Category Archives: Business
Telecoms company Cable & Wireless to quit UK after 140 years
Firm built to connect far-flung reaches of British empire to relocate from London to Florida
Cable & Wireless Communications, the last remnant of a telecoms empire that once employed 54,000 people around the world, is to leave the UK.
After 140 years as a British company, CWC is relocating its headquarters from Holborn in central London to southern Florida, transferring about 100 jobs to the United States.
CWC will keep its London listing, but the remaining UK ties of a company that was built to connect the far-flung regions of the British empire have been gradually severed.
In 2010 the firm was demerged from its UK network, which was placed in a separately listed company, Cable & Wireless Worldwide. That business was bought by Vodafone last year.
More recently CWC has sold its networks in the Channel Islands, the Falklands and the Isle of Man so that it can focus on operations in Panama and its Caribbean stronghold.
The Bahraini national carrier Batelco has bought the British isles operations, as well as those in the Maldives and Seychelles, and is in talks to acquire CWC’s Monaco business.
As part of its retrenchment to the pan-American region, CWC has also disposed of its Macau network, selling it to Citic Telecom for $750m (£490m).
Chief executive Tony Rice, who has overseen the transformation, will make the move to Florida, where the preferred locations are currently Miami or Fort Lauderdale.
“The group is now focused on a single region with low penetration for data services and strong growth potential where we have scale and market leadership,” said Rice. “This focus will create a more unified, effective and cost-efficient group.”
Assembled from a number of British telegraph companies founded in the 1860s, Cable & Wireless was merged with the Marconi operations in the 1930s and nationalised shortly after the second world war as the government sought to exercise closer control of key strategic assets.
In 1981 it became the first company to be privatised under Margaret Thatcher, and was later the first UK operator to offer an alternative telephone service to British Telecom, via its subsidiary Mercury Communications.
Poor investments slowly whittled away the group’s scale. During the dotcom boom chunks of the family silver were sold, including the One2One mobile phone business (now T-Mobile).
Some £5bn of the proceeds were put into creating a web-traffic carrier by buying internet companies, mainly in the US.
The idea was ahead of its time. Without traffic to fill the brand new fibre networks, price-cutting became ferocious.
In 2003 the firm rang up a loss of £6.4bn, from revenues of £4.4bn. The Caribbean, where Cable & Wireless was on many islands a monopoly provider, was the only part of the business still making a significant profit.
CWC now makes $586m in revenues in Panama and $1.12bn a year from the Caribbean. Its Monaco business generates $236m a year in revenues.
Announcing full-year results on Wednesday, Rice said further job cuts over the coming two years would help create $100m a year of savings.
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Markets rally as Ben Bernanke backs further quantitative easing
Federal Reserve chief makes clear he has no intention of cutting short $85bn-a-month stimulus programme in near future
Global markets continued their rally on Wednesday as Ben Bernanke, chairman of the US Federal Reserve, made clear he had no intention of cutting short his $85bn-a-month (£56bn) quantitative easing programme in the near future.
The US economy was improving, but “headwinds” including government budget cuts were dragging on the recovery, Bernanke told the US Congress.
He denied his stimulus programme was causing a new bubble similar to the one experienced by the housing market ahead of the recession.
The Dow Jones industrial average was up nearly 90 points at 15,474 by mid-afternoon, while the FTSE 100 added 36.40 points to 6840.27, coming within 90 points of its all-time high achieved on 30 December 1999, at the peak of the dotcom boom.
In Europe, Germany’s Dax rose 0.69% to a new high, while France’s CAC climbed 0.37%.
Bernanke warned Washington’s deep spending cuts were holding back the recovery. “Conditions in the job market have shown some improvement recently,” he said.
“Despite this improvement, the job market remains weak overall: The unemployment rate is still well above its longer-run normal level, rates of long-term unemployment are historically high, and the labour force participation rate has continued to move down.
“Moreover, nearly 8 million people are working part time even though they would prefer full-time work.”
Bernanke acknowledged that historically low interest rates and the Fed’s huge government bond-buying programme had costs, but he said “a premature tightening of monetary policy could lead interest rates to rise temporarily, but also would carry a substantial risk of slowing or ending the economic recovery”.
Republican congressman Kevin Brady questioned Bernanke about his exit strategy from quantitative easing. “My worry is the Fed doesn’t have the prescription for what ails our economy,” he said.
Bernanke acknowledged the recovery had been slow, but said it had faced “significant headwinds” including deep government spending cuts.
He said it was “not responsible to focus all of the restraint on the very near term” and urged Congress to replace some of its fiscal tightening with measures to restrain long-term healthcare and social security costs.
The Fed chairman was asked whether monetary policy might create new bubbles. Senator Pat Toomey said he was concerned about recent rises in the housing market, farmland prices and junk bonds. “I don’t disagree that this is not easy,” said Bernanke. “There is no risk-free strategy here.”
Bernanke said he was particularly concerned about the recession’s continuing impact on the long-term unemployed. In April, there were 4.4 million long-term unemployed people in the US – those jobless for 27 weeks or more – according to the Labour Department. Their share of the unemployed declined by 2.2 percentage points to 37.4%.
The levels remained a “significant concern”, said Bernanke. “We are seeing evidence that employers are reluctant to look at people if they have been out of work for a long time,” he said. But he said he believed it was not an “irreversible problem”.
Speculation has been rising that the Fed might be preparing to taper off its bond purchases and some Fed members have called for the policy to be reassessed.
Bernanke said the Fed would consider to monitor the situation and would taper off the programme “as the economic outlook improves”. But he said a wind-down would not be an “automatic, mechanistic process”.
“All things considered, we still think that the Fed will begin to curb its asset purchases before the end of the year, with a complete halt sometime in the first half of next year,” said Paul Ashworth, chief US economist at Capital Economics.
US stock markets surged after Bernanke’s remarks, with all the major markets rising in morning trading.
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Fed chairman Ben Bernanke: stimulus programme not creating ‘bubbles’
Stock markets rise after Federal Reserve head tells Congress quantitive easing to continue and criticises government cuts
Federal Reserve chairman Ben Bernanke denied his $85bn-a-month stimulus programme was creating new financial bubbles as he updated Congress on his views on the US economic recovery on Wednesday.
The Federal Reserve’s quantitative easing programme has helped drive US stock markets to record highs even as the wider economy continues to suffer from high levels of unemployment. Asked whether the stimulus programme was creating bubbles similar to the one experienced by the housing market ahead of the recession, Bernanke said “major asset classes, including the stock markets, were “not inconsistent with the fundamentals”.
US stock markets rallied Wednesday morning as the Fed chairman made clear he had no intention of cutting short the quantitative easing programme in the near future. The US economy is improving, but “headwinds” including government budget cuts are dragging on the recovery, Bernanke told Congress.
Investors, however, became more cautious on Wednesday afternoon and the markets fell after the release of the minutes from the Fed’s last meeting showed some committee members were prepared to start cutting back the size of the programme as early as June if the recovery continues.
Bernanke warned Washington’s deep spending cuts were holding back the recovery. “Conditions in the job market have shown some improvement recently,” he said. “Despite this improvement, the job market remains weak overall: The unemployment rate is still well above its longer-run normal level, rates of long-term unemployment are historically high, and the labor force participation rate has continued to move down. Moreover, nearly 8 million people are working part time even though they would prefer full-time work.”
Bernanke acknowledging that historically low interest rates and the Fed’s huge government bond buying programme had costs but he said “a premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.”
Republican congressman Kevin Brady questioned Bernanke about his exit strategy from quantitative easing. “My worry is the Fed doesn’t have the prescription for what ails our economy,” he said.
Bernanke acknowledged the recovery had been slow but said it had faced “significant headwinds” including deep government spending cuts. He said it was “not responsible to focus all of the restraint on the very near term” and urged Congress to replace some of its fiscal tightening with measures to restrain long-term healthcare and social security costs.
The Fed chairman was asked whether monetary policy might create new bubbles. Senator Pat Toomey said he was concerned about recent spikes in the housing market, farm land prices and junk bonds. “I don’t disagree that this is not easy,” said Bernanke. “There is no risk free strategy here.”
Bernanke said he was particularly concerned about the recession’s continuing impact on the long-term unemployed. In April, there were 4.4m long-term unemployed people in the US – those jobless for 27 weeks or more – according to the Labor Department. Their share of the unemployed declined by 2.2 percentage points to 37.4%.
The levels remained a “significant concern”, said Bernanke. “We are seeing evidence that employers are reluctant to look at people if they have been out of work for a long time,” he said. But he said he believed it was not an “irreversible problem”.
Speculation has been rising that the Fed might be preparing to taper off its bond purchases and some Fed members have called for the policy to be reassessed.
Bernanke said the Fed would consider to monitor the situation and would taper off the programme “as the economic outlook improves”. But he said a wind-down would not be an “automatic, mechanistic process”.
“All things considered, we still think that the Fed will begin to curb its asset purchases before the end of the year, with a complete halt sometime in the first half of next year,” said Paul Ashworth, chief US economist at Capital Economics.
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Letters: Paying tax is absolutely a moral issue
CBI president Sir Roger Carr’s claim that there can be no moral basis to concerns about tax avoidance is a grave misjudgment (Never mind morals, tax is all about the rules, 21 May). A great many ordinary people see payment – or rather non-payment – of tax as fundamentally a moral question. Perhaps it might be talked about as justice or fairness, but it boils down to the same thing. Christian Aid supporters have been campaigning on matters of tax justice for five years.
At the heart of their concern is the moral question of how societies raise revenues and how that money is spent. We estimate that developing countries lose around $160bn a year in tax revenue from multinational corporations. Contrast this with the UK’s aid budget (£12bn) or the UN’s Food and Agriculture Organisation’s estimated cost of tackling global hunger ($50bn a year on top of existing funding to 2025). The fact that tonight one in eight people in the world will go to bed hungry shows that the moral case for a fair and just taxation system is undeniable.
Canon Geoff Daintree
Church advocacy adviser, Christian Aid
• Simon Jenkins is spot-on when he calls on David Cameron to crack down on the UK’s own tax havens (Comment, 22 May). Global Witness’s investigations have found numerous examples of dodgy deals routed through places such as the British Virgin Islands, favoured by tax evaders and corrupt dictators. There is often a misperception that the UK can’t impose its will on these last outposts of empire. In fact, from the decriminalising of homosexuality to banning the death penalty, there are repeated examples of UK governments telling its tax havens what to do, sometimes against their will. After Radio Caroline started broadcasting from the Isle of Man, the UK banned pirate radio stations from there and from the Channel Islands.
If the PM really wants to crack down on tax evasion, corruption and money laundering, he should force the British-linked tax havens to lift their veil of secrecy, for example by requiring them to publish the names of the ultimate owners of companies and trusts registered there.
Robert Palmer
Campaigner, Global Witness
• Paying tax is a social obligation. It is the price we pay for being part of a civilised society and one defining characteristic of such is its willingness to support those who are not considered to be economically productive. This doesn’t just mean the unemployed, the sick, disabled and the old, but also artists, musicians and writers, those who enrich us and our society both intellectually and emotionally.
In the commercial world, businesses view taxation as just another cost of doing business and therefore within their fiduciary responsibility to seek ways of reducing their tax obligation as part of their cost base. This is wrong. The payment of corporate tax should be viewed not as a cost of doing business but as the price for gaining access to society.
Businesses that manipulate the tax rules to reduce or avoid paying tax impoverish the society in which they operate both financially and ethically. Good corporate citizenship requires the commercial world to fully engage in society – by making a fair and equitable contribution to the tax receipts of a nation and by paying its employees an appropriate living wage.
Mike Kellett
Cardiff
• In 1974, the then Tory prime minister, Edward Heath, called an election with the question Who governs Britain? – his premise being that the unions had too much power. Forty years on we can ask the same question in respect of big business (Cut tax and we’ll pay, says Apple boss, 22 May). I thought governments, elected by their peoples, decided tax rates. Apple (and Google, Amazon and the others) rely on their customers to be healthy and well-educated and for the states where their customers live and buy their products to be stable, orderly and defended.
Without all the benefits that a state provides there would be no Apple sales. Big business has grown increasingly arrogant and no longer plays and pays its part in contributing to the costs that are essential to their profits. Perhaps there should be an additional and hugely hefty tax on the products of those companies who are refusing to pay their way, so that in the end they are left with no profits to quarrel about.
Mark Doel
Sheffield
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Google boss calls for a ‘rational and predictable international tax system’
Eric Schmidt rejects Ed Miliband’s criticisms of tax affairs, saying firm fears being ‘double or quadruple taxed’ under any changes
The Google chairman, Eric Schmidt, has told political leaders to sort out a rational and predictable international tax system, as he faced a wave of criticism over the firm’s failure to pay more tax.
Ed Miliband attempted to deliver his rebuke direct to Schmidt when invited to speak at the Google Big Tent conference, although the US executive missed the Labour leader’s address on Wednesday, saying he had to attend a meeting in London.
Nick Clegg disclosed at a press conference he had also criticised Google at a Downing Street meeting earlier in the week at which Schmidt was present. David Cameron’s aides, after earlier denying the prime minister rounded on Schmidt at that meeting, later briefed that Google had been implicitly rebuked in the context of the prime minister’s general call for greater tax transparency as part of his agenda for the G8 summit next month.
Speaking at the annual Big Tent event after Miliband had left, Schmidt said one of his key concerns about changes to the tax structure was that Google might be “doubly or quadruply taxed”.
Asked by Labour MP Stella Creasy how he would reform the tax system, he suggested: “Have a rational system that’s predictable and doesn’t change very much.
“Virtually all the American companies have tax structures like this, and UK companies operating in the US do too. But if we pay more taxes in one area, then we pay less in another.
“Google feels very, very strongly that tax information, tax policy should be done openly. I don’t think companies should decide tax policy, governments should … we’re in a very long-standing tax regime … we need to have a conversation about this, we’re not trying to do the wrong thing, we’re trying to do the right thing.
“We don’t want to be in a situation where we get double or quadruple taxed.”
Asked how he would cope if Miliband were to come to power and, as promised, stop transfer pricing, Schmidt said: “If he does – if he does so, we will follow the rules.” Transfer pricing involves firms shifting profits between countries.
Schmidt also said Google would continue to invest in the UK, no matter what tax regime was in place: “We love you guys too much. We will continue investing in the UK no matter what.”
He rebuffed Miliband’s suggestion there was a distinction between the letter and the spirit of the law. “You’ll have to define the difference,” he said to a barrister who challenged him to say whether Google would comply with the “spirit” of the tax laws, which might then lead to it being taxed more. “We’re governed by US securities laws – in that scenario it might be seen as incompetence,” added Schmidt.
Earlier Miliband told the meeting of the firm’s staff that he was “disappointed” it had paid £6m in corporation tax on UK sales worth £3.2bn in 2011. Most of Google’s profits are routed through Ireland. Miliband said the US company’s employees expected it to do the “right thing”, as its motto was “Don’t be evil.”
He said: “I can’t be the only person who feels deeply disappointed that a great company like Google, with great founding principles, should be reduced to arguing that when it employs thousands of people in Britain, makes billions of pounds in revenue in Britain, it is fair that it should pay just a fraction of 1% of that in tax.
“So when Google does great things, I will praise you … But when Google goes to extraordinary lengths to avoid paying its taxes, I say it’s wrong.”
Labour rejected Schmidt’s explanation, saying Google has been making sales to UK customers from its UK staff, but pretending the transactions were being made from Ireland so the firm could register the profits as made in Ireland rather than the UK.
Booking those sales in the UK would not mean taxing profits twice – just taxing them in the UK, not Ireland.
Even after profits were shifted to Ireland, Google avoids paying 12.5% corporation tax there by switching the surpluses to tax havens such as Bermuda, according to a Reuters investigation.
This is done by using two Irish firms, (hence the name, “double Irish”) one a tax resident in Bermuda and owning the intellectual property of the company. The offshore firm then charges the onshore one royalties, which shifts the profits out of Ireland and into Bermuda.
By doing so Google would not be taxed on the same profits in different countries; it is shifting profits between tax jurisdictions to avoid paying tax.
Clegg told a press conference in London on Wednesday morning: “My overall approach to tax is the obvious one. I put this directly to Eric Schmidt from Google and other business leaders at a meeting in Downing Street a couple of days ago.
“We are bringing the tax burden on corporations down by lowering the rate of corporation tax but in return people have to pay their fair share.”
He said tax havens were symptoms of the growing pains of globalisation. “You have got tax systems that are national rooted in an old economy, and now we have got these new corporate goliaths that operate in this disembodied way particularly in the digital sector, that quite unsurprisingly think they can exploit the best deal for themselves in the cracks and crevices between the national tax systems.”
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Austerity is a task for another day, IMF tells George Osborne
International Monetary Fund advises chancellor to defer cuts programme and instead stimulate faltering economy
Hit the austerity pause button. Invest more in social housing, schools and road repairs. Growth is more important in the short term than deficit reduction. Couched in suitably polite language, that was the uncomfortable message from the International Monetary Fund to George Osborne .
The chancellor could take some comfort from the fact that the fund was rather more diplomatic about his economic strategy than it was in Washington a month ago, but not all that much. For the past couple of weeks, the government has done its utmost to persuade the IMF that Britain should stick to its current budgetary course. Osborne has tried. The chief secretary Danny Alexander has tried. Sir Mervyn King has tried. They have all failed.
After three years in which it first strongly supported Osborne’s austerity programme, then had second thoughts when the economy sank into a double-dip recession, the IMF has finally had enough. It wants further fiscal tightening postponed until the economy is strong enough to take it. That is, of course, precisely what Ed Balls, the shadow chancellor, has been saying, which is why the fund’s recommendations in its annual “Article IV” health check on the UK are a political problem for Osborne.
The countdown began a year ago when the fund said that the chancellor should be ready to change course if the economy weakened. Then in April, amid speculation that Britain was about to enter a triple-dip recession, the fund’s chief economist, Olivier Blanchard, said it was time for Osborne to rethink plans to reduce Britain’s structural budget deficit by 1% of GDP this year. The chancellor was particularly irked at suggestions that the UK was “playing with fire”, pointing out that the government had already shown flexibility in its deficit reduction strategy and had introduced measures to stimulate growth.
The fund remains unconvinced. At a press conference hosted by the Treasury yesterday, its deputy managing director, David Lipton, fleshed out Blanchard’s critique: the fund is unhappy about the £10bn Osborne is taking out of the economy through spending cuts and tax increases this year and wants them offset by investment in infrastructure and tax measures to help business.
Lipton’s argument is simple. Britain may have avoided a triple-dip recession, but the economy remains extremely weak and unemployment too high for comfort. While the government’s determination to tackle the budget deficit back in 2010 was understandable, with the benefit of hindsight, it cut capital spending too aggressively. There are already two major headwinds facing the economy – the recession in Europe and a banking system that is repairing its balance sheets. It doesn’t need Osborne to add a third with his £10bn of tax and spending measures.
A bit of extra spending now would not only boost demand, according to the IMF, it would also improve the long-term supply capacity of the economy. What’s more, with interest rates on government debt at historic lows, it would be dirt cheap. The fund’s forecast for UK growth this year currently stands at 0.7%, but it believes that could be raised to 1.2% or 1.3% if Osborne deferred his planned £10bn of tightening to another year.
This is bog-standard Keynesian analysis. In the medium term, the IMF does think that the deficits need to be addressed, just as Keynes did. What’s at issue is the timing, and the fund says now is not the time for more austerity.
Two questions arise from the fund’s analysis. The first is how much extra Osborne would have to borrow. Lipton refused to be drawn, but it would be less than the £10bn the chancellor is taking out of the economy this year, due to so-called multiplier effects. The IMF believes that a pound spent on public investment will have more of an impact on growth than, say, a pound saved by cuts to day-to-day spending at the Home Office. On some estimates, £5bn might do the trick.
The second question is how the chancellor will respond. Infrastructure will be a focus for next month’s spending review, the chancellor has said. But the spending review will not affect decisions until 2015-16. The IMF will be hoping for action sooner than that.
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Who dares to dodge Google’s information tax? | McKenzie Wark
In exchange for giving up our personal data, we get to watch each other’s cat videos, while Google becomes the new state
Of course Google doesn’t want to pay its taxes to the British crown, like a loyal corporate subject. In Google’s mind it secretly thinks that it is now something like a state, and we are all its subjects. It is we who should pay tribute to it – and we do.
We pay it a sort of information tax. Google is the Ministry of Information Retrieval. If you want some data, you have to give up some, about who you are, what you do, what your movements are. Like most other states, Google will then sell access to you to other interested parties.
Just like any state, Google has its spies. Its Street View cars snoop the world’s high-value streets. All the better to help us citizens of Google-land do what we are supposed to do there – which is shop.
If Google succeeds in selling us its Google Glass, then we all become its agents. We would be a sensory apparatus for a vast computer database whose mission is to take our perceptions, thoughts, feelings or discoveries and turn them into money.
Some might be quite happy residing in Google-land. Google Books might be better than your local library. Google Maps makes up for all the missing street signs your council can’t maintain. It is entirely possible that Google has better intelligence on world affairs than MI5 or the CIA, and its designs on what to do with it might be a bit less evil.
As with any state, there’s another side. The British government at least notionally acts in the interests of its citizens. There is at least some transparency, some checks and balances. But in Google-land none of this applies. It acts in the interests only of its shareholders, and that perhaps only notionally. We are not really its citizens but its peons. We always owe a debt of information to Google, no matter how much of it we have already given up.
There used to be all sorts of criticisms of the old “culture industries” like Hollywood and the top 40, which entertained us with stories or songs that always ended on an upbeat note, no matter how false. But at least the culture industries went to the bother of entertaining us. Their replacements don’t even bother. They expect us to entertain each other, and pay a tax for it. Facebook or Google’s YouTube are not the culture industries so much as the vulture industries, taking an information surcharge from us while we amuse each other, and selling us to advertisers. Like do-it-yourself commercial TV.
These are all elements of what I call the “spectacle of disintegration“. The old spectacle of television and radio papered the world with images of what the lovely soul of the commodity was supposed to look like. We were at least still free to daydream while we sat idly watching.
But in the spectacle of disintegration, all that breaks apart. The big screen decays into so many little screens. Our leisure time is now to be spent producing information for the vulture industries of Google and co, in an unequal exchange of information. In exchange for the poll tax of personal data, we get to watch each other’s cat videos, while Google becomes some new version of the state, presiding over all our bitty lives, master of all our data, in aggregate.
Like any state, Google has its patriots. But there are also those who think this latest version of the spectacle offers some quirky avenues for having fun at its expense. Its time for a certain opacity, a certain glamour of obscurity. Not all the information we offer up has to be even remotely true.
It’s 45 years since the failure of May ’68, that last attempt to rock the old kind of state. Afterwards the Situationists, who gave us the concept of the spectacle, disbanded. But they did not go silent. They pioneered ways of discreetly carving out spaces where other codes apply, protected by cryptic passwords. Perhaps some of their subtle arts might work within the belly of this new digital beast, so that we might live within it, but not give it our undivided attention.
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UK and France to join global anti-corruption initiative
Decision by two countries to join scheme exposing corruption in mining and oil industries represents significant breakthrough
Britain and France have both announced they are to join a groundbreaking initiative to expose systematic corruption, mainly in Africa, requiring mining and oil companies to reveal the taxes paid to national governments and the value of the minerals being extracted.
Nearly 40 countries have already signed but the news that France and the UK have joined the initiative represents a breakthrough.
The decision to join the Extractive Industries Transparency Initiative was announced by the French president, François Hollande, and the British prime minister, David Cameron, ahead of a working dinner in Paris.
The UK helped create the EITI in 2002 and has subsequently funded it, but since the UK was not defined as a “resource-rich” country by the International Monetary Fund, the UK did not feel it necessary to join, even after Barack Obama said the US would join in 2011.
Under the initiative, annual reports publish what tax was paid by oil and mineral companies in a country, and the national government publishes what it received. The report is prepared to an international standard overseen by an independent body. The two sums are then reconciled and any gap can be often be attributed to corruption. The move also strengthens the powers of the legislature of countries since they have clearer information on what their executives have received.
The current chair of the EITI is Clare Short, the former international development secretary. In a weekend interview she said: “This is billions and billions and it far outweighs anything that goes across the world in aid. If these monies were properly managed and properly invested and used, hundreds of millions, literally, of people could see a better life. At the moment there’s great riches but they’re not lifting up the people in poor countries that have become the target of mining and oil investment in this commodity boom in the way that they should.”
She said: “You can’t force countries, but if a country won’t reform and in the worst case that you talk about where you’ve got a kleptocracy that really is running away with the money, no one can make them change unless they want to.
“But the EITI does leverage change in improvement in some of the countries with really serious problems.”
In Washington last week, David Cameron the current chair of the G8 leading economies, called for more openness among energy companies, claiming a veil of secrecy obscures the conduct of the extractive industries.
He announced an urgent review into Britain’s failure to join the regime, saying: “We cannot call on other countries to live up to these high standards if we are not prepared to do so ourselves.”
The US Securities and Exchange Commission ruled last year that oil and natural gas companies must disclose payments to foreign governments.
At present there are 39 countries involved with the initiative and 23 that are fully compliant.
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RBS bankers receive £2.7m in shares as bonus
Four top bankers share bonus pot, but chief executive and finance director miss performance targets
Four top bankers at Royal Bank of Scotland have been handed £2.7m in shares from bonuses that were awarded to them by the bailed-out bank three years ago.
The largest award was handed to Ellen Alemany, the outgoing head of the US arm Citizens, who received just under £1m. Nathan Bostock, the current head of risk who is being promoted to finance director, received £670,000, while Chris Sullivan, business banking head, received £480,000.
Ron Teerlink, the head of the bank’s back office operations who is to leave later this year, received £650,000.
None of the bankers received the total number of shares they were first awarded in May 2010 as they hit performance targets that entitled them to only a third of the maximum.
Chief executive Stephen Hester and outgoing finance director Bruce van Saun missed out on bonuses under the scheme after failing to reach any of the performance targets attached to their share awards.
The bank only disclosed the number of shares of the four bankers received after they had sold shares to pay taxes but the Guardian made estimates of the total number of shares that they would have received before the share sales.
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Google’s Eric Schmidt believes one company is an island
A slip of the tongue by Google’s executive chairman speaks volumes about his perception of the company’s tax obligations
A week or so ago, Google’s chief executive, Larry Page, caused ripples when he suggested at a public event that laws older than 50 years or so shouldn’t apply to internet companies, and that it might be fun to have an island where Google could dabble in new ideas without all the silly meddling of governments. (That’s only a slight paraphrase.) The only way he could have seemed more like a Bond villain would be if he had been stroking a cat while speaking.
While not an island, Google created its own patch of turf in Hertfordshire on Wednesday with its Big Tent event, which really is held in a big tent – a gigantic one with perfect Wi-Fi, and tables, chairs, coffee machines and a big stage in the grounds of the Grove hotel. Think of it as the most glamorous camping imaginable, Google’s little island in the UK.
Sadly, there were no self-driving cars (buses were laid on), nor people sporting Google Glass . About 250 people turned up for a day out of London to hear deep thinking about the future, whether we’ll all turn into robots, and perhaps a bit of fisticuffs about tax.
For that, we looked to Eric Schmidt, formerly the company’s chief executive but now its executive chairman – in effect, its roving representative on earth. Especially on tax, he is a master at not really answering questions. He’s like the un-Google. So he turned up in the afternoon to un-answer lots of questions about tax.
For someone so brainy, he has a remarkable capacity not to know things. How much money does Google ship to Bermuda under its complex tax system? He doesn’t know. Couldn’t Google live by the spirit as well as the letter of the law? He doesn’t know enough law. How should international tax law be reformed? He’s really not sure. When will Google Now (a Google program that suggests bus journeys and hotel rooms based on your travels) seem as smart as a human being? Well, that’s hard to say.
If he were a search engine, you’d type your question and get a blank page back. Getting direct answers out of Schmidt would tax a saint – at a low rate, of course.
He also has a surprising capacity for going missing at opportune times. Despite having been at the Grove on the Monday and Tuesday for the private Google Zeitgeist, he somehow missed Wednesday morning’s session.
There, Ed Miliband cruelly (and cleverly) used Google’s original “letter from the founders” to argue that its tax structure – “close” sales in Ireland, ship money to the Netherlands, and then ship even more money to Bermuda, where it must form a sort of digital sand dune – was short-term thinking, something that Larry Page and Sergey Brin had said they wouldn’t do.
Yet when Miliband looked around to say this to Google’s man – like the guest at a housewarming who slags off the owner – Schmidt, like Macavity the cat, wasn’t there. Not until the afternoon, when he un-answered like a pro.
Certainly he must tut and sigh when he hears Page talk about ignoring laws and creating fiefdoms but, when he was asked about capitalism, he replied: “Of course, Google is a capitalist country …” Laughter. “Company,” he said, uncomfortably. A slip of the tongue? Perhaps the truth is out. Perhaps Larry Page’s island isn’t so far off after all. One has to wonder – how soon can one move there, and what will the tax rate be?
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