Tag: corruption

Why the travails of Apple are symptomatic of a much wider problem

By Daniel Margrain

In the wake of the democratic decision of the British people to exit from the EU, it would paradoxically appear to be highly probable that the UK government will give away the kind of sovereignty the ‘Brexiteers’ claim to covet by signing an unadulterated TTIP deal with the United States government. At a point in time in which the UK government appears set to extricate itself from the ‘bureaucratic and unaccountable’ EU, the multinational conglomerate Apple is availing itself of Ireland’s tax system, the most favourable national tax regime in Europe.

However, the European Commission ordered Apple to pay the Irish government £11bn of back-dated tax that it has avoided. The Irish Cabinet agreed to appeal the European Commission diktat. Irish PM, Enda Kenny, ordered his ministers back from their summer holidays after the European Commission accused Ireland of breaching state aid rules.

But Independent minister John Halligan initially said that the Irish government should take the cash owed by Apple in order to fund hospital services in his constituency before eventually agreeing to the decision to appeal the ruling. The European Commission alleges that Apple’s effective tax rate in 2014 was a mere 0.005 per cent which means that someone earning £30,000 a year at an equivalent rate would pay just £1 a year in tax.

Meanwhile, the reaction of the British government to the impasse, was not to support the EU in its noble endeavor, but rather to remain on the sidelines in the hope that the situation would play out to their advantage, thus providing them with a potential opportunity to entice Apple with a ‘sweetheart’ ‘investment’ deal. Meanwhile, as Alex Callinicos  pointed out “Apple is playing the EU and the US off against each other over which gets the taxes it hasn’t been paying.”

It’s precisely the logic that overrides these kinds of shenanigans that explains one of the reasons why wealth inequality continues to rise to stratospheric levels, and why governments are witnessing a backlash against globalization. Over the past 40 years, the productive capacity that capitalism has engendered, allied to the ability of successive governments to transfer assets and capital from the public to the private sphere, has created an enormous concentration of wealth at the very top of society.

Britain is a country where armies of lawyers and accountants sift through mountains of legal paper work in order to justify on a legal basis those at the very top paying as little tax as possible. This has happened as a result of the restructuring of rules and regulations which provide corporations with legal loopholes with which to jump through.

In the case of Apple, profits are funneled into a ‘stateless company’ with a head office which, according to EU Commissioner, Margrethe Vestager, “has no employees, premises or real activities.” In other words, Apple’s resident European office for tax purposes doesn’t exist. It has no staff and no location so it doesn’t pay any tax on most of the money it earns outside the United States.

Ireland has been told that it must claw back the £11 bn of back taxes from Apple even though Ireland’s ruling politicians say they don’t want it. This is money which could be spent for the benefit of an electorate who these politicians supposedly represent. Irish finance minister Michael Noonan intimated that individual states, not the EU, are responsible for individual taxation policies. “It’s an approach through the back door to try to influence tax policy through competition law.”, he said.

But what use is a tax policy if it is not intended to benefit human kind? If tax havens like Ireland behave in a way that negatively affects the well being of humans by reducing the resources available to fund services and infrastructure of which the functioning of civil society depends, then such a tax policy is not worth the paper it is written on. Does Ireland look like a country that doesn’t need £11 bn?

Apple’s billions worth of profits generated in Europe and the Middle East are transferred to Ireland where the company pays tax on just 50m euros worth. The rest is sent to their non-existent ‘virtual’ head office. As of 2015, the company’s lightly-taxed foreign cash off-shore mountain of $187bn is the biggest of any U.S multinational.

 

How can Apple defend this state of affairs whilst simultaneously maintaining the moral high ground by claiming that any attempt to prevent such an immoral situation will be bad for the societies in which they operate?

The activities of a virtually non-existent tax-paying company like Apple is already bad for these societies. The reason the masses, as opposed to companies like Apple, are subject to tax at a fixed rate, is because the former, unlike the latter, are not in the financial position to be able to avoid it. Those who are least able to pay taxes are the ones who have it deducted from their wages in full at source.

It’s not the overreaching arm of the EU ‘interfering’ with the tax laws of individual member states that’s the problem, but the fact that multinationals pit one country against another to avoid paying as much tax as possible while availing themselves of everything the rest of us pay for. The ‘race to the bottom’ is one in which corporations are constantly on the look-out to ‘up-sticks’ in the search for ever cheaper tax havens.

The end goal is a scenario in which the corporations pay no tax at all, while the masses pay for civil society because corporations like Apple, Google and Starbucks don’t have to. The upward spiral of money from the many to the few is increasing at a rate of knots due to a form of state-managed capitalism that perpetuates it. Moreover, it is happening to the detriment of the whole of the human race.

Widespread public anger towards this kind of systemic corruption is stymied daily as a result of the distractions associated with TV light entertainment and sports programmes. All this is aided by a largely uncritical corporate-based journalism. The ability of the rich and powerful to lobby governments in support of their own economic narrow interests, often to the detriment of the environment and society at large, exacerbates the problem.

Shortly before becoming the UKs unelected PM, Theresa May, intimated that the Tory government she would go on to lead would instigate greater transparency between government and big business and that she would no longer tolerate the undue influence of corporate power on domestic UK politics and the corruption through the power of lobbying that this implies. However, less than two months later, the Guardian revealed that a £3,150 payment to the government will buy business executives strategic marketplace influence.

The privileging of a tiny minority of the wealthy and corporations in this way, can be regarded as nothing less than the usurping of democracy. The mass of the working poor whose exploited labour creates the wealth from which the rich benefit and who often vote for corporate-funded politicians diametrically opposed to their own interests, is indicative of the propaganda power of a corporate and media-dominated political and economic system.

With a corporate tax rate levied at just 12.5 per cent, Ireland is effectively prostituting itself to Apple who can legally say that legally they are doing nothing legally wrong. The conventional argument goes that if Ireland failed to attract corporations like Apple, then it would be places like Belize, Bahamas or any of the British tax avoidance dependencies who would. But this zero-sum game means that while this situation is great for the CEOs of the corporations and their shareholders, it’s terrible for everybody else.

Because of the unfair competitive advantage the multinationals are able to lever, shops close, factories shut down and local businesses go under. Companies like Apple not only have governments on their side and can buy and manufacture on a vast scale, but they are not subject to the relatively higher rates of tax small businesses are forced to pay.

This situation is compounded by the fact that the typical consumer will tend to look for the cheapest goods and services available which, as a result of economies of scale, the big corporations will be most likely to provide. In such an eventuality, the role that corporations play in society becomes more prevalent at the expense of the small business.

The logical corollary to this is that eventually everything will be sold by a few giant multinational corporations who will come to dominate the marketplace resulting in less choice for the consumer, as well as its monopolization by private capital. This process was predicted by Marx who understood that capitalism was an inherently contradictory system.

In order to gain a competitive advantage over their rivals, capitalists either need to introduce mechanization to speed up the production process, reduce wages or replace their existing workforce with a cheaper one. Here’s where the contradiction comes in: If all capitalists are engaged in this process, their workers will have less and less money so they won’t be able to buy what the capitalists are producing to sell.

The capitalists, therefore, are effectively ‘creating their own gravediggers’ as a consequence of there being less demand in the economy. How has the system managed to have kept going when people don’t have money to buy things? The answer is the emergence and widespread availability of credit. However, the problems of capitalism are now so severe, so systemic, so global, that many people are wondering whether the system is coming to an end.

The Panama Papers

By Daniel Margrain

The handing over by an anonymous source of massive amounts of data from the Panama-based, German-run law firm Mossack Fonseca which specializes in providing clients with dodgy offshore accounts, had clearly contributed to some unease within the camp of British Prime Minister, David Cameron. Rarely, if ever, do corporate journalists give Cameron a hard time and this was no exception. Having just returned from one of many in a long line of luxury holiday’s on the back of the impending collapse of the UK steel industry, a car crash shambles of a budget, divisions within his own party over Europe and with government policy over schools and health in meltdown, Cameron angrily snapped at reporters in response to feeble attempts to bring him to account regarding the extent to which his father allegedly attempted to shield his wealth from the UK tax authorities.

Cameron was clearly in no mood for such media games especially as both he, the media elite and the Westminster political hierarchy in general, know that due to the specific nature of the leak, much of the potentially incendiary material will never see the light of day within the public domain. It’s disgraceful that Cameron and some Tory ministers are using the ‘privacy prerogative’ to hide behind the morally repugnant and possible criminal activities associated with Cameron’s father which means that the PM is also potentially complicit.

The reason why leaked material that’s likely to be detrimental to the powers that be is hidden from the public on so called privacy grounds can be explained by the fact that the said material is being managed by the International Consortium of Investigative Journalists (ICIJ) who in turn are supported by some of America’s biggest corporate funders. I’m not reassured by the ICIJ when they said they’ll be releasing the full list of people and companies in early May. In any case, the true nature of the revelations won’t be revealed as to who was acting legally and who wasn’t.

Had the leaker approached Wikileaks with the 2.6 terabytes of data consisting of 11.5 millions documents, rather than Suddeutsche Zeitung – and by extension, the Western media more widely – the impact and potential consequences for those concerned would of been far greater. Instead, the largest data leak that journalists have ever worked with will be selectively ‘drip-fed’ with most of the significant amounts implicating Western elites being censored from the public gaze.

We have already seen signs of this with Luke Harding’s Guardian piece published Monday (April 4) which, predictably, focused on Russian individuals and companies whose wealth represents a minority of the money stashed away. Harding’s seriously compromised piece failed to mention that 9,670 UK Companies and over 3,000 US Companies, as well as Cameron’s father, top Tories and some of the UK’s biggest allies, were implicated and/or named in the Panama Papers.

Did the corporate media vilify David Cameron for some serious high-ranking connections to this mother of all leaks? No, it did not. Did the same media publish any damning report that featured Cameron airbrushed alongside global ‘baddies,’ like former Iranian leader Ahmadinejad? No. But it seems as far as Putin and Russia is concerned, anything the media dishes out is regarded by the elites as fair game.

Arguably, the most important graph in the Panama Papers scandal is highlighted below. It shows the number of intermediaries (banks, accountants) in each country.

 

There is no mention of these by the media or of the numerous huge Western multinational corporations or billionaires, some of whom sit in the House of Lords. Neither does Harding mention by name any of the 12 leaders, past and present, identified in the documents. Instead, the Guardian journalist, in line with the methodological approach adopted by Suddeutsche Zeitung which received the leak, selectively focused on the West’s official enemies – Russia, Syria and North Korea.

Despite the fact that Putin wasn’t personally mentioned in the Panama Papers, I’m in no doubt whatsoever that since he uses Russia as a personal fiefdom, he should not be exonerated. It’s one thing ridding the country of the oligarch’s who were responsible for asset stripping its resources which subsequently turned Russia into a gangster capitalist paradise, but another to pocket a large chunk yourself by getting shot of the competition which is effectively what Putin has done. Putin’s primary interest is Putin himself.

But what the Panama papers reveal is that he’s not alone. The global web of corruption and tax avoidance extends to 72 states, heads or former heads of state. Yet you would be unlikely to have reached this conclusion having read the Guardian article or observed the cover of the paper which sensationally headlined with the words “Exclusive: The Secret $2bn trail of deals that lead all the way to Putin”. Neither would you have reached the conclusion having watched the UK state broadcaster, the BBC, who chose to mention just five of the 72 – Egypt, Iceland, Gaddafi, Putin and Assad.

Central to all this is the pathetic kow-towing to power by our media that’s supposed to be impartial and independent yet they act reflexively en masse by directing their fire at enemies of the state. If you don’t believe me, just look how often Putin has been foregrounded in the coverage of these leaked documents, complete with the requisite ‘shady’ photographs. Naturally, the media cannot be perceived to be so transparently biased which is why the occasional ‘balanced’ message is required. Step forward the Telegraph.

On Monday April 4, the paper dutifully reported:

David Cameron’s father ran an offshore fund which avoided paying tax in Britain by hiring Bahamas residents, including a bishop, to sign paperwork…The fund, which was established in the 1980s with help from the Prime Minister’s late father, continues today. The Guardian says it has confirmed that ‘in 30 years Blairmore has never paid a penny of tax in the UK on its profits.”

Nevertheless, the targeting of a dead man is virtually risk free as will be the ‘outing’ of a senile corrupt Lord to be cynically used a sacrificial lamb for the media hacks to peruse over if and when the time is right. Ultimately, the UK Secret Services will never allow the media to publish anything that is likely to damage the ‘reputations’ of leading establishment figures. The destruction of the Snowden files that the Guardian had in its possession but were requested to destroy by M15, are proof of that.

I had been watching the UK media all day on Monday after the story had broken, and news bulletins prefaced the scandal with either Putin, Cameron’s deceased father or Assad. It’s mainly the first two which are easy and convenient targets intended to deflect away from the crimes that implicate ‘our’ leaders. Almost certainly then, there is a highly motivated political agenda at work here that probably explains why Iceland, who locked up many of its corrupt and criminal bankers, was also named.

Following the revelations that Iceland’s PM was implicated in the scandal, the people of Reykjavik took to the streets in their thousands. At the time of writing, I watched the BBC News at Ten which reported from outside the Icelandic parliament. Following the resignation of the PM, the BBC reporter interviewed some Icelander’s. What the people on the streets of the country are increasingly aware of is that corruption within the corridors of power in Iceland and elsewhere is systemic.

The elites on both sides of the Atlantic are concerned about the effect the revealing of undoubted widespread and systematic corruption within the high echelons of media and politics will have on the body politic of Europe and North America. They don’t want Reykjavik to spread to London, Paris and Washington. This is another reason why the full scale nature of those implicated will never be revealed.

What all this highlights is the public is being cynically deceived by the corporate media in order to get their fellow elites off the hook. Craig Murray’s brilliant expose of the BBC Panorama documentary entitled Tax Havens of the Rich and Powerful Exposed, highlights the extent to which BBC producers and presenters will go to in order to misdirect its audience to this end. Perhaps less subtle than the overt propaganda pieceSaving Syria’s Children, but no less effective, the BBC related at length the stories of the money laundering companies of the Icelandic PM and Putin’s alleged cellist. As Murray said:

“The impression was definitely given and reinforced that these companies were in Panama. [Presenter] Richard Bilton deliberately suppressed the information that all the companies involved were in fact not Panamanian but in the corrupt British colony of the British Virgin Islands. At no stage did Bilton even mention the British Virgin Islands.”

Murray goes on to say:

“Is it not truly, truly, astonishing the British Virgin Islands were not even mentioned when the BBC broadcast their “investigation” of these documents?”

Indeed, Mr Murray, it is.

The BBC and media in general are obscuring the key role British money-laundering via its base in the British Virgin Islands plays in these transactions. This scandal must also be seen within a context in which between £30bn and £120bn a year of UK tax is either avoided, evaded or uncollected (sources (Tax justice/ PCS estimate & HMRC estimates). Meanwhile, £16bn worth of benefits a year remain unclaimed (HMRC estimate) against a backdrop in which benefit fraud amounts to a relatively tiny £1.2bn (DWP estimate).

Which of the above figures do you think the government and their media mouthpieces constantly highlight?

It can never be stated enough that this corruption scandal is mostly centred on the British Virgin Islands. Yes, the corruption is widespread and involves a number of world leaders, some of whom are our official enemies. However, in the broader scheme of things, these political figures are essentially peripheral. The level of corruption is widespread and systemic. As far as the major players are concerned, the media need to focus closer to home.

Labour are still a bunch of crooks

UPDATE

36,000 people voted for swizzler Tessa Jowell to be Labour candidate for London’s mayor. If you consider the facts below, that says something very scarey about a substantial portion of Labour Party membership, even if she didn’t win.

The fact that it is still a serious possibility that a substantial number of Labour members will vote for Tessa Jowell to be the party’s candidate for London Mayor – which Labour electorate includes the new membership – should be a serious jolt to anybody who believes the Labour Party is transformed. The Labour Party is still full of crooks, and Tessa Jowell is one of the biggest crooks.

As I wrote in 2009
:

Tessa Jowell actively participated in the laundering of the corrupt payments from Silvio Berlusconi, given to her husband David Mills in return for false testimony in court to cover up some of Berlusconi’s endless crooked dealings. Tessa Jowell participated as a full partner in the three time remortgaging of her home, paying off the mortgage with cash and then remortgaging. She has stated that there was “Nothing unusual” in this.

Most people would think it was very unusual to be able to pay off a large mortgage with cash at all. To do it twice and remortgage again each time would strike most of us as very weird indeed.

Tessa Jowell claimed she did not read the mortgage documents before signing them or know where the money was coming from. David Mills was eventually acquitted on a technicality by the Italian legal system, but it is not in dispute that the money came from Berlusconi or that he lied in court. Jowell claimed she did not read the documents and had no idea where the money came from or what her husband was doing. She then “left” him and went through a sham “separation” which the whole London establishment knew was a fake, (but the media obligingly did not publish), until the heat died down and the couple could get together again.

Revelations about Labour crookedness constantly make you gasp, such as the meetings Cherie Blair set up with Hillary Clinton on behalf of the Qatari royal family. Blair’s free holidays on Berlusconi are well remembered. Labour can claim that the Corbyn election is a defeat for Blairism and a new leaf. But if today Jowell gets more than a derisory vote, we will all know Labour are still a bunch of crooks at heart.

Article written by Craig Murray and published on his blog on September 11, 2015.

Public Coffers Hammered

 Impressed: An image provided by West Ham which shows how the stadium could also be used as a concert venue after the Games

The new English Premier League football season begins today. As as life-long West Ham United supporter my expectations for a successful season are typically low. If the Hammers finish in a top eight position and have a good cup run I’ll be happy. With our move away from our spiritual home at the Boleyn into the Olympic Stadium at Stratford, east London next season, it’s imperative that we maintain our premier league status.

With a new manager and former player (who appears to be finally attuned to the  entertainment ethos of the club that the fans demand) in place, all is relatively good on the playing side of things. As far as the fans are concerned, off the park shenanigans are good too given that those who run the club plan to substantially reduce season ticket prices in an an attempt to fill the stadiums 54,000 capacity – a model that other clubs are encouraged to adopt (1).

But here’s the problem. West Ham United are paying just £15million towards the £272million cost of converting the Olympic Stadium despite the fact that, should the club still be a Premier League next year, it will – under the terms of a new TV deal – be entitled to a payout of at least £99million (2).

Small business people, many whom whom run their businesses on extremely tight margins, might be wondering how the elite within football, like multi-millionaire lady Brady, who brokered the deal are apparently immune to the kind of market forces that the former are compelled to adhere to?

As far as the super-rich with contacts to the top echelons of political power – whether they be premier league chairmen or City bankers – are concerned, it would appear that the kind of business risks the rest of us are prone to, is not applicable to them. The Premier League football racket is akin to the banking racket.