leads us to ask:
- Will the Scottish government address the ‘speculative chaos’ that mangles the countryside (above) while failing to build the houses people need?
- Will it challenge a system in which terrible homes (above) are built at great expense?
- Will it take land into public ownership to ensure that new developments are built by and for those who will live there rather than for the benefit of volume housebuilders?
And ends, “For centuries, Britain has been a welfare state for patrimonial capital. It’s time we broke it open, and broke the culture of deference that keeps us in our place. Let’s bring the Highland spring south, and start discussing some dangerous subjects”.
The fully referenced article can be found at monbiot.com
Why are increasing numbers of people using alcohol and legal/illegal drugs to excess? Monbiot indicts the economic system
Treatment costs the taxpayer £2.8billion, and they are urging the government to tackle the ‘public health crisis’. (Picture: Metro)
Scroll down to see a chart showing the rise in drug-related hospital admissions, 2002-2012.
Yesterday George Monbiot, in the Guardian, recorded that dementia, high blood pressure, alcoholism and accidents, depression, paranoia, anxiety and suicide, become more prevalent as social interaction has reduced.
He notes some socio-economic changes which have led to increasing isolation of the individual:
- factories have closed,
- people travel by car instead of buses,
- they use YouTube rather than going out to the cinema,
- people turning to their televisions for company.
The content of current TV programmes breeds deep dissatisfaction:
“You have only to think of the wall-to-wall auctions on daytime TV, Dragon’s Den, the Apprentice and the myriad forms of career-making competition the medium celebrates, the generalised obsession with fame and wealth, the pervasive sense, in watching it, that life is somewhere other than where you are, to see why this might be”.
Monbiot briefly critiques the current economic system which has led to rising inequality:
“Figures published this week in the Times show that while the income of company directors has risen by more than a fifth, wages for the workforce as a whole have fallen in real terms over the past year. The bosses now earn – sorry, I mean take – 120 times more than the average full-time worker. . .The top 1% now own 48% of global wealth, according to a Credit Suisse report, but even they aren’t happy. A survey by Boston College of people with an average net worth of $78m found that they too are assailed by anxiety, dissatisfaction and loneliness”.
Apart from one reference, he did not mention the effect of long-term unemployment which arguably has been created as a consequence of the economic system progressively gaining ground since the 50s.
We are now entering a post-social condition created by economic policies which have led to a broken society. Monbiot counts the cost:
- the natural world has been ripped apart,
- conditions of life have been degraded,
- freedoms have been surrendered and
- increasing numbers of people have become engrossed by electronically purveyed “compulsive, atomising, joyless hedonism”.
He ends: “Having consumed all else, we start to prey upon ourselves”.