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Whistleblowers 10: as revelations which damage corporate interests are penalised, useful material for ‘Russia bashing’ is rewarded

whistleblowers sufferThere have been several general articles about whistleblowing on this site & others focussing on some brave individuals who suffered for revealing unwelcome truths, including Dr Raj Mattu, Julian Assange, Ian Foxley, Peter Gardiner, Bradley Manning, Osita Mba, Jerry Bryzan and the Glaxo 4. Earlier in the century, before the site was set up, there were health sector whistleblowers; Marta Andreasen & Paul van Buitenen also revealed shocking cases of EU financial mismanagement and suffered for it.

This week a reader sent a link leading to news of sentences given to two former PwC employees who leaked data from 45,000 pages of documents which one of them had accessed through a glitch in the company’s servers. They revealed information about Luxembourg’s tax deals with large corporations such as Apple, Ikea, and Pepsi.

Though the revelations prompted parliamentary debates, select committee hearings, and an EU probe into anti-competitive tax deals the two former employees of PWC and a journalist ended up in the dock – not PwC and the tax authority.

As NATO presents Russia as a major threat, every opportunity to confirm this view is embraced

The Russian 800m runner Yuliya Stepanova, was banned from the sport for anomalies in her athlete biological passport in 2013. Yuliya and her husband Vitaly, a former employee of the Russian Anti-Doping Agency (RUSADA), then made a series of secret recordings and allegations that were broadcast in a German television documentary entitled “Secret Doping Dossier: How Russia Produces its Winners”.

She has now been granted a special dispensation to race again at the 2016 Olympic Games in Rio de Janeiro as a “neutral athlete” by the International Association of Athletics Federations (IAAF) doping review board.

The guilty verdicts for the two former PwC employees are increasing calls for more robust protections for whistleblowers. One of Deltour’s lawyers William Bourdon called the verdict “scandalous”. The message of Luxembourg’s justice system was for multinationals to “sleep tight”, he said.

NB: In Britain whistleblowers are usually made to suffer, despite the nicknamed ‘Whistle-blowers Act’: http://www.legislation.gov.uk/ukpga/1998/23/pdfs/ukpga_19980023_en.pdf

 

 

 

The first sign of a Corbyn-trending, kinder and more principled governance?

1

David Hencke alerts us to reports that Downing Street announcement that the UK government has withdrawn from its prison training deal with Saudi Arabia.

Just Solutions International, the commercial wing of Britain’s Ministry of Justice, has been selling ‘expertise’ to oppressive regimes including Oman and the Saudis. It was established under Mr Gove’s predecessor Chris Grayling in 2013, assisted by ‘professional services network’ PwC but Michael Gove, Minister for Justice, has now closed it amid criticism that it was selling prison expertise to countries with poor human rights records.

Corbyn, “but why on earth was it set up in the first place?”

A few days ago, Hencke reported that Jeremy Corbyn had challenged David Cameron to explain why the British government could not cancel a contract with the Saudis to provide training for their prison system – just as it was about to execute a teenage dissident and crucify him (below right).

mohammed al nimriJeremy Corbyn had written: “Will you step in to terminate the Ministry of Justice’s bid to provide services to the Saudi prisons system – the very body, I should stress, which will be responsible for carrying out Ali’s execution? . . . Ali’s case is especially urgent – the secrecy of the Saudi system means that he could face execution at any time, and even his family may only find out after the event. There is therefore no time to spare in taking this up with the Saudi authorities, if we are to prevent a grave injustice.”

In his conference speech, addressing Cameron, Corbyn added: “And while you’re about it, terminate that bid made by our Ministry of Justice’s to provide services for Saudi Arabia – which would be required to carry out the sentence that would be put down on Mohammed Ali al-Nimr.”

Though it was alleged that the government would face punitive penalty clauses for cancelling the contract, less than two days afterwards, the minister retracted this explanation, admitting that no financial penalties applied and Parliament had been given “incorrect information.” He had to “apologise unreservedly” in a letter to the MP, Nigel Huddleston, Conservative MP for Mid Worcestershire.

The critical factor: HMG’s broader engagement with Saudi Arabia

Hencke had highlighted the real reason they did not cancel in a Tribune article; in the words of Andrew Selous, the junior minister at the Ministry of Justice: “The critical factor was the strong view from across Government that withdrawing at such an advance stage would harm HMG’s broader engagement with Saudi Arabia.

Michael Gove’s finer hour

michael 2goveThe withdrawal follows the Times reports of a cabinet rift on the issue: Michael Gove, the justice secretary, wanted to pull out of the deal, saying the government should not be assisting a regime that uses beheadings, stoning, crucifixions and lashings to punish its citizens. The Foreign Secretary Philip Hammond had warned that cancelling it would not be in the national interest as it would make Britain appear an untrustworthy ally – and No 10 had agreed, the paper reported.

David Hencke adds that Lord Falconer, the shadow Lord Chancellor, has reported this to the National Audit Office – because Just Solutions International.deserves a thorough financial examination. He gives credit to lawyer David Allen Green – known as Jack O’Kent on Twitter- who has assiduously followed this issue. He can be followed on the JackofKentblog which carries an account with snapshots from the Times article.

Nicholas Watt and Alan Travis in the Guardian report, “Corbyn responded to the cancellation saying: “David Cameron has been shamed into a U-turn, a strong message to repressive regimes that the UK is a beacon for human rights and that this contract bid is unacceptable in the 21st century, and would damage Britain’s standing in the world on this terrible contract, but why on earth was it set up in the first place?”

 

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 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