End this shameful greed
Britain’s shareholder spring, symbolised by the pay revolt against american Bob Dudley at BP, isn’t an isolated event.
if one theme other than Brexit has surfaced here at the iMF meetings, it is the perceived growing inequality between the elites and ordinary citizens.
this division also featured strongly in thursday night’s new York primary debate between Hillary Clinton and Left-winger Bernie sanders. the loudest cheers for the Vermont senator came when he attacked Clinton for her dependence on Wall street financing from the likes of Goldman sachs.
the governance revolt against BP, and the one boiling up against Michael Dobson at schroders over his elevation to chairman with an over-generous salary, echoes another event in the Us. an analysis of boardroom pay by s&P Global Market intelligence found that 11 executive chairmen at the Us’s top 500 quoted companies bust through the $30m ($21m) pay barrier last year despite some poor earnings performances.
top of the pay league is Phillippe Daumon of cable giant Viacom who received $54.2m (£36.9m) a considerable sum but still less than Britain’s most well paid boss sir Martin sorrell of WPP who received £63m.
Others on america’s fat-cat list include robert iger of Walt Disney, safra ada Catz at high-tech group Oracle and Jeffrey immelt of General Electric. the bosses of Comcast, Honeywell and Discovery all received more than $30m despite falling share prices.
the scale of the Us pay bonanza is making political and economic waves. american pay advisory group Value alliance argues that not only are the packages out of line with performance but also have broader negative effects on the economy.
Governance rules are much less established in the United states than in Britain. it is shameful that despite the sophisticated pay rules in Britain – enforced by the Financial reporting Council – unfettered greed in the boardroom is as entrenched as ever.
Loss of trust
iF YOU are going to make progress on ending the dark arts of tax avoidance, tax evasion and money laundering there may be no better location than the international Monetary Fund. Employees at the Fund and its sister multi-lateral development banks pay no tax at all in a gesture meant to guarantee independence of action.
there is nothing, however, like a good scandal to drive reform.
it turns out that the European G5 – Germany, Britain, France, italy and spain – have moved heaven and earth over the last week to come up with a plan for an open exchange of all information about beneficial ownership of trusts and other tax avoidance vehicles.
the aim is a bit like crowd-funding. Once the more powerful players have signed up, others will follow.
this whole area poses particular problems for George Osborne and Britain. Many of its overseas territories and dependencies, including the notoriously secretive British Virgin islands, have agreed to create registers of entities formed in their countries and make them available to the tax and law enforcement authorities in the UK on request.
But there is no automatic right for anyone else including the media to see the information. Osborne is raising the stakes calling for a ‘blacklist’ of non-compliant territories which could be excluded from future economic and trade relations.
there is another complication in Britain. the Government is promising to get behind beneficial trusts, designed with a tax purpose, but there are whole categories of other trusts – set up by guardians to support an orphan child – which will not be opened up. Clearly such trusts authorised by the courts have a special place. But when there are exceptions the cleverest of trust enablers will always find a loophole.
the Panama papers have been hugely influential in advancing a reform agenda of more transparency. Panama itself finally looks to have agreed to create its own register of beneficial interests and make them available. it has changed its mind on this before and could do so again.
all of this is encouraging. But no one is saying what most of us are thinking. How is it that relatives and friends of the Chinese and russian leaders have become some of the world’s wealthiest people?
and who diplomatically will dare take on and challenge of the most corrupt leaderships of the 21st Century?
Only real political outsiders such as Donald trump, Bernie saunders and maybe Jeremy Corbyn. they have nothing to lose.
Dove flutters in
MOstLY when new members of the Monetary Policy Committee are unveiled, those of us who write about the Bank of England and interest rates scratch our heads and wonder who they are. there will be no such questions about Citigroup chief economist Michael saunders who is to replace one of the MPCs hawks, Martin Weale.
saunders is one of the most quoted City scribblers and is among those saying rates will not rise until 2017. that, of course, excludes a post-Brexit sterling crisis.