Tuesday, 30 October 2012

Multinational organisations like Apple and Facebook regard tax avoidance as a moral imperative. Isn't it time we made them pay up?

In the midst of the Jimmy Carr tax avoidance scandal earlier this year (in case you were holidaying off-planet that week, Carr was left rather red-faced after it emerged that his accountant was channelling the comedian's earnings into a Jersey-based tax shelter), the BBC carried a fascinating interview with accountant Ronnie Ludwig. Yes, that's right, a fascinating interview. With an accountant.

As you might expect, Ludwig drew a firm distinction between tax evasion (trying to avoid playing tax by illegal means) and tax avoidance (attempting to mitigate the amount of tax you pay). But what most interested me was his answer to the question "Is morality part of your business?"
No, it isn't. We do not sit in judgment of our clients' moral values, nor do we preach morals to them. What we do is give advice based on the law. 
Pushed about whether a tax avoidance scheme designed to circumvent the intent of the law would bother him, he replied: "Probably, on a personal level, yes. But I'm there to advise on the legality of it, and if this particular scheme would work, and that is it." I have no doubt that Ludwig's stance is standard practice in most areas of professional life.

Jimmy Carr at least had the decency to be embarrassed once his tax arrangements became public ("I now realise I've made a terrible error of judgment"), but yesterday a gem of a press release landed in my inbox from Nigel Green, the chief executive of the deVere Group, the world’s largest independent financial advisors. Written in response to David Cameron's comments in parliament last week that he was "unhappy" with the level of tax avoidance by large corporations operating in Britain, Green retorts:
Mr Cameron is slamming companies who take legal measures to minimise their tax liabilities.  Of course businesses try and mitigate their taxation as they have a responsibility to their shareholders to turn as large a profit as possible, which is both honourable and economically responsible as profit creates jobs and wealth. 
That word "honourable" really leaps out - and not just because I've italicised it. Green and his ilk appear to believe, entirely sincerely, that tax avoiders are performing a morally laudable public service. This despite the fact that the "wealth creator" argument has already been comprehensively dismantled (for a quick overview, I recommend this brilliant column by the Guardian's Aditya Chakrabortty or this article by Salon's Michael Lind. For a longer view check out Matt Taibbi's long profile of Mitt Romney in Rolling Stone).

Better yet, Green goes on to say in his press release that the Prime Minister having the audacity to refer to massive corporate tax avoidance constitutes "demonising corporations" and could "incite protest groups to employ ‘direct action’ tactics against major brands". David Cameron: anti-corporate rabble-rouser. It's certainly a novel approach. 

Trying to frame a rational response to this level of brazen brass neckery (dictionary definition: "someone with no sense of shame about what they do") is extremely difficult. All we can say for certain is: Toto, I've a feeling we're not in Kansas any more. The global financial elite is operating in a mirror world, one in which black is white and up is down and being asked to pay your full tax bill is not only a gross imposition, but as Green makes clear, to do so would be a gross dereliction of duty to your shareholders.

Appeals to corporate conscience or the public good are now worthless. The only way to clamp down on tax avoidance is regulation that honours the spirit of the law and an aggressive approach to closing loopholes.

But the problem with closing loopholes, as Amy Rosenbaum pointed out in reference to VP nominee Paul Ryan, is that it requires standing up to the special interests that benefit from them. In August there were calls for Google bosses to be hauled in front of the Treasury Select Committee to explain why they paid only £6m tax on UK revenues of £395m in 2011. 

This is, just to be clear, the same Google who it was reported in May had met with Tory ministers at least once a month since the last general election. Unless the cosy relationship between UK politicians and multinationals is severed, the prospect of getting large corporations to pay their full tax bills seems a distant blot on the horizon.

Wednesday, 24 October 2012

The court interpreting saga continues as Capita's £300m Framework Agreement with the Ministry of Justice is branded "unsalvageable"

As the old adage goes: if it ain't broke, don't fix it.

Yesterday the Justice Select Committee (JC) held its first evidence session into the £300m court interpreting contract awarded to private translation firm Applied Language Solutions (ALS) by the Ministry of Justice (you can watch the evidence session here).

It's fair to say the contract, which came into play on February 1 this year, has been an unmitigated disaster (I co-authored a piece for The Guardian in March this year, one month after the new contract came into affect). Morale in the court interpreting community is dangerously low, with many highly-qualified and experienced interpreters drifting away from the profession in protest at slashed pay rates and what they see as a dangerous decline in the standard of court interpreting.

Back in March I also interviewed Mirela Watson, a Romanian translator with 15 years experience of court interpreting, who told me she was "extremely unhappy" with the new arrangements and that the standard of interpreting in some cases was so bad that a major miscarriage of justice was only a matter of time.

Rebranded as Capita Translation and Interpreting earlier this month, ALS's catalogue of errors is far too long to list exhaustively, but has included no-shows, providing interpreters with no court experience, and non-existent criminal background checks, with one man managing to register his cat as a qualified interpreter. While Capita insisted these were the inevitable "teething problems" encountered at the start of a new contract, the firm is still filling only 95% of bookings more than six months after the contract began.

The fact that bookings have levelled out at 95% - the MOJ's contract with Capita actually specifies they will meet 98% of bookings - is interesting in itself. Madeleine Lee, director of the Professional Interpreters' Alliance, suggested at the JC evidence session that, in cases that involve a long journey due to the lack of an available local translator, Capita bosses may be actively choosing to save money by paying the penalty fee for missing a session rather than stumping up for large rail fares.

While the number of bookings met has increased, serious problems remain. At the evidence-gathering session, the Law Society's criminal law committee chairman Richard Atkinson told of an arrested party with no prior criminal convictions being remanded into custody on three separate occasions as no interpreter had arrived to explain his bail conditions to him. 

Eventually police were forced to give up and release the man with no bail conditions set. Atkinson also told of a crown court trial delayed for a day, at the expense of thousands of pounds to the taxpayer, because no Albanian interpreters had been sourced.
All of which begs a simple question: why was the change made in the first place? In July a spokewoman for Capita told the Guardian:
The Ministry of Justice awarded the contract to ALS to address the weaknesses, lack of transparency and disproportionate costs of the previous service.
The idea that the new regime has fixed any of these factors is a joke. While John Fassenfelt, chairman of the Magistrates' Association, admitted the old system was far from flawless, he said he struggled to think of a single way it had improved since the Capita contract came into force. 

As for a lack of transparency, the new system has created a sizeable conflict of interest, with the same company now responsible for training, assessing and providing court interpreters. And as for "disproportionate costs" - the MoJ agreement has led to the collapse or delay of hundreds of trials, which will cost the taxpayer hundreds of thousands of pounds.
So what was the drive behind the switch? The truth is that it seems to be yet another case of outsourcing on ideological grounds. The political credo of our times is clear: public sector, local, piecemeal = bad, private sector, multinational, overarching = good. It emerged last week that senior MoJ officials had failed to even read the credit report they commissioned, which warned ALS was too small to handle the full MoJ contract and should be given no more than £1m a year of business.
The decision to hand over the court interpreting contract to Capita is simply yet another example of the bull-headed belief that subcontracting out services to private firms always leads to a sleeker, more efficient service. The recent failures of ALS, back-to-work firm A4e and private security contractor G4S would suggest otherwise. Up in front of the Justice Select Committee next Tuesday is ALS founder and former CEO Gavin Wheeldon (pictured). He could be in for a bumpy ride.

Sunday, 21 October 2012

Farewell then Andrew Mitchell. Now Labour need to capitalise on David Cameron's week from hell.

It has not been a great week for David Cameron. The PM has lurched his way through seven days which might inspire soup├žon of sympathy in even the reddest of hearts.

In a turn of events straight out of a The Thick of It script brainstorming session, Cameron announced at Prime Minister's Questions that he would be forcing energy companies to offer all customers their cheapest tariff. The only problem being that he'd not mentioned this proposal to energy secretary Ed Davey. Cue armies of flustered aides frantically briefing to the press that, um, this had been the policy all along, except, er, if it wasn't.

Chief whip Andrew Mitchell became former chief whip on Friday after sustained pressure from the 2010 intake of Tory MPs, while walking cadaver Lord Tebbit popped up today in the Observer to lambast "this dog of a coalition government." No, that's right, it appears he's not a fan.

The cracks in the coalition appear to be showing. The Observer reported that the cabinet were split on whether Mitchell had to go, with Teresa May apparently to keen to get rid, and Michael Gove in favour of letting him stay on. Now the question is simple: after Ed Miliband's barnstorming conference speech, can Labour capitalise on disarray in the coalition?