Obama’s blatant humbug
THE EU’s demand for £11bn of back taxes from Apple has provoked a multitude of different reactions across the Atlantic. In Congress and on the presidential election trail there has been mild approval.
No-one likes tax cheats and there is strong US political momentum aimed at repatriating the trillions of dollars of reserves that US companies have been accumulating in Bermuda and elsewhere to reinvest in the domestic economy.
In the pages of the Wall Street Journal the assault on Apple is seen as a glaring example of Brussels ‘bad practice’, with bureaucrats using state subsidy rules to impose retrospective taxation. The WSJ notes that other US firms including McDonald’s and Amazon are still under scrutiny.
The most contemptible response comes from the Obama White house and US Treasury. They essentially are telling the EU to butt out of American affairs and that it cannot accept extra-territorial interference. Coming from Barack Obama’s White house this is humbug on a grand scale.
This is the very same administration which in 2010 shamelessly exploited the Deepwater horizon accident in the Gulf of Mexico to unleash anti-British sentiment against BP costing investors up to £50bn and almost driving it into bankruptcy.
Indeed, the Americans have been absolutely relentless in the pursuit of european companies. In 2012 GlaxoSmithKline was fined £2.3bn by the Food & Drug Administration over a variety of ethical failings in the sale of medicines in the US. It has just been disclosed that our other great pharma company AstraZeneca has settled a £4.2m bribery charge from the Securities & exchange Commission.
Meanwhile, european banks must form an orderly queue to pay up or lose their licences to operate in America.
BNP Paribas has been among the biggest victims so far, fined a whopping £7bn by the US authorities over its role in mortgagebacked securities. HSBC reached a record breaking settlement with the US over money laundering and Standard Chartered clashed with the New York prosecutors over alleged sanctions busting.
efforts by the British government to return Royal Bank of Scotland to the private sector are being held back by the threat of a huge fine and penalties over mortgage-backed securities, and Barclays recovery is hostage to the same issue.
Bad behaviour by banks which bamboozled clients by selling them garbage securities and manipulating markets is abhorrent. But the suggestion that American companies making huge profits in europe should somehow be excluded from the attentions of enforcers over suspect tax practices is unacceptable.
europe and the UK have the same rights to enforce their rules, regulations and laws as the gung-ho American authorities. Just a few short months ago, President Obama came to Downing Street to tell Britons we would be back of the queue for trade deals with the US should we vote for Brexit. how ironic then that the EU, which he defended, has turned its guns on US corporations. As they used to say on Dad’s Army, ‘they don’t like it up ’em’.
Going slow
PEOPLE often have retired or even passed onto another place waiting for the Financial Reporting Council to finish its work.
The disciplinary action taken against PWC and its auditor Simon Bradburn over the work done on the accounts of credit provider Cattles in the run-up to the financial crisis falls into this category. It has taken the audit and governance watchdog almost a decade to impose a penalty of £2.3m, discounted from £3.5m, over an audit which risked ‘the loss of significant sums of money’. In a separate ruling, the FRC also has cleared Tesco’s former chief financial officer laurie McIlwee over his alleged part in an accounting scandal which led to profits being over-stated by £263m. It concluded there was no realistic chance that a tribunal would come up with an adverse warning. That is hardly going to make future alleged miscreants shake in their boots.
Both cases illustrate the multiple hurdles which FRC chief executive Stephen haddrill has to navigate to discipline accounting miscreants. After the long delays in past cases, partly as a result of the obstructions often placed in the way by rich accounting firms, the FRC is promising swifter justice in the future and has set itself a two-year deadline.
even that will seem a lifetime to the 11,000 employees and 21,000 members of the retirement scheme waiting for some justice over the failure of BHS. Sir Philip Green rightly is taking most of the flak. But BHS auditors PWC could have done a better job in alerting all stakeholders to an impending disaster.
Juggernaut halted
ONE of the lessons of the financial crisis, witness lloyds and HBOS, is that merging two weakened banks doesn’t make for a stronger one. This looks to have been the conclusion of John Cryan of struggling Deutsche Bank when he held preliminary merger talks with Commerzbank late in August. even if the two lenders were brought together, the market value of the institution would be just £22bn.
Doesn’t look as if Frankfurt’s banks are fit enough as yet to challenge london as europe’s financial hub.