Saturday, 10 December 2011

Voices from the Occupation - That Was The Week That Was


Voices from the Occupation
That Was the Week That Was



This week has seen the UK government use its veto in Europe for the first time, together with the story of a HMRC (UK internal revenue service) whistleblower facing harassment and the threat of prosecution for highlighting potential fraud in the UK tax system.  These stories, while seemingly unconnected, are not. In both cases, the institutions purportedly created to represent and enforce the will of the electorate, are shown nakedly to represent and enforce the will of corporate interests.  This article takes a look at both cases, and how they demonstrate the need for revolutionary transformation and the creation of democratic institutions that are worthy of the name.

Her Majesty’s Revenue & Customs




According to the Guardian, in March this year, Osita Mba, a personal tax solicitor working for the HMRC prepared evidence and used the formal whistle blowing protocol within the HMRC, to request the National Audit Office (NAO) undertake a review of the settlement of a case with Goldman Sachs.  Goldman Sachs had used a scheme to avoid the payment of tax and national insurance contributions, along with several other institutions.  The HMRC declared this loophole closed and requested the outstanding contributions.  All players except Goldman Sachs paid up.  Goldman Sachs decided to take on the HMRC, including sending a stooge witness to court, extending this argument over five long years.  This cost the HMRC time and money.  Despite the efforts of the litigation teams within the HMRC over this period, including legal advice which stated that the HMRC has a strong case, despite letters from HMRC to Goldman Sachs warning them that interest would be applied to the outstanding contributions for as long as they held out….Permanent Secretary for Tax David Hartnett had other ideas.  He ‘settled’ the deal with Goldman, in a private meeting, waiving them of up to £10m in interest payments due on the outstanding £30m tax.

When this first came to the attention of the Public Accounts Select Committee, a parliamentary committee tasked with ensuring value for money for the British tax payer and with oversight duties over the HMRC, Dave Hartnett stated that he did not deal with the tax affairs of Goldman Sachs.  Following the evidence supplied by the whistleblower, Hartnett was called back the select committee on 12th October 2011.  Charged with lying to the committee by its chair Margaret Hodge (Labour MP), Hartnett produced a suitably mealy mouthed response about not dealing with the ‘day to day’ tax affairs of Goldman Sachs, and that his role in the meeting on 19th November 2010, when the sweetheart deal was made, was purely a ‘relationship management’ issue.

According to Hartnett’s own testimony, he took no legal advice on the deal he was making with Goldman Sachs ahead of this meeting.  In short, he struck his own deal with the corporation.  Early the next week, he referred in conversation with HMRC general counsel Anthony Inglese that he had settled on of Iglese’s litigations.  It was not until the heat came up that Hartnett turned to Inglese and informed him of the issue, on 7th December 2010 and sought his advice.

Inglese’s behaviour under questioning at the select committee on 7th November 2011 was so evasive, that Chair Margaret Hodge required the clerk to administer the oath.  Under oath, Inglese confirmed the details above.  He was asked directly, what he had advised Hartnett to do.  Several times, Inglese attempts to wrong foot the committee stating that he advised of the options – either Hartnett could go forward with the deal he had struck, despite the mistake…or he could repeal the deal and make a new one including the outstanding interest.  Under further questioning on the issue, Inglese states he provided no ‘legal opinion’ about which would be the preferred course.  Under further grilling, Inglese finally mutters that he provided a 'personal opinion' to proceed with the deal, at the tax payers’ loss.
Quite how one distinguishes a personal from a legal opinion, coming from the HMRC General Counsel to the HMRC Permanent Secretary for Tax, on a specific litigation, defies sense.

The most astonishing items to come out of the select committee hearings are threefold.  One, the egregious governance procedures inside the HMRC.  The top three layers of senior management are mostly composed of the same people.  This means that the person making the deal, the person authorising that deal, and the person charged with performing due diligence by reviewing that authorisation, are in this case and therefore probably others, the self same person.  Secondly, the absurd use of legal privilege arguments.  The committee does not even know the amount of interest in fact which Goldman Sachs avoided, because Hartnett and his team fall back on legal privilege when questioned.  The Committee is also struggling to interrogate the case of the missing Vodafone contributions (alleged between £1 and 8bn) on the same basis.  In fact, without the whistleblower, we would not know this deal had been struck with Goldman and despite three sessions before the select committee, we are still very little nearer finding the truth.  In short, we have no idea if this is the whole story or merely the tip of the iceberg of HMRC skulduggery.
Thirdly and finally, the unbelievable double standards applied in the HMRC’s treatment of the biggest corporations and the rest of us.  In September 2010, the HMRC admitted massive mistakes in its PAYE system…up to 15 million people had, unbeknownst to them, either made over or underpayments on their tax deducted from their wages.  Those who had, due to the HMRC mistake, underpaid, were sent harassing letters and threatened with fines and prosecution if they did not repay the sometimes vast amounts in very short time periods.  Tax they had just found out they owed, having been making their contributions in good faith.  Hartnett refused to apologise and was then forced to in the face of public uproar.  But the problem didn’t go away for those tax payers, the HMRC didn’t say ‘oops, our mistake, you keep your money’.  But they did to Goldman Sachs and allegedly Vodafone, and who knows who else?

In response to the charge, the HMRC have proven evasive, manipulative and downright ruthless.  The Guardian reports, and the HMRC has confirmed, that Osita Mba, the whistleblower, was told he could not return to work, unless he called in advance and was escorted by his line manager.  Mr Mba will also face an internal inquiry and potential prosecution.

So, the role of the HMRC is to collect tax, and to retrieve contributions from those individuals and corporations attempting to flout the law.  Osita Mba did his job, Hartnett did not – yet who is facing the sanction?  There is rumour of a ‘Save Dave’ campaign within the HMRC.  Meanwhile, Mba is viewed as some sort of traitor.  In this action, the HMRC is proving exactly who it is there to serve, and it is not us. 

While small companies are not able to gain time to pay arrangements, going through distraint proceedings, facing fines, for being unable to pay their taxes as their businesses crumble under the pressure of the financial crisis; the biggest players are able to avoid payments for over five years and face no penalty whatsoever.  The man bringing all this to light?  He’s the bad guy.

To those of us participating, supporting or simply agreeing with the ideals and outrage of the Occupy Movement, this is purely symptomatic of the system we are operating in right now.  Institutions; from courts, to houses of parliament, to police services, to tax collection agencies, all working in the interests of big money.  Where is the room for the families, the vulnerable, the community groups, the little guy? 

The British Bulldog Bites Back



Meanwhile, over in Brussels, Heads of State for the 27 members of the European Union sat around a table through the night, apparently to hammer out a new deal to save the Euro/zone.  British PM David Cameron went into the negotiations stating that if Europe attempted to ‘impose’ a financial transaction tax, or any additional regulation which would impact the City of London, he would use the UK veto.  They did, and he did.

Now, what I find most remarkable about this whole story, is that the UK has never used its veto.  When the UK fishery industry practically went belly up due to EU fisheries legislation, no veto.  When UK farmers wailed at the Common Agricultural Policy and impacts of subsidies and uneven legislation, no veto.  When the financial services industry, who’s unregulated abuse of the derivatives market caused the biggest global economic collapse in history, are requested to a) pay higher contributions to help pay for any kind of recovery and b) undertake regulation to stop the same behaviour happening again……then we use the veto?  Then we become the British Bulldog and effectively separate from the European Union?

There have been arguments from the regular pundits, that the financial transaction tax was some kind of evil plot by Sarkozy and Merkel to penalise the City.  But, this tax would apply everywhere…in fact it is not even clear that by vetoing the deal, the tax wont still move forward and be applied to the City anyway. 

David Cameron is arguing that public sector workers should see their wages reduced or frozen, their pension contributions go up, to work longer, to get a smaller pension in retirement, that students should pay £9,000 a year to attend university to face a jobs market where currently 5.7 people are applying for every job, where 710,000 public sector jobs are to go over the next few years, all in the name of austerity to pay down the deficit. 

The deficit was not caused by too many teachers, or nurses, or ‘gold-plated’ pensions, but by outrageous corporate fraud across the financial services industry.  The government chose to bail out collapsing banks from the public purse.  The public spending crisis is explained by the acronym, PFI.  These Private Finance Initiative deals across the public sector, where private companies have been massively overpaid to build and lease buildings to the public sector by civil servants who were from the very companies making the deals, have seen billions sucked out of the public sector into the private sector over recent years.

But whilst condemning both PFI and the behaviour of the financial services industry and regulatoryframework while in opposition, the coalition government has expanded the PFI project and now been the bulldog fighting for those self same fraudsters in the City who got us here in the first place.

What You Might Have Missed



Quietly, at the back end of Friday this week, two stories broke under the cover of a corporate media news cycle stuck on the above records.

One, at the tail end of a press release announcing a new Chief Executive for the HMRC, Lin Homer, replacing Leslie Strathie for health reasons, Dave Hartnett’s July 2012 retirement was announced.  If Hartnett is allowed to quietly retire, he retains an £80k per annum pension, and the ability to attain lucrative consultancy positions for the very same companies he has been helping defraud the UK taxpayer for years in his post.  So, we need to get him before he goes.  The case against Hartnett continues…

And secondly, Downing Street revealed that, between April and June this year, in the run up to the Murdoch Empire’s attempt to bid for BskyB, David Cameron personally met with RupertMurdoch or News Corp senior executives five times.  Five times in two months.  Greater than the number of meetings he had with the rest of the media combined, for the same period.  So, Cameron hired Andy Coulson (former editor of News of the World – and accused of being at the head of the phone hacking scandal) as his chief spin doctor, spent Christmas with Rebekah Brooks, and a quite enormous amount of time in discussion with News Corp ahead of a media monopoly making deal which would have come to his government for approval.  And he wonders why we might think that he is in bed with the beastly corporation?  Because you are, David, you are.

We Must First Stop Tolerating It



In summary, it is time for us to give up on the cavalry coming from institutions created to provide the appearance of supporting us, but genuinely to maintain and defend the status quo. It is too easy merely to raise our hands, admit it’s all rubbish and crack on with our duty to consume.  Human beings are infinitely capable.  We can choose to tolerate this, or we can refuse.  People like Osita Mba are the living embodiment of this.  They call people to account and personally make a stand for justice.  We are free in the sense that we have will.  We are free to reject institutions which serve vested interests, and create ones which serve the public interest.  We are free even to transform our society in whichever way we see fit. 

It takes conversation, time, participation, love and courage.  This is what the Occupy Movement is all about.  A conversation for a new world, where stories like this will be in the history books, as ludicrous and unconscionable as Fascism, the Holocaust and Slavery.  For in reality, the capitalist system as it stands today and for the last century has been the smiling assassin.  A bogus project for a disparate, unequal world, where a person’s value is calculated in currency – where work is unrecognised unless it is a job.  People and planet asset stripped for private profit.

Enough is enough.  December 15th 2011, is Occupy Everywhere day.  You are invited and encouraged to consider and perform creative and unignorable acts of civil disobedience wherever you are.  So, this week, is your library under threat?  Is your school becoming an academy?  Is your local hospital closing?  Are you a community group which has lost your premises? Is your council making decisions you can’t support?  Occupy it.  Go stand outside dressed as a clown, pitch a tent on their lawn, sit down with friends in the doorway, make up revised Christmas carols and flash mob your local Tesco, hold a sit in or a die in or a dance in or a love in somewhere important to you.  However small or insignificant you might believe yourself or your idea to be, consider it as important as every single other tiny drop in this wave of humanity.  Mostly, make it fun, make it angry, make it silly, make it poignant, whatever inspires you out of bed on December 15th with a kick in your step.  And if you cant think of one, how about attending a planned action on December 15th

Let’s make this a day we all remember.  To the myriad Dave’s of the world intent on maintaining the status quo, a global statement that ‘up with this we will not put’.

Dedicated to my friend, Mr Osita Mba.  Please sign a petition of support for him here.

6 comments:

  1. You are an excellent writer. OccupyLSX is fortunate to have you aboard.

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  2. Brilliant and inspiring. In bed with with flu and you have cheered me up no end :) Have signed petition for Osita and will be calling back again for more of your daily posts - good overall picture of issues. THANKS

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  3. Great to have this analysis but it is still the tip of a tiny iceberg about Dave Hartnett which @RichardJMurphy (Twitter tag) has exposed on his Tax Research blog - enter search to reveal the whole story.

    This was the Swiss-UK tax deal, trumpeted earlier this year, said to bring in billions for UK taxpayers - but doing nothing of the kind.

    UK Uncut and #OccupyLSx highlighted this blatant incompetence (at best) on October 24th when it organised the march to HMRC http://bit.ly/s4s72W. (I don't know how to get this in as a link - really sorry!)

    It's hugely important this grossly unjust deal is brought to the public's attention while questions are being raised about Dave (Hartnett, not Cameron.)

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  4. I think that much of what is written is good, where I think you have gone wrong is to personalise it by attacking this government. You should be attacking all aspects of what is wrong. Thre is a fundamental problem of inbalance, most western countries are deficit financing which is unsupportable. This must be faced by addressing the world financing system, it needs to be addressed. The world has been moved on, it is much more global and we all need to change.
    We have no right to things as they have been, we are like those in their tents in Kenya except no one will be feeding us we need to adapt to the 'new' world which is global.

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  5. Excellent points, and very pleased to see the discussion expanding.

    Jeffrey - true, there was a space issue but very glad you have highlighted the swiss deal and urge others to read more into this.

    Jim - I agree with your assessment on causality and my points later are global not merely tinkering with our own system so we feel better. Pls see previous articles which cover this in more depth.

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  6. Great as ever. thanks Saskia

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