Category Archives: Corruption

The Paradise Papers and Tax Avoidance

People will by now have grown well-used to revelations about Tax Avoidance by large corporations and the wealthy elite. However this week’s BBC Panorama programs on the so-called Paradise Papers (available to watch here and here), about the widespread use of offshore Tax Havens, will have shocked many by the sheer scale of the avoidance that is going on – and not just by the usual suspects of large corporates like Apple, or corrupt individuals like ex-Tory Treasurer Lord Ashcroft, but also including much-admired sports stars like Lewis Hamilton, and much-loved celebrities like the cast of Mrs Brown’s Boys.

However the program unfortunately failed to explain just why such Tax Avoidance is so prevalent, and how nothing will change until we make fundamental reforms to our parliamentary system.

Some may think that Tax Avoidance is so devilishly complicated that it is very difficult for governments to come up with an effective way of dealing with it; or alternatively that it has up until now been very well hidden, but once exposed effective action can be taken. Neither of those points is true.

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Tropical paradise Bermuda is one of many British Overseas Territories that facilitates widespread Tax Avoidance. Picture © Mike Oropeza

The reality is that legislation, though complex, is easily within the capability of government experts to deal with. However they don’t, because successive governments have been absolutely complicit in facilitating Tax Avoidance, and will undoubtedly continue to be so, while all the time trying to fool us by making statements to the contrary. The reason is very simple – in a system of government where our political parties are reliant on private funding to run their operations and fight election campaigns, they are completely beholden to the providers of that money as to what legislation they enact. Take for example ex-Tory Treasurer Lord Ashcroft, who is one of the worst individuals for avoiding tax and featured in the recent program. He has donated over £10 million to the Tories over the years, and indeed contributed £500,000 to their recent General Election campaign. ‘He Who Pays the Piper Calls the Tune’, and his involvement in Tory funding therefore represents a massive conflict of interest. What chance is there of the Tories, even if they have a fit of good conscience and want to take action on Tax Avoidance, being actually able to do so, when their ability to win general elections is dependent on the continued financial support of someone who clearly doesn’t want such changes to be made? It obviously isn’t going to happen. And it’s not just Lord Ashcroft – over half of all Tory funding comes from the financial sector*, providing a relentless source of pressure to keep such Tax Avoidance loopholes open. (I’m afraid it’s not just a Tory problem either – the last Labour administration under Tony Blair was similarly reliant on donations from wealthy business people).

So what will actually happen? There will be many outraged speeches in Parliament, closely followed by promises of firm action by the government. There will then be the ritual punishment of some of the more minor players (the cast of Mrs Brown’s Boys better watch out), followed by some relatively insignificant changes to legislation which the government will talk up to make us believe the problem is solved. However behind the scenes the government will be reassuring people like Lord Ashcroft not to worry, be patient, and soon all will be well. Then, in a year or two’s time, when it’s all blown over, the government will quietly make some more changes to tax legislation, with a couple of loopholes deliberately included to help their wealthy friends. And that will be it – back to business as usual.

Don’t forget, whenever the government makes cutbacks on benefits, refuses to pay public sector workers a fair wage, cuts payments to local authorities, or generally does anything in the name of Austerity – justified by saying that state finances are in a mess and the deficit is too high – the real reason there is a shortage of money is because the wealthy elite are being allowed to get away without paying their fair-share of tax (Tax Avoidance is estimated to cost the country £95bn/year) and the rest of us all have to pay for it. And that won’t change until we stop political parties being funded, and therefore controlled, by the wealthy elite.


Private Money Corrupts Democracy

This week it was announced that a major Tory donor, Sir Andrew Cook, was threatening to cut his funding of the party if they pursued a ‘Hard Brexit’ in their upcoming negotiations with the EU*. Now many people may agree with his view as to what sort of deal we should aim for as our membership of the EU comes to an end – however that is not the real issue here. What his announcement demonstrates is the extent to which the very wealthy can use their money to influence democracy, in a way which completely undermines the democratic process.

Sir Andrew Cook has donated well over £1 million to the Tories, a significant sum of money which means his threat to withdraw any future funding will not be ignored. However, wherever you stand on the Brexit debate, it cannot be right that one person has so much influence over government policy, when we’re supposed to live in a one-person one-vote state. The private funding of political parties completely undermines this democratic principle, and this isn’t the first time wealthy people have influenced government policy in this way. Click here for other examples.

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Funding a Political Party costs a lot of money, and He Who Pays the Piper Calls the Tune. Picture © NCVO London

Some people argue that allowing private individuals to fund political parties saves the taxpayer money, but the reality is that the taxpayer loses far more money through corrupted policies than it would cost to provide such funding. For example it only costs about £10m or so to fund a major party for a year, and it is estimated the total bill to the taxpayer of funding all such parties would be in the region of £100m/year. Compare that to the £billions the taxpayer loses every year through tax avoidance, via loopholes which successive governments have failed to close because their wealthy donors don’t want them to.

Many other countries have recognised this problem, and have in place legislation to limit the extent to which the wealthy can influence government policy via their political donations. In France for example it is actually illegal for companies to fund political parties, while no individual can donate more than ‎€7,500 in a given year. In Iceland no-one can donate more than 400,000 ISK (about £3000) a year; and many other countries have similar strong limits and controls on such funding.

In this country there are no such rules, and until there are we will continue to live in a society where ordinary people may vote for political parties, but it is a small handful of wealthy donors who control the legislation they actually enact.



The Panama Tax Scandal

This week we have been rocked by the Tax Avoidance scandal coming out of Panama, after a whistle-blower leaked more than 11 million documents from the law-firm Mossack Fonseca. This firm has spent the last 40 years helping their wealthy clients worldwide to hide money and so avoid tax, and the leaked documents revealed the names of many people from the world of business and politics who have benefited. It will come as no surprise that the wealthy business elite do whatever they can to avoid tax, nor will it surprise many people that the leaders of countries like Russia, the Ukraine and Argentina do similar things. However what is shocking is that Western leaders like the Prime Minister of Iceland (who has now resigned) and even our own Prime Minister David Cameron have also been implicated.

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David Cameron has got caught up in the ‘Panama Papers’ scandal. Picture © Willwal

We in the West have come to believe that institutionalised government corruption is essentially a Third World problem, but this leak reveals that not to be the case. Though it may be true that blatant corruption (involving ‘backhanders’, ‘cash in brown envelopes’, ‘family favours’ and the like) is virtually absent from Western politics, it has been replaced by a far cleverer but more insidious form of wrong-doing. Nowadays our wealthy elites employ armies of lawyers to find loopholes in the legislation, which mean they can avoid tax without actually breaking the law, and that often involves taking their money offshore to some tax-haven where rates are artificially low. Added to that many of these tax havens employ high levels of secrecy which mean it can be very difficult for the taxman to get to the bottom of what is really going on, and in such circumstances, with limited resources, the revenue services are often forced to abandon any investigations.

Many people have said that this is even more evidence that the government should change the law and clamp down on these loopholes, but what incentive is there for them to do that if our own leaders are using the loopholes themselves? Even worse, the fact that many Tory (and Labour) donors are also using tax havens and other tax avoidance techniques, creates a massive conflict of interest right at the heart of our democratic system. ‘He who pays the piper calls the tune’, and Party donations would soon dry up if any government made serious efforts to tackle the illicit wealth of their own donors (it’s worth remembering at this point that over 50% of Tory Party funding comes from the financial sector.*)

Consequently though our politicians love to make all sorts of statements about the ‘moral repugnance’ of tax avoidance, the reality is they do the minimum required to keep the public happy, while they and their mates carry on as usual. An example of this is the government’s recent clampdown on tax avoidance by small businesses, while at the same time blocking EU legislation to clamp down on abuse by offshore trusts, which is a much bigger problem*. The nett result? The government trumpets the fact it aims to cut tax avoidance by £12bn, which sounds huge, but neglects to mention that with tax avoidance running at an estimated £95bn/year, that represents only 13% of the total. Until we have sorted out the conflict of interest created by the private funding of our political parties, legislation will continue to be enacted (or not enacted) which puts the needs of the privileged and wealthy over the needs of ordinary people. And this tax avoidance scandal is just one more symptom of that.

* Tory Funding

* Trusts


Free Markets Just Mean Corporate Corruption

This week we saw yet another scandal involving our banking system, when it turned out that HSBC have not only been facilitating large-scale tax avoidance and tax evasion via their Swiss subsidiary, but have even been advising their wealthy clients on how is the best way to go about it.* It is estimated that up to $21.7bn has been sheltered from the treasury in this way, at a vast cost to the British taxpayer.

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HSBC: Yet another massive banking scandal. Picture © Danesman1

This all came to light as the result of a leak from a whistleblower in 2007, details of which were passed to the Inland Revenue in 2010. However, despite an estimated 1100 individuals being guilty of underpaying their tax, to date there has only been one prosecution. Even more scandalous, the man in charge of HSBC during this period, Lord Green, was made a Conservative peer and appointed to the government as minister for Trade & Investment 8 months after the Inland Revenue was made aware of wrongdoing at the bank. Far from being punished for his misdemeanors, Lord Green was handsomely rewarded with a position in the heart of government. HSBC’s response to all this is to admit to ‘past failures’ but assures us all that things have now changed. Lord Green himself has consistently said ‘no comment’. Full details of the scandal are in this BBC Panorama documentary.

Of course we all know this is far from being a one-off, as it comes hot on the heels of various other banking scandals including fiddlng interest rates (Lloyds, Barclays, Royal Bank of Scotland); fixing foreign exchange rates (HSBC, Barclays, Royal Bank of Scotland); money laundering (HSBC); sanctions busting (Standard Chartered); ‘dark pool manipulation‘ (Barclays); and fiddling precious metal prices (Barclays, HSBC).

The reality is that the priority of companies, and in particular banks, is to make money for themselves, and to do it they will employ whatever dodgy practices they think they can get away with. The less regulation there is the more corrupt they can become, so this idea that ‘light touch’ regulation and free markets is the best way to run things is a complete nonsense, and is in effect just putting the foxes in charge of the chicken coop. Given the chance, the clever and the unscrupulous will just fleece us all, and that is exactly what they are doing.

Even more evidence of how corrupt our system has become was produced a couple of weeks ago when it was announced that Price Waterhouse Coopers (PwC), the accountancy firm, has also been facilitating corporate tax avoidance on ‘an industrial scale’.* PwC is also a major corporate donor to both the Labour and the Conservative parties. Why would anyone support both the major parties? Ah yes… that’ll be a bribe, so that whichever party gets into power lets them carry on with their corrupt business practices. What a rotten system we live in, that allows such things to go on while poor people are forced to undergo ever-increasing Austerity.

And the government’s response? At a business leaders’ meeting recently David Cameron pathetically asked bosses if they would give their staff a pay-rise, and so spread their ever-increasing wealth around*. I thought in a Free Market Economic system wealth was supposed to naturally ‘trickle down’ anyway? Clearly not, and if Cameron thinks his desperate pleas will make any difference to their behaviour, he clearly has little understanding of the business community he claims to represent.


* PwC:

* David Cameron Speech:


Our Disgraceful Finance Sector

People would have been shocked today to hear of yet another scandal involving our beloved banks*. Apparently they’ve now been caught fixing foreign exchange rates, and fines totalling £2bn are being handed out to all the usual suspects including HSBC, Barclays, Royal Bank of Scotland (being owned by the taxpayer doesn’t seem to inhibit their criminal activity), plus UBS of Switzerland and America’s J P Morgan and Citibank. We’ve become used to hearing these tales of financial malpractice, but what was particularly galling in this case was the fact that the rate-fixing was going on until October last year. ie 5 years after the crash of 2008, and even after the previous LIBOR fixing scandal involving the exact same banks. In other words, these people have no intention of changing their behaviour no matter what happens around them. Of course criminal prosecutions might change their behaviour, but as usual, although the banks have been fined, no individuals have been held criminally accountable for what in everyone else’s eyes is blatant fraud.

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Price Waterhouse – helping write tax laws and then advising companies how to avoid the laws they’ve just written! Picture © Unshaken City

However, as shocking as all this is, far more insidious was the announcement earlier this week that the Labour Party has received £600,000 worth of free advice from PwC (Price Waterhouse Coopers) the accountancy firm, to help formulate its tax policy*. Now, why would PwC want to give free advice to the Labour Party? Ah yes, that’ll be because PwC makes a lot of money advising businesses on how to avoid tax, and that job will be much easier for them if they get to help write the legislation which they can then advise businesses how to avoid. Absolutely disgraceful, and Labour’s justification for it that PwC are experts in the field holds no water whatsoever. PwC, like all the big accountancy firms, are a threat to the very fabric of our society, as they are at the heart of the system which undermines government revenue collection, and so forces Austerity and poverty on millions of ordinary people. To have them help formulate tax legislation is simply putting the fox in the charge of the chicken coop. Just imagine if the government wanted to formulate new legislation on paedophiles, and put Gary Glitter in charge of the inquiry. And then justified it by saying Gary Glitter was chosen because he’s an expert in paedophilia! There would be justifiable outrage at such nonsensical logic, and yet the government does this all the time with financial legislation, completely undermining our democratic processes. Whether it’s through companies framing legislation like this, or the so-called ‘revolving doors’, where individuals pass effortlessly between Whitehall and the corporate world, the tentacles of business are firmly entwined in our legislative processes, ensuring we now live in world where those with money control all the levers of power.

We need change. The Tory Party, as the party of business, are of course beyond hope in this area, but with the Labour Party now acting in exactly the same way it should be absolutely clear, if it wasn’t before, that they offer no meaningful alternative either. The only hope for getting a government which represents the interests of ordinary people is to sweep both these parties into the dustbin, and start afresh with a completely new breed of politician, driven by a desire to help other people rather than just to look after the interests of themselves and their cronies.

* Bank Fines: Labour Party/Price Waterhouse Coopers:


The Labour Party is Compromised

Many people will be aware of the corrupting influence that the private funding of political parties has on our democratic process. The Tory Party gets most of its funding from big business (and over half its funding from the City of London) so it’s no surprise they make policies which benefit the wealthy. However the Labour Party, in its efforts to break away from Trade Union influence, has now fallen into exactly the same trap, and events this week demonstrate the extent to which they too are now totally in the grip of big business.

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Ed Miliband: He may want to create a fairer, more equal society, but will the party’s donors let him? Picture © Mandate for Change

Firstly, one of their biggest donors, multi-millionaire Assem Allam*, who in recent years has given £210,000 to the party, has openly criticised Ed Milliband’s proposal for a ‘Mansion Tax’.  He also made his overall intentions pretty clear when he criticised proposals to increase other taxes on the wealthy, saying the rich should be looked after and encouraged, as they are the people who drive the economy (strange words for a Labour Party supporter you might think, unless he is clearly exercising some kind of vested interest!) Following on from this, other major Labour Party donors voiced similar concerns about the Mansion Tax, including Lord Noon* who described it as ‘hopeless and desperate’; while the party’s biggest donor, John Mills* – who gave them £1.65m last year – also criticised the tax, saying it would produce ‘all sorts of problems’ (especially for him, presumably, if he has to pay it.)

Now you may or may not think the Mansion Tax is a good idea, but it’s for parties to put policies in their manifestos, and then for the electorate to vote on them, not for wealthy individuals to use their money and influence to control government policy regardless of what the electorate wants. What will now inevitably happen is that should the Labour Party get elected, Ed Milliband will be leant on, and with the threat of losing crucial funding, the policy will be quietly dropped, or massively watered down. And with pressure mounting on him to backtrack on this tax, you can be pretty sure that similar pressure will also be applied should he make any other suggestions which increase taxes on the wealthiest and most privileged members of society. Instead, all the party’s biggest donors will no doubt be encouraging him to continue with Austerity: freezing public sector wages, cutting public services,  and slashing benefits given to the poorest members of society.

Many people still no doubt hold to the view that voting Labour is the best way to achieve a fairer and more equitable society, but with Labour now firmly in the grip of big business, that unfortunately is a sad illusion. With both the Labour and the Tory parties offering nothing but endless Austerity, the only way to change things is to vote for someone else at the next election, and hope that a coalition government of some sort will allow alternative ideas to be implemented. And top of those alternative ideas has to be a reform of the entire process of Party Funding, because as long as the wealthy can ‘buy’ the legislation that suits them, the wealth that capitalism generates will stay in the hands of a narrow elite, and millions of ordinary people will be forced to struggle in endless poverty.

*Refs: and


Banking – The Corrupt Core of a Rotten System

Yesterday it was announced that Lloyds Bank was being fined £218m for fiddling interest rates in order to manipulate the market for its own benefit*. The particularly shocking thing about this incident – the latest in a long line of corrupt practices by the banks – is that the offence happened after the crash of 2008, and involved abuse of the very fund the government had set-up to help the banks survive. (The government was providing emergency cash for when banks were in difficulties, and by fiddling interest rates Lloyds was able to reduce the fees it paid to use this cash). This effectively meant Lloyds was stealing money from the government.
LLoyds – The latest bank to be fined for manipulating the market. Picture © TubularWorld

Mark Carney, the governor of the Bank of England called the offence ‘reprehensible’, and in reply Lord Blackwell, chairman of Lloyds, described it as ‘truly shocking conduct’ (though whether he was referring to the fact they fiddled interest rates, or just the fact they were careless enough to get caught doing it, is of course open to debate). All were agreed that it amounted to criminal conduct for which individuals ‘could’ face prosecution (don’t hold your breath).

This scandal of course follows other scandals involving Barclays* (fiddling interest rates; fiddling the price of precious metals;  ‘dark pool’ manipulation); Royal Bank of Scotland* (fiddling interest rates); HSBC* (money laundering, fiddling the price of precious metals); and Standard Chartered* (sanctions violations). There is also an ongoing investigation into the fiddling of foreign exchange rates involving, not surprisingly, Barclays and the Royal Bank of Scotland*.

After all the events of the last few years, it’s quite clear that Free Market Capitalism is a completely broken system, whose only purpose is to enrich the clever and the unscrupulous at everyone else’s expense. Banking is at the rotten heart of this corrupt system, and rather than providing a service to the rest of society, it has become an enormous leech whose only function is to accrue as much wealth for itself as it can. Greed and selfishness rule, leading to corrupt and frequently criminal activity, which the criminals then either cover up, or if they can’t do that they try to pass the buck in endless circles, so that no one individual is ever held accountable or responsible. It is now obvious to any decent person that if the private finance sector is to continue at all, it should only be under tight regulation, with severe penalties for those who step out of line. Unfortunately there are still people around who believe in ‘light touch’ regulation, and more importantly the banking sector does its damnedest – through lobbying and the financing of political parties – to fight any changes that might diminish its vast wealth and power (the Tory Party gets over half its funding from the City of London). Which is why we must fight the system as hard as we can from the outside, because it will never reform itself from within.

* Refs: Lloyds: Barclays: and and  Royal Bank of Scotland: HSBC: and Standard Chartered: Foreign Exchange:


Business Destroys Nature

Further evidence of the way in which the corrupt pursuit of profit destroys all in its path  was provided this week, with the announcement that Natural England (the government body charged with protecting the countryside), is planning to allow the unlimited destruction of Robin, Starling and Wagtail nests*. This may seem a rather bizarre thing for a conservation agency to allow, but further investigation reveals the sordid chain of events that led to this decision.

Officially destruction of nests will happen if they pose a ‘hazard’ (though I’m sure most people would struggle to think of circumstances when Robin’s nests would be considered dangerous). However the effect of this legislation will be that anyone will be allowed to destroy any of the nests of these birds with legal impunity. So why has this decision been made, and more importantly, who stands to benefit from it? Well for starters, the construction and housebuilding industries will benefit massively.

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The Starling: numbers are falling, and with this legislation they’ll be falling even more. Picture © Airwolfhound

Currently builders have to halt their building work if birds’ nests are discovered, and cannot restart until the birds have finished breeding. With this legislation they will just be able to destroy any nests that get in their way, whenever they want – how very convenient for them! Which leads us to ask  how it is that such  legislation has managed to get passed by a body which is supposed to protect the environment, not destroy it? Could it possibly be anything to do with the fact that the construction industry has donated millions of pounds to the Tory Party over the last few years?* Or is that just a coincidence? More tellingly, it’s highly suspicious that the recently-appointed chairman of Natural England, Andrew Sells*, is himself an industrialist, with a strong background in the housebuilding industry, and a record of giving large donations to the Tory Party?* Or maybe that’s just a coincidence too. In the murky world where politics and business now merge, it’s impossible to know who pulled which strings where, but when the ruling party is being funded by corporations, and government bodies that are supposed to protect nature do just the opposite, it can only point to further evidence that our parliamentary processes have been utterly corrupted by the power of money.

Nature is under severe threat from the pursuit of profit all over the the globe, and with this bit of legislation, Starlings, Robins and Wagtails in the UK are under a bit more pressure too. What a lovely world we are creating for ourselves.

* Refs: Nest Destruction: Construction Industry Tory Party Donations: Andrew Sells Chairs Natural England: Andrew Sells Tory Party Donations:


Nigerian Abductions

The news that the Nigerian Islamist group Boko Haram had abducted 276 schoolgirls broke into the  mainstream media this week, with Western leaders falling over themselves to condemn this atrocity and with it Islamic Fundamentalism. However it is worth taking a step back and looking at the wider picture, and in particular just what it is that makes large numbers of people support or even join such an outfit.

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Ordinary people in Nigeria suffer massive environmental damage caused by Western Oil companies, but share little of the wealth. Picture © Chebyshev1983

Nigeria is an incredibly rich country, with huge oil reserves that make it the 11th largest oil producer in the world. It is also growing at over 7% per annum  and has just overtaken South Africa to be the largest economy in Africa. However it is also a country riddled with corruption, where a wealthy elite keep most of the riches for themselves, leaving the vast majority of the people in poverty (over 60% of the population live on less than $1 per day).  The Northern provinces of Yobe and Borno*, where Boko Harem has come from, are particularly deprived. As well as widespread poverty, the internal Nigerian security services are notorious for their extreme violence and the brutal way they deal with any dissent*.

So, vast swathes of the Nigerian population are angry and dispossessed, with little opportunity to change things for the better under their brutal and corrupt government. Against that backdrop it should come as no surprise that many of them turn to desperate measures, and the more impressionable of them (particularly the younger ones who see no hope for their future) fall under the influence of charismatic but violent zealots.

And how  does the West react in the face of all this wrongdoing? No surprise, the lure of money means we’re more than happy to put all our beliefs in human rights to one side, as our oil companies fall over themselves to operate there, and so continue to prop up the regime. In addition, our oil companies have a terrible reputation in Nigeria for causing  widespread environmental damage*; so as well as helping their government steal their oil, we’re also wrecking their ecosystem as well. It’s hardly any wonder that with the West so heavily involved in the abuse of their country, the Islamists see us as being guilty by association, and their hatred of their government also becomes hatred of the West and our values.

Now if all this sounds familiar then let’s turn to another, much more infamous fundamentalist Muslim group. A country incredibly rich in oil, with a wealthy elite that does little to improve the lot of its citizens, and which rules with brutal and repressive force. The West, lured by the attraction of untold wealth, is more than happy to put all its basic principles aside and ignore human rights issues, instead doing everything it can to trade with and prop up this regime. Eventually some of the people of this country get so fed up with the corruption they turn to Islamic Fundamentalism, and their hatred of their government transfers into hatred of the Western Governments that support it. The country of course is Saudi Arabia, and the group is Al Quaeda.

Now no-one can support rape, murder, torture, kidnappings and all the other dreadful aspects of extreme religious fundamentalism. But it is also incredibly naive to think that all those things exist in isolation, are simply the product of a few evil minds, or spring spontaneously out of nothing. If you treat people badly they will become desperate, and will eventually start behaving badly themselves. They will then target anyone they hold responsible for their lot, and unfortunately the West is knee-deep in the corruption and brutality that they are forced to endure. Which takes us all the way back to Free-Market Capitalism. Our behaviour in those regions is the result of a blind belief in the power of the ‘market’ and the lure of profit. Human rights have no value in such a system and so are ignored wherever possible. The end result is 276 innocent girls being kidnapped – and until we in the West can see the extent to which we and our economic systems are complicit in such behaviour,  atrocities like that will continue to plague us all.

*Refs: Poverty: Police Brutality: Environmental Damage:


Financial Loopholes

STOP PRESS 14/8/14: Both HSBC and Royal Bank of Scotland have announced they will be employing a loophole to circumvent the cap on bankers’ bonuses – since this blog was written it has been confirmed that HSBC is giving £7.1m in ‘fixed payments’ to 15 of its top staff to sidestep the EU-imposed cap on bonuses. Similarly RBS will be paying £3.5m to 10 of its top bankers. Further proof that the Free Market Capitalist view of the ‘trickle down’ of wealth is a nonsense, as those at the top will shamelessly employ every trick they can to accumulate society’s wealth for themselves.

The advocates of our current version of Capitalism – Free Market Capitalism or ‘neo-Liberalism’ – freely admit that those fortunate enough to reside in the upper echelons of society will accumulate vast amounts of wealth, but claim that this wealth will naturally ‘filter down’ for the benefit of everyone. This is a complete fallacy, with the reality being  that those at the top will use every trick in the book – legal and illegal – to hang on to their wealth and avoid sharing it with anyone else. This is perfectly illustrated by two events this week, where extremely wealthy people resorted to desperate and disgraceful measures to increase their already vast fortunes.
Bernie Ecclestone: not content with his £2.8bn fortune, does his best to avoid paying tax as well. Picture © Ryan Bayona

First, Bernie Ecclestone, the Head of Formula 1 racing, who is reputedly worth some £2.8bn, has been involved in a long-running dispute with the Inland Revenue over unpaid tax. Mr Ecclestone apparently set up a series of family trusts, which he then put in his wife’s name, before transferring them to the Tax Haven of Liechtenstein. This got him out of a tax bill estimated to be about £1.2bn*. However, after a 9-year investigation the Inland Revenue eventually agreed to drop proceedings, and Bernie Ecclestone has instead coughed up a mere £10m in underpayment: as much as he makes every  6 weeks in interest on the money! It may well be that by clever manipulation of legal loopholes he has stayed within the  law, but it nevertheless shows the extreme lengths the very rich will go to, to avoid sharing their wealth with the rest of society, while at the same time ordinary people have to struggle on under the cosh of Austerity.  What on earth does he need £2.8bn for anyway, other than to show it off as an obscene status symbol? If he’d paid the £1.2bn tax and was now worth ‘only’ £1.6bn, in what way would that have adversely affected his lifestyle? One wonders whether he considers how the tax he’s avoided could have gone to improving the lives of so many ordinary people, or is his selfishness so complete he really doesn’t give a damn?

The second story concerns Taxpayer-owned Royal Bank of Scotland, where it was announced this week that  the government will not allow the bank to pay bonuses of 200% of annual salary to their staff, but must instead stick to the 100% limit agreed by the EU. So chief exec Ross McEwan can ‘only’ be given a maximum bonus of £1m on top of his £1m annual salary. So what have RBS done? Announced that Ross McEwan will now also be paid a £1m annual ‘allowance’ on top of his salary. In other words he will still get the extra £2m/year that a 200% bonus would have delivered*. These people just take the p*ss – not only have they clearly learnt absolutely nothing from the financial crisis, but they continue to blatantly milk the system for all it’s worth right under our very noses, by side-stepping the rules without even trying to hide what they’re doing.

This is Free Market Capitalism at its very worst – allowing those with the wealth to make the rules, which enables them to take as much money for themselves as they like, while the rest of us all have to pay for their excess. What we badly need is a system of governance where those in power are truly independent of those with the cash, and the rules and laws are made for the benefit of all society, not just the wealthy elite at the very top. Until we get that, the vast injustices that we witness on an almost daily basis will continue unchecked.

*Refs: Bernie Ecclestone: Ross McEwan: