work of investigators in the Sam Spade
mould, who discover economic crime and
yet the police refuse to get their man, unless
he has stolen a water bottle.
There are ghost companies. They are located
in a country for tax reasons and don't even need
to rent an office, or even buy a chair. They are
represented by a post box.
It was like the Apocalypse when Nicholas Shaxson
showed his Youtube audience that Boots, a UK
retail pharmacy institution had been "reduced" to
a post box on the side of a building in some
Swiss city.
Investigator vs police
Investigator: Okay, so I located the box. Who does it belong to?
Police: Dunno
I: Where is the company registered?
P: Dunno
I: Some info was leaked from a tax haven by ICIJ
P: Dunno. What about it?
I: We found out who the post box belongs to
P: Whataboutit?
I: Let's arrest them
P: They're in the Caymans
I: NO, you moron. The company is registered there. They are
having lunch in Bloomsbury, right now.
P: They'll get indigestion
I: They're breaking morality laws
P: But no legal ones right?
I: Perhaps
P: Go to your member of parliament, den
I: Right. Go back to sleep
checkit: Tax
justice
Where
there's muck, there's brass plates: on the trail of UK ghost companies
The UK's investigative and satirical magazine
Private Eye has produced a major new investigation into corporate crime,
handled via the United
Kingdom. The subtitle of the piece 'how UK ghost companies made Britain the capital of corporate crime" is
quite apt, notwithstanding the best efforts of jurisdictions like New Zealand to outdo the UK.
The
article is not online, unfortunately, so if you're in the UK you'll have to go
out and buy a copy on the newsstands - it's available now. There's far too much
in here to give it full justice, but a couple of paragraphs should give a sense
of what's going on here:
“Limited liability partnerships”, of which
Vector Aerospace LLP was one, joined the lexi- con of British corporate law
only in 2000 as a result of heavy lobbying from Britain’s big accountancy
partnerships, which wanted to limit
their liability for carrying out dodgy audits without becoming limited companies and so incurring extra
taxes. [See Treasure Islands,
and the Ratchet chapter, for the extraordinary story of how the accountancy firms got Britain to enact its
LLP laws.] The new corporate vehicle allowed them to have it both ways by
stipulating that an LLP would have limited liability but would not be a taxable
entity itself (see Partnerships in crime).
The new hybrid had great appeal: not just
to respectable accountants, but also to those who were up to no good. For if an
LLP’s members can also claim that they are not taxable in the UK, there is
nothing to trouble the taxman and no inconvenient questions will be asked by
the authorities about what the LLP is up to.
This
is pure tax haven activity, and Britain is rapidly heading down this road. One
last TJN-related section from the story:
"In 2009/10, a study by campaigning
accountant [and a TJN Senior Adviser] Richard Murphy found that of the 2.6m companies on the UK
companies register, just 69 percent were even asked for a tax return by
the authorities and only 45 percent actually submitted one. While it is
impossible to measure precisely how many of Britain’s ghost companies are part
of interna- tional criminal networks, it is in these helpfully crowded and
murky waters that some of the world’s most serious organised crooks swim
undetected."
. .
. . and much, much more: this is just a taster. You can see the authors, Andrew
Bousfeld and Richard Brooks, in a short video clip here. Among other things
they watch a postman stuff large quantities of letters through a letterbox, and
they're clearly visible through the glass door.
"All
these letters have landed face down," Brooks says ruefully: "that's
what you call tough sh*t."
The
text piece finishes like this:
"Epic levels of money laundering,
illicit arms dealing, frauds, counterfeiting and government corruption are the
result, all thriving on emasculated British company law and political and
official indifference. A clean-up is indeed badly needed. Right here and right
now."
