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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Margaret Hodge: ‘The tax you owe is a duty. It’s an obligation’

Category : Business

Margaret Hodge is on the warpath. This week alone she called MPs lazy, criticised a £1bn overspend on academies and raged against tax avoidance. So who’s next in her sights?

Every age searches, however ironically, for heroes, and in a time lacking in such old-fashioned things, Margaret Hodge, Labour MP for Barking, and, since 2010, chair of the Public Accounts Committee, has emerged as an unlikely candidate. Ever since she appeared on our TV screens last November, tearing strips off pale, suited, variously composed or stuttering men from Google, Starbucks and Amazon, she has been worth watching, for the theatre of it, and for something rarer: the vision of a politician freed from the party straitjacket and demanding in forceful, demotic terms to

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David Cameron urged to act over British Virgin Islands

Category : Business

Secret offshore havens ‘stain face of Britain’, says Lib Dem peer, as evidence grows over sham directors and hidden cash

The prime minister has come under pressure to act against Britain’s secretive offshore industry at June’s G8 summit, as leaked evidence continued to mount that politicians and tycoons from all over the world have used the British Virgin Islands to hide funds.

The premier of Georgia, Bidzina Ivanishvili, was the latest to be named, along with prominent Pakistani, Indian, Thai and Indonesian figures – while there was fresh evidence of Britons acting as front directors for companies based in offshore havens such as the BVI.

A senior Liberal Democrat figure said the leaks showed the secret haven of the BVI “stains the face of Britain”, as anti-corruption campaigners called for action.

Lord Oakeshott, the Lib Dem peer and a former Treasury spokesman, said: “How can David Cameron keep a straight face calling for the G8 to make big business pay tax when we let the BVI use British law and British protection to suck in billions in dirty money?”

He asked: “How much British aid paid to corrupt countries like Pakistan ends up behind a BVI brass plate?”

Despite mounting evidence that British sham directors are selling their names as fronts for offshore secrecy, the UK’s Department for Business, Innovation and Skills (BIS) signalled that politicians are reluctant to move against them.

A report on the sham directors scandal has already been sent to ministers by the BIS deputy head of corporate governance, Jo Shanmugalingam. This followed a Guardian-BBC investigation last year into the leaked data which revealed that two dozen Britons, giving obscure offshore addresses, were purporting to control thousands of companies.

The latest example, which emerged on Thursday, is of a “general builder”, Kevin Gaitely. He gives an address in south London and is registered as the director of Tamalaris Consolidated, a company blacklisted by the UK and US as a front for Iran. He is recorded as a director of a variety of other UK and BVI companies.

Ministers insist they are not ready to act. The BIS issued a statement on Thursday night saying: “The vast majority of companies and directors do comply with the law and they should not be unfairly burdened, so we will focus our attention on those who deliberately seek to break the law.”

It is not illegal as such for Britons to rent out their names on behalf of offshore companies, so the BIS statement appears to be a recipe for inaction.

Meanwhile MPs criticised tax avoidance in Pakistan in a report issued on Thursday by the UK Commons committee on overseas aid. It said: “We cannot expect people in the UK to pay taxes to improve education and health in Pakistan if the Pakistani elite does not pay meaningful amounts of income tax.”

Robert Palmer of the campaign group Global Witness repeated the call for Cameron to act, saying: “The massive cache of leaked documents demonstrates how hidden ownership of shell companies facilitates corruption, tax dodging and other crimes.”

He said: “The time to deal with this issue is now. Given that he has pledged to tackle these secretive shell companies at this year’s G8 summit in Northern Ireland, he and his fellow leaders must commit to publishing information on the people who ultimately control and own companies.”

The names of thousands of owners of secret offshore companies are currently being published by the Washington-based International Consortium of Investigative Journalists (ICIJ), in collaboration with the Guardian and other international media.

This follows the leak to ICIJ of a hard drive containing 200GB of internal files of offshore incorporation agencies in the BVI, Singapore and the Cook Islands.

A spokesman for the Georgian prime minister, who had set up a BVI company called Bosherston Overseas Corp, said he had done everything in accordance with the law: “For the reporting period of 2011-12, prime minister Ivanishvili had no interest in the company

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Letters: No way to dodge the tax haven issue

Category : Business

It’s sad, sombre, sobering and soulless, when one reads that the aid budgets in most of the wealthy countries are falling, yet so many of the really rich hide their money offshore for personal gain (Secrets of the rich who hide cash offshore, 4 April). Yet the privatising and profiteering 1980s and 1990s seem to have imbued the public with a “me-only” mentality. The really wealthy have fed at our expense, and instead of giving back to their countries, have gouged more private wealth instead of realising their obligations – and how much joy they could get from setting up foundations to aid the poor.

Unless governments set the standards and change their legislation to encourage opinion leaders to value those who give over those who are incredibly rich, we appear doomed to this selfish culture. We need more people like the Australian businessman Dick Smith, who believes that financial magazines should be publishing lists of the top 100 tax payers rather than the top 100 wealthy. In other words, we need to see tax paying as a positive, rather than a negative, and ensure that those who reap untold benefits (often from public licences and permits) contribute their fair share. Sadly, I don’t see this happening.
Peta Colebatch
Pretty Beach, Australia

• Your investigation into offshore account holders reveals the corrosive effects of financial secrecy. But the impacts are neither restricted to a few high-profile cases, nor to rich countries. Developing countries lost an estimated $859bn in 2010 to illicit financial outflows – more than they received in aid, and more than the Food and Agriculture Organisation of the UN estimates would be required to end hunger globally. This year, the G8 should act to end financial secrecy by agreeing to publish a registry of who owns companies, foundations and trusts, automatically share tax information with other countries, and push tax havens to do the same. This would help governments north and south to recover billions of dollars which could transform the lives of millions of people living in poverty.
Sol Oyuela
Christian Aid
Gavin Hayman
Global Witness
Kathleen Spencer Chapman
Brendan Cox
Save the

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Australia to force multinationals to disclose tax arrangements

Category : Business

Measures aimed at curbing alleged tax avoidance will see firms with revenues above A$100m required to published tax details

Australia will force corporate giants such as Google and Apple to disclose their tax arrangements in an effort to curb alleged tax avoidance by multinational corporations.

The increasingly borderless global economy means big firms often have no tax liability in a country, even with a major local presence, assistant treasurer David Bradbury said on Wednesday.

In Australia, multinationals including the local arm of Google have been accused of shifting income to countries such as Holland or Ireland where tax rates are lower.

“This should not be a guessing game,” said Bradbury after releasing measures that would require about 2,000 large and multinational businesses, including miners BHP Billiton and Rio Tinto with yearly revenue of A$100m (£69m) or more, to have their tax details published by the government.

“The government intends to improve transparency around how much tax large enterprises are paying. We want to make sure that large multinational companies are paying their fair share,” he said.

Australia’s minority Labor government last year released draft revisions to tax laws to stop profit-shifting in line with a push by Britain and Germany, and discussions last year within the Group of 20 wealthy nations.

Asked in a radio interview on Wednesday about alleged profit-shifting by Google, the prime minister, Julia Gillard, said she did not want to single out any company but said profit-shifting was an international issue requiring action by G20 nations.

“As a matter of principle, taxpayers, whether they’re companies or individuals, should pay their proper rate of tax,” Gillard said. “This is an ongoing discussion at an international level.”

The revisions, opposed by opposition conservatives, will be voted on by parliament after the 14 May budget, with the government requiring support from a handful of independent lawmakers and Greens holding the balance of power.

The amendments aim to shut down loopholes that risk the loss of more than A$1bn in government revenues each year by allowing IT firms to avoid or reduce tax through online sales.

Australia’s corporate tax rate is 30%, compared with 12.5% in Ireland. Major companies including Rio Tinto have already begun publishing tax details, expanding on information in existing financial statements.

Bali post-2015 talks may yield progress on private sector tax payments

Category : Business

Private sector can be a driver of development – but only if developed countries address global tax laws

Developing countries fully realise the importance of the private sector in creating jobs, a theme that dominates all national consultations conducted by the UN on any future set of development goals.

Harnessing the power of business for development has long been a subject of discussion. “Productive capacity”, another term for business, featured prominently in the conference of the least developed countries in Istanbul in 2011.

So it is in Bali, where a UN high-level panel appointed by Ban Ki-moon, the UN secretary general, is holding its third substantive meeting on the development agenda after 2015, focusing on global partnerships. In recognition of the role of the private sector, the UN panel includes Paul Polman, the boss of consumer goods giant Unilever.

The private sector is certainly being trumpeted by Justine Greening, the UK’s international development secretary, who is deputising for David Cameron because the prime minister could not make it to Bali due to a diary clash.

In a recent speech at the London Stock Exchange, Greening said she wanted to see “far more businesses joining the development push with the Department for International Development” (DfID). Her enthusiasm for the private sector is not shared by many civil society groups. In a communique released on Sunday, civil society organisations struck a sceptical – if not hostile – note to business.

“The private sector is increasingly emphasised by governments as an important development actor, but it is one that lacks appropriate regulation and accountability: the conditions for private sector engagement risk undermining development gains rather than supporting them, through sharply escalating human inequalities,” said the communique.

The NGO Save the Children has adopted a more nuanced position, acknowledging the private sector as an important driver of development – creating jobs, innovating, providing products that meet development needs and through paying taxes.

Citing the $648bn of inward foreign investment to developing countries in 2011, Save the Children said in a new policy brief (pdf) that the engagement of the private sector in the conception and implementation of the post-2015 development framework is critical to its success.

Businesses, however, should adopt a “do no harm” approach, argued the brief authors. This means analysing the potential harm that products, practices and suppliers and their day-to-day business may do.

“It means they must adhere to legislation, but much more than that, it includes adhering to international human rights standards, respecting international labour and safety conventions, paying taxes appropriately, and addressing environmental impact,” said the report.

That multinationals should pay their fair share of taxes may be one of the concrete results from this high-level panel process, said Claire Melamed, head of the growth, poverty and inequality programme at the Overseas Development Institute thinktank.

“If there is momentum on sorting out tax rules, then it is a big step,” she said. “If developed countries sort out global tax laws, this could be one of the things people will remember from this process.”

The debate on jobs and taxes reflects the Jekyll and Hyde approach of the private sector. Greening neatly – if inadvertently – encapsulated this in her London speech, when she praised SAB Miller, the brewing giant, for working with 1,200 farmers in South Sudan to supply its brewery in the capital, Juba; according to ActionAid, governments in Africa may have lost as much as £20m through SAB Miller’s non-payment of tax.

“You do see companies with a strong corporate social responsibility (CSR) that do everything to avoid taxes,” said one business representative who did not want to be named. “They will say it is within the law but, if they have aggressive tax avoidance, how does that sit with their CSR declaration?”

How indeed. Save the Children is urging the high-level panel to recommend in its report to the UN general secretary in May that all parties to the post-2015 goals ensure greater transparency and accountability by all companies. A potential indicator would be a legislative requirement that all large companies report on their non-financial performance – a commitment that would cover environmental, social and governance impacts.

Such legislation, said Save the Children, could be accompanied by a robust set of guidelines that could take the global reporting initiative – a framework for gauging sustainable businesses – as a starting point.

There are various other instruments on accountability, such the UN’s global compact, which sets out guidelines for corporate behaviour, the EU’s accounting directive and the extractive industries transparency initiative, to name but a few. In fact, part of the problem is the proliferation of transparency mechanisms – hence Save the Children’s favouring of the GRI, which it considers the most sophisticated existing framework.

The commitments to transparency and accountability could be the condition for businesses that want to be “partners” in development, said Melamed. The incentive for businesses would be the chance to tap new markets and make profits, but the quid pro quo would be for them to abide by such principles as the GRI.

“Governments,” said Melamed, “can say to companies that want to be partners, for example, in nutrition goals: ‘You can’t be be in the partnership unless you meet transparency on reporting and labour standards’.”

Financial Conduct Authority chief says increasing fines will not change culture

Category : Business

Head of new regulator says customer activism and changing boardroom culture will improve behaviour in financial sector

Increasing the level of fines on highly profitable financial institutions will not alter their behaviour, the head of the Financial Conduct Authority said on Thursday as he set out his vision for the new regulator.

Martin Wheatley, chief executive of the FCA, also admitted that there was a concern that the situation in Cyprus, where banks have been closed since Friday while the country hammers out details of a €17bn (£14.4bn) bailout, could cause problems elsewhere.

Wheatley said higher fines on firms would have no impact unless top management also took responsibility and customers were ready to move their accounts if they were fed up with the behaviour of the firm. “To be honest, to the banks that make billions of pounds in profits, whatever the level of fine it will get passed on to shareholders.”

Raising the level of fines is not going to make firms change “unless individuals are held to account… and the consumers make a decision themselves that we’d rather bank elsewhere,” said Wheatley.

This week the Financial Services Authority (FSA) said it was taking a tougher approach to fines by basing them on stock market value rather than assessments made by the enforcement division.

On Cyprus, Wheatley said an initial plan to skim €5.8bn from savers’ bank accounts as part of the bailout could hit confidence in the banking system as it may undermine the €100,000 guarantee on deposits across the EU. Cyprus has now backtracked from the idea of putting a levy of 6.75% on deposits between €20,000 and €100,000 and a 9.99% levy on any deposits larger than that.

“From our point of view the confidence in the banking system was very strongly underpinned” by the guarantee put in place after the 2008 crisis, he said. He saw it as a “very important principle”.

“It does undermine confidence in the banking system when what people previously thought were insured deposits [appear not to be],” Wheatley said.

The FCA is being spun out of the FSA, which is being disbanded at the end of this month, and will take on the existing investigations into Libor rigging. It will also take care of consumer issues and the conduct of firms, and be responsible for promoting competition. A new divisional head is being recruited. Banking regulation is moving a new body – the Prudential Regulation Authority – inside the Bank of England.

Wheatley attempted to set out a different tone to Hector Sants – the former chief executive of the FSA who now works for Barclays – who had previously warned the City to “be afraid” of the FSA.

“You won’t hear from us the ‘be afraid’ tone,” Wheatley said. “We want to get back to us having a discussion with the CEOs of firms.”

Wheatley had previously said that he would “shoot first, ask questions later” in dealing with financial products that may not be appropriate for consumers, as the FCA will have the powers to stop banks and financial firms selling products that it has concerns about.

Wheatley said that the current payment protection insurance scandal – estimated to have cost the industry £12bn – was a reminder that it was “better to deal” with problems early. “We will be on the front foot when we see things we don’t like,” Wheatley said.

Wheatley refused to comment on the near-£40m of bonuses that had been released to nine Barclays staff on Wednesday, shortly after the budget. But said he “understood the point” after a year in which Barclays was fined £290m for rigging Libor. Speaking generally, he said: “It is a problem if rewards are taken that don’t bear any relation to the risk that was taken by the institution.”

He said the FCA had demanded that bonuses be clawed back from bankers at some institutions.

In addition to the potential for contagion in the eurozone, Wheatley said the regulator was also concerned that customers would start to seek out riskier products because interest rates were so low, and that once rates started to rise customers might start to have difficulty repaying loans.

John Griffith-Jones, who will be the non-executive chairman of the FCA, said the regulator could make “a fresh start.”

“Prevention in this industry is much cheaper than a cure,” he said.

A year after the shareholder spring, the green shoots of rebellion are withering

Category : Business

About this time last year, Bob Diamond’s pay package seemed to have triggered a new anger in investors. Looking back now, it seems the headlines were better than the reality

The anniversary of the start of the so-called shareholder spring happens about now. A year ago, it was the publication of Barclays’ annual report that gave the first hint that something might be up: the revelation that the bank had paid the £5.7m tax bill of then chief executive Bob Diamond astonished even those hardened to bankers’ self-serving definitions of fair rewards. A showdown of some sort seemed to be on the cards.

A year on, the shareholder spring feels less exciting than it did at the time. Diamond has gone – not for any pay outrages but because of the Libor scandal that broke a few months later – and the amazement now lies in the fact that only 27% of Barclays’ shareholders voted against the pay report.

Antony Jenkins, the new chief executive, and Sir David Walker, the new chairman, have virtually acknowledged that pay practices at Barclays must be reformed more quickly. All that has really happened is that something closer to common sense has prevailed. And there’s still a long way to go: Barclays’s song is less shrill than in the past, but the £1m-plus bonuses are still flowing even as its performance, measured by return on shareholders’ equity, remains sub-par.

Or look at the direct casualties of the spring, like Andrew Moss at Aviva. How on earth, we now wonder, did he survive so long? The new boss of the giant insurer cut the dividend by 44% last week, admitting in effect that Aviva had been paying out sums it could not afford. And then remember that Moss received a 90% vote in favour of his re-election as a director, as pusillanimous investors instead registered unhappiness by voting against the pay report. Calling that a rebellion was an exaggeration. It was more an embarrassed cough on the part of City investors at Aviva’s plunging share price.

Indeed, various studies of what happened last spring make the entire show appear stronger on headlines than on substance. Out of a sample of just over 300 annual meetings, the average vote against pay reports was 7.64% in the first six months of 2012, compared to 6.1% in the same period a year earlier, according to a study by Pirc, the independent investment consultancy. Pirc also compared 234

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Hedge fund boss must pay millions of pounds in tax after court ruling

Category : Business

Patrick Degorce promises to appeal after HMRC persuades court to throw out film investment scheme

One of London’s most successful hedge fund managers, Patrick Degorce, has been forced to part with millions of pounds in tax after Revenue and Customs persuaded the courts to throw out a complex film financing investment which sought to shelter earnings of almost £19m.

The discredited scheme was marketed to the Kensington-based fund manager, best known for co-founding the Children’s Investment Fund with Chris Hohn, by financiers from Goldcrest Pictures. Goldcrest was behind films such as Gandhi, The Killing Fields, Chariots of Fire and A Room with a View.

The treasury minister David Gauke said the Goldcrest structure was a “dubious avoidance scheme” and that HMRC was getting increased powers and resources to clamp down on such activities. “The government has made it clear that we will not allow marketed avoidance schemes to deprive the UK of vital tax revenues.”

It is the latest in a long line of film investment schemes to be challenged by the taxman. Desperate to get on top of the backlog of such cases, in December Revenue and Customs wrote to investors in certain film financing structures – many of them among the UK’s wealthiest bankers, financiers and celebrities – urging them strongly to settle. Settling was “the best opportunity to resolve these disputes in a way which was cost-effective and consistent with the law”, investors were told.

HMRC said its victory over Degorce underlined how weak the credibility of many tax avoidance structures were that involved, or purported to involve, film investments. “Sadly, many people have been tempted by similar schemes which we also believe don’t work, and we have opened a settlement opportunity to get them back on the straight and narrow,” said Jim Harra, HMRC director general. “I would urge anyone in this position to sign up for this facility quickly.”

Goldcrest is owned by the veteran film financier John Quested, 77, who lives in Switzerland. Its outlawed scheme had been sold to 11 other wealthy investors in addition to Degorce who had sought to reduce income taxes by incurring combined losses of £47.6m. If successful, they would have benefited by £17.7m.

Artificial “losses” of £18.8m created for Degorce by the Goldcrest-devised investment structure would have benefited the fund manager by £7.5m. In a statement, a spokesperson for Degorce – who set up a $700m (£466m) hedge fund called Theleme Partners, based in Mayfair, three years ago – said he was disappointed that the tax tribunal had thrown out his appeal against HMRC’s decision and would appeal against the judgment at the earliest opportunity. “HMRC’s public statement … is riddled with errors,” the spokesman said.

“Mr Degorce believes his film business has been conducted in full accordance with UK tax rules. He devoted substantial resources and time to create this successful business, which will pay several millions in tax in the coming years. As soon as HMRC first questioned the business arrangements in 2009, Mr Degorce suspended his film activity pending clarity on the taxation issue.”

During the dispute, it emerged that Degorce, a former Merrill Lynch banker and one-time French naval officer, had also participated in separate film financing schemes devised by Ingenious Media which were also under investigation by tax inspectors, though the tribunal was not asked to consider their merits. Further investments by him in other Goldcrest schemes were also being examined. The tribunal only considered investments in 2006-2007, involving the purchase and assignment of rights in two Hollywood comedies – Mike Myers’s The Love Guru and Ben Stiller’s Tropic Thunder.

Tax avoidance schemes involving film finance have attracted the ire of MPs on the public accounts committee, with the chair, Margaret Hodge, describing some as “immoral” when representatives from the industry appeared before parlliament in December.

The Ingenious Media founder and chief executive, Patrick McKenna, told MPs: “I can tell you categorically that we are not involved in the business of tax avoidance or the marketing of tax avoidance schemes. We are in the business of creating much-needed commercial investment for the creative industries.”

Hodge responded: “For heaven’s sake, Mr McKenna, have a little bit of common sense. I was involved, as culture minister, in that film tax. I was involved in trying to encourage a lot of film production here in the UK, and it was the most disappointing thing, particularly from a company such as yours that pretended to be at the heart of supporting the creative industry … Actually you were exploiting a well-intentioned tax relief to try to get individuals, and God knows who else, to mitigate their taxes.”

McKenna said this was not correct.

Tax campaigners study multinationals’ enthusiasm for going Dutch

Category : Business

Brewer SABMiller is just one of the consumer goods giants accused of using tax treaties in the Netherlands to shift profits around the world and avoid millions in tax

In the centre of Rotterdam lies the Cool district, well known for its bars, cafes and cinemas. Less well known, though, is a small office used by 10

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To stop firms gaming the tax system, make them admit what they’re doing

Category : Business

There is nothing illegal about deferring bonuses to the next tax year. But there is quite a lot of shame in having to announce the fact publicly to one’s struggling customer base

Lloyd Blankfein, the boss of Goldman Sachs, is unrepentant about plans – now dropped – to help the bank’s already highly paid traders avoid paying the top rate of income tax. To recap, Goldman had been thinking about deferring part-payment of bonuses from 2009, 2010 and 2011 into the new tax year to help recipients benefit from a fall in the top rate of tax from 50% to 45%.

The firm surrendered only after Sir Mervyn King, governor of the Bank of England, said he found the idea “depressing” and Treasury minister Sajid Javid quietly intervened.

There is, of course, nothing illegal about moving payments beyond 6

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