I’ll make 'damn sure' big companies pay their tax, says David Cameron

Cameron says he will use his G8 presidency to seek collective backing to tackle corporate abuses

The world’s most powerful leaders must mount a concerted effort to prevent multinational companies such as Starbucks and Amazon legally avoid large corporation tax bills, David Cameron will urge in his role as president of the G8.

  

The Prime Minister vowed to make “damn sure” that multinational firms paid their fair share of tax on their UK operations.

He is to use Britain’s presidency of the G8 group of the most industrialised nations, which began this week, to discuss ways of stopping global companies moving their money through different jurisdictions to minimise tax payments.

HM Revenue & Customs has been accused of being “too lenient” towards big businesses that indulge in aggressive tax planning. The credibility of HMRC and the tax system rests on it becoming “more aggressive and assertive in confronting corporate tax avoidance”, the chair of the Public Accounts Committee, Margaret Hodge, said last month.

Mr Cameron says a crackdown can only be effective if countries around the world act collectively to tackle abuses. Britain, along with Germany and France, has asked the Organisation for Economic Cooperation and Development to investigate whether tax loopholes can be closed.

He signalled his determination to confront global corporations during an appearance in Lancashire before business leaders and entrepreneurs. Asked why “Starbucks and Amazon” were allowed to avoid paying large corporation tax bills despite their extensive British presence, he replied: “We have got to crack that, you’re absolutely right.

“This is a really important issue. I think we’re offering actually a fair deal to businesses. We’re saying, ‘Look, we’re going to have a really low rate of corporation tax’ but I want to make damn sure that those companies pay it.

“It’s simply not fair and not right what some of them are doing by saying, ‘I’ve got lots of sales here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation’.”

Mr Cameron said he wanted to start a debate in the UK about “really aggressive tax avoidance”.

He said: “We do need a debate in this country, not only what is against the law – that’s tax evasion, that is against the law, that’s illegal and if you do that the Inland Revenue will come down on you like a ton of bricks – but what is unacceptable in terms of really aggressive tax avoidance.

Mr Cameron added: “We’ve got a low top rate of income tax now; we’ve got a low rate of corporation tax now; we are a fair tax country. But I think it’s fair then to say to business, you know, we’re playing fair by you; you’ve got to play fair by us.

Mr Cameron said he had put the issue “right at the top of the agenda” for the G8 this year as well as tackling it nationally.

“It’s simply not fair and not right what some of them are doing by saying, I’ve got lots of sales here in the UK but I’m going to pay a sort of royalty fee to another company that I own in another country that has some special tax dispensation.”

The Commons Public Accounts Committee last month condemned the “unconvincing, and, in some cases, evasive” evidence it had received from representatives of Starbucks, Google and Amazon who were called in front of it to defend their tax affairs.

http://www.independent.co.uk/news/uk/politics/ill-make-damn-sure-big-companies-pay-their-tax-says-david-cameron-8439137.html

With Autonomy, H-P Bought An Old-Fashioned Accounting Scandal. Here's How It Worked.

HP Shares Plunge After A $8.8 Billion Writedown Of Accounting Problems At Autonomy- Abram Brown 11/20/2012

Whitman: $8.8 billion worth of vaporware:-

The story was first told to me late last year, and like a lot of stories of financial impropriety inside a huge company, it was almost impossible to nail down. Hewlett-Packard‘s Autonomy division, my source told me, was vaporware writ large: A $10 billion software company with an overhyped flagship product that was literally being given away because customers didn’t have a use for it.

Today, Meg Whitman admitted as much. H-P announced it was writing off 88% of the purchase price for Autonomy and accused “some former members of Autonomy’s management team” of using “accounting improprieties, misrepresentations and disclosure failures” to hide the software company’s true performance and value.

In the release, H-P identified one of the oldest accounting tricks in the book, a variation on the one “Chainsaw Al” Dunlap used to accelerate revenue at Sunbeam — by getting customers to “buy” products now, under terms that really just borrowed from the future.

I spoke to my source again this morning and he detailed what he saw at H-P, from his position deep within the 300,000-employee company.

“What I saw was exactly what Meg Whitman wrote in her internal memo to employees,” my source said. “There was really sketchy accounting going on.”

Autonomy was founded as Cambridge Neurodynamics in 1991 by Michael Lynch, a Cambridge-educated computer scientist, according to this flattering profile by the Guardian after he left H-P in May. The company was based on the then-hot concept of Bayesian search, named after 18th-century mathematician Thomas Bayes, and ultimately developed an all-encompassing software package it called IDOL — Intelligent Data Operating Layer.

H-P today said it stands behind IDOL and well it should. Otherwise it would have to write off the entire $10 billion it paid for Autonomy. But my source doesn’t think much of the product, which is supposed to find all of a company’s data, wherever it resides, and whether or not it can be identified by specific words. (Typical example: Finding documents that contain the phrase “flightless bird” when you’re looking for “penguin.”)

“It’s the primary smoke and mirrors that Autonomy has used to make people think they’ve got something very impressive,” he told me. “It’s a fancy search engine.”
I attempted to reach Lynch this morning, unsuccessfully. His spokeswoman told Reuters he is still  reviewing H-P’s allegations. H-P said it has referred the information it uncovered in a forensic accounting to fraud officials in the U.S. and the U.K.

Here’s what my source observed personally. Autonomy grew through acquisitions, buying everything from storage companies like Iron Mountain to enterprise software firms like Interwoven. They’d then go to customers and offer them a deal they couldn’t refuse. Say a customer had $5 million and four years left on a data-storage contract, or “disk,” in the trade. Autonomy would offer them, say, the same amount of storage for $4 million but structure it as a $3 million purchase of IDOL software, paid for up front, and $1 million worth of disk. The software sales dropped to the bottom line and burnished Autonomy’s reputation for being a fast-growing, cutting-edge software company a la Oracle, while the revenue actually came from the low-margin, commodity storage business.

“They would basically give them software for free but shift the costs around to make it look like they got $3 million in software sales,” said my source, who directly observed such deals.

Lynch’s management team also was practiced at the art of wringing attractive-looking growth out of a string of ho-hum acquisitions. The typical strategy was to bolt IDOL and other software onto a company’s existing products and try and convince customers to pay more for the “new” products. If that failed, they’d milk the existing customer base by halting development and outsourcing support, my source says, using the cash from the runoff business to fund more acquisitions.

“Mike Lynch was famous for saying Autonomy never put an end of life on any product,” said my source. “But the customers were screaming.”

Now, my source has never been a Mike Lynch fan. In sales meetings, he says, Lynch “loved to do vague and theoretical academic-type presentations to show what a visionary he was.”

And Autonomy may have some powerful features my source didn’t appreciate. The Defense Department reportedly is a customer. But from his perch within the company, it looked like a lot of vaporware wrapped up in fancy Cambridge talk and the kind of accounting tricks managers have engaged in since the dawn of publicly traded stock.

With its announcement today, H-P seems to agree. The company accused former managers of “a willful effort” “to inflate the underlying financial metrics of the company in order to mislead investors and potential buyers. These misrepresentations and lack of disclosure severely impacted HP management’s ability to fairly value Autonomy at the time of the deal.”

Calling customers wouldn’t necessarily have uncovered the problem, my source says.

“I think these companies are embarrassed to admit they spent $10 million on software that doesn’t actually work,” he said.

http://www.forbes.com/sites/danielfisher/2012/11/20/with-autonomy-h-p-bought-an-old-fashioned-accounting-scandal/

Ford under fire over grants payment

By Press Association, Nov 6, 2012

Car giant Ford has been criticised for accepting millions of pounds from UK taxpayers in the run-up to announcing the closure of its last British assembly plant, with the loss of 1,400 jobs.

The vehicle manufacturer received cash from the regional growth fund (RGF) to help develop its Dagenham base, and was given an £80 million loan from the European Investment Bank (EIB) for its factory in Turkey, before revealing it would shut its plant at Swaythling in Southampton.

Production of Ford's Transit van will switch from Swaythling to Turkey, having been based in Southampton - the company's last UK vehicle assembly plant - for 40 years.

The Government said the regional growth fund cash helped protect jobs - and argued the money could still have been granted even if ministers knew about the plan to shut Swaythling next July. But Labour's former innovation and skills secretary John Denham, MP for Southampton Itchen, said: "It is extraordinary that a regional growth fund grant was made to Ford without the Government being aware of the wider Ford strategy.

"I think that is a weakness of the regional growth fund compared with the old regional development agency structures, which were much more likely to ensure bits of Government dealing with major companies were aware of the whole of the company's strategy. By dividing the regional growth fund into separate grants, there is no sense of engagement with the company."

Shadow business minister Iain Wright claimed it was a "huge failing of the RGF" that the money was approved without the Government knowing of the company's plans to shut Swaythling.

But Business Minister Michael Fallon claimed the RGF cash would protect hundreds of jobs: "We announced on October 19 our conditional offer of £9.3 million to support Ford's investment of £156 million into Dagenham to build an all-new engine series at the plant. That investment - and it may be of no comfort to those in the Southampton area - will safeguard some 450 jobs and create 50 new jobs while supporting many more in the supply chain and wider economy."

It emerged at the weekend that the EIB loaned Ford £80 million to invest in Turkey as part of its moves to prepare the country's economy for possible European Union membership. The money, part of which came from British taxpayers, was signed off by the EIB, whose governors include Chancellor George Osborne.

Mr Fallon backed the EIB cash, saying the loan was "not based on the cessation of production at Southampton". He added: "It is incorrect to imply the EIB loan is responsible itself for exporting jobs from the UK."

Conservative MP Caroline Nokes (Romsey and Southampton North), who led today's Westminster Hall debate, said the revelation Turkey would benefit from Swaythling's demise sparked concern and anger. She believed the firm had "a moral duty to declare its hand" before applying for cash.

http://money.aol.co.uk/2012/11/06/ford-under-fire-over-grants-payment/

Evangelicals, excluded from proposed Russian religious hatred law, voice displeasure

BY BARRY DUKE – OCTOBER 1, 2012

RUSSIA, increasingly sinking into a mire of religious fervour, is apparently contemplating a new law that would carry a three-year jail sentence for anyone insulting any of the four recognised religions in the country: Russian orthodoxy, Islam, Judaism, and Buddhism.

According to this Persecution Blog report, if such a law is enforced, life will be made intolerable for evangelical Christians.

Wally Kulakoff, a representative of Russian Ministries in Moscow, said that, because the Duma has openly proclaimed that there are only four traditional religions in Russia, Protestants are left out in the cold.

Kulakoff pointed out that evangelical Christians insult many when they say God had a son

He became the Lamb of God who takes away the sins of the world. Islam says that they have a god who does not have a son, and anyone who claims God had a son has no right to live on this earth. Now, who is insulting who

Kulakoff added:

Non-traditional religion in Russia with be chastised, prohibited, [and] will have to go underground. There will be no room for the Protestant church

Russian Ministries School is training next-generation church leaders – young people who are already leaders in their community. If this law is passed and it’s interpreted harshly, Kulakoff says:

Then Russian Ministries’ School Without Walls goes underground and will continue to have an impact, but in another form. Rather than [operating] openly, it’ll be more excluded and secluded.

Kulakoff warned that the proposed law could have far-reaching impact, saying that the greatest insult to the Orthodox Church is to have a Bible translation that they didn’t authorise

That means Russia will say you can only use one Bible …  the more modern, the more contemporary translations will be illegal

[This is clearly a response to the hypocrisy of the west - just a different set of red lines]

Source:- Freethinker/

US debt collectors cash in on $1 trillion in student loans

RT Sunday, 9 September 2012
young people trapped for life

WASHINGTON — Most US college students hope to land a good job with a high salary after graduation. But for some the reality is very different. Many find themselves faced with insurmountable debt — and a loan industry that’s happy to cash in on their misfortune. ­

As the number of people taking out government-backed student loans has soared, so has the number of borrowers who have fallen behind in making payments.

MORE AND MORE SINKING INTO HOLE

Around 5.9 million people nationwide have fallen at least 12 months behind in their payments. This number has grown by a third in the last five years, according to a State Higher Education Finance survey.

Many who can’t repay their loans feel they have no choice but to default. It’s a decision that can be disastrous — ruining a borrower’s credit and increasing the amount they owe. It can also result in penalties of up to 25 per cent of the balance.

SCARY SCENARIO

Despite the scary consequences, young adults across America have chosen to default on their loans. And that decision has resulted in a cat-and-mouse game with the government.

“I keep changing my phone number. In a year, this is probably my fourth phone number,” former student Amanda Cordeiro told the New York Times.

Cordeiro receives up to seven calls a day from debt collectors attempting to recover her $55,000 in overdue student loans. But phone calls are just the beginning.

NO STATUTE OF LIMITATIONS

Since the federal government imposes no statute of limitations for collecting loan repayments, escaping the debt is nearly impossible.

“You are going to pay it, or you are going to die with it,” said John Ulzheimer, president of consumer education at SmartCredit.com.

As America’s poor economy causes companies and small businesses to close their doors, the debt collection industry is booming.

Conserve, a debt collection agency in New York, expects to double its payroll in the next three years.

“There is great opportunity,” the company’s president and founder Mark E. Davitt, told the New York Times.

It’s easy to see where that opportunity comes from.

$1 TRILLION IN OUTSTANDING LOANS

The nationwide student loan balance is more than $1 trillion. It’s a number that makes borrowers cringe.

However, debt collectors are more than grateful for the astronomically high amount of debt among college graduates.

Debt collectors used to receive a steady and reliable income from credit card debt, but the slowing economy has made collection a challenge.

Now, student loans are filling that hole. In fact, many are calling students the “new oil well” for the debt collection industry.

“While the Department of Education debt collection contract has been one of the most highly sought-after contracts within the ARM industry for years, I believe it is now THE most sought-after contract within this industry, centered within the most sought-after market — student loans,” mergers and acquisitions specialist Mark Russell wrote on Insidearm.com.

WIN-WIN SITUATION FOR SOME

It’s a win-win situation for both the government and collection agencies. Government officials estimate they will collect 76 to 82 cents on every dollar of loans made in fiscal 2013 that end up in default. Borrowers then have to pay collection costs, which go straight to the debt agencies.

In addition to the balance, borrowers are charged for collection costs, which go straight to the debt agencies.

The rewards trickle down to other areas, too.

COLLUSION WITH GOVERNMENT

Educational Credit Management Corp. (ECMC), a Minnesota based agency, benefits from its 18-year-old agreement with the US government, according to Bloomberg News.

The company charges fees to borrowers and earns commissions from taxpayers when it collects on defaulted student loans. And the rewards are lucrative.

ECMC’s debt collectors earn financial perks as a reward from extracting money from defaulted borrowers. In 2010, the company’s top performers received bonuses equivalent to as much as 10 times their base salaries, which range from $33,000 to $46,000.

'CLOSEST THING TO DEBTORS' PRISON'

It’s a never-ending cycle between borrower and lender — and the winner is almost always the lender. After all, it’s nearly impossible to hide from the government.

“It’s the closest thing to debtors' prison that there is on this Earth,” former student Patrick Writer said of his federal loan.

Us student Loan Debt

Help for Heroes slammed by troops for subsidising building projects rather than helping injured veterans

Mail Online

Charity accused of becoming 'too cosy' with the MoD, and 'wrongly focusing' on veteran recovery centres. It recently spent £20million renovating flagship centre Tedworth House, Wilts, a Grade II-listed building.

A BBC probe unearthed cases of soldiers having to pay for their own physiotherapy and prosthetic limbs.

Mother of double amputee Ben Parkinson, who carried the Olympic torch in Doncaster, said injured soldiers are not always getting the help they need

Injured soldiers and their families last night criticised military charity Help for Heroes for spending millions on care facilities that they say should be funded by the Ministry of Defence.

They said that the charity’s funds should instead be targeted at the veterans themselves to help with practical care.

Help for Heroes is planning to spend £153million on building and servicing five regional MoD Personnel Recovery Centres to provide training and resources to injured servicemen and women.

Mr McBean, 25, who lost an arm and a leg when he stepped on a Taliban landmine and is a Help for Heroes patron, said: ‘Rather than £100million being spent on limbs for every single guy who has been injured, and the future, instead the MoD somehow managed to get all these “Gucci” buildings out of it.’

Diane Dernie, the mother of Lance Bombardier Ben Parkinson – another double amputee – said: ‘We find it difficult to see these buildings, these edifices that are being paid for by charity.

‘If there’s building work, if there’s need for a location then that should be the MoD’s responsibility. Charities should be there, we think, to support the guys, to support the families.’

The criticism was uncovered in an investigation by the BBC’s Newsnight and the Bureau of Investigative Journalism. Many contributors paid tribute to the charity’s ‘good intentions’ but said it was overly reliant on the MoD’s advice on where to spend its funds.

Last night the charity said it was ‘deeply upset’ by the ‘misleading nature’ of the report.

It said: ‘We work closely in partnership with the MoD but continue to drive the agenda and challenge the status quo.

‘We are fiercely independent and, far from getting our orders from the senior officers, we listen to the wounded themselves and then see how best we can support them.

‘We have committed over £121million-worth of support, the largest single contribution in British military history, both directly to individuals and to provide world-class facilities that would not otherwise have existed.’

Newsnight also found that some wounded veterans have complained that following their discharge from the forces they have been denied access to recovery centres, with one ex-Royal Marine corporal saying they felt like a ‘burden’ and had to beg to get what they needed, which they found ‘degrading’.

Veterans Suffering

Libor: An opaque scandal erodes confidence in major banks

Jul 24, 2012 JOHN STODDER, MBJ national affairs correspondent

Last month, one of the biggest financial scandals in history came to light, involving many of the most pre-eminent banks in the world. But public reaction has been so muted that a Los Angeles Times columnist was compelled to ask, “Why aren’t more people furious about the Libor scandal?”

In fact, people are.

The news media soon will be full of stories of outrage concerning the London Interbank Offered Rate (Libor), the daily interest calculation that underlies hundreds of trillions of dollars in loans and option transactions; about how Barclays and other international banks managed to manipulate it to bolster profits and buttress their stock prices, and how the manipulations subverted capitalism, robbed pensioners. Regulators, congressional investigators and plaintiffs’ attorneys are massing around the scandal, ready to attack both banks and U.S. and U.K. bank regulators who, some allege, knew about a persistent pattern of rate manipulation and cartel-like behavior but turned a blind eye.

Treasury Secretary Timothy Geithner, for example, will be grilled about how much he knew about Libor manipulations when he headed the Federal Reserve Bank of New York. According to the Washington Post, the New York Fed had received “occasional anecdotal reports from Barclays of problems with Libor” beginning in 2007, enough that in 2008, Geithner asked British officials whether the rate was being manipulated.

According to numerous media reports, officials in California, Connecticut, Florida, New York and Maryland are looking into possible legal action against the banks, blaming Libor manipulation for higher borrowing costs and lower investment yields that affected public treasuries. Joe Dear, head of the California Public Employee Retirement System, the nation’s biggest public pension fund, which has been beset by falling investment yields since 2008, called for prosecuting bank executives if it is shown that the Libor manipulations affected long-term investors such as pension funds.

Libor, explained

Every weekday morning before 11 a.m. GMT executives at up to 19 large banks, including three U.S.-based banks that participate in the London Interbank money market, provide what the British Bankers’ Association (BBA), which runs the Libor-fixing process, terms its “lowest perceived rate” for inter-bank loans at that moment. It is an estimate of what interest they would be charged that day for unsecured loans from other banks.

The rates are averaged together with the four highest and four lowest figures tossed out. The results are reported as that day’s Libor rates, published by Thomson Reuters.

The Libor rates immediately become that day’s benchmarks for pricing a vast number of loans, securities and derivatives around the world.

Libor affects the health of pension plans and city and state budgets, the profits and losses for derivative traders, and rates for mortgages, student loans, auto loans and small-business lending.

From at least 2005 until 2009, according to investigators for the U.S, U.K. and the European Union, some of the participating banks gamed the Libor rate. When Libor rates rose, consumer and business borrowing became more expensive. When Libor rates fell, investment yields were reduced. When Libor rates were manipulated, there were winners and losers, depending on the direction of the manipulation. What was clearly sacrificed, however, was the integrity of the banking system.

First up, Barclays

Barclays was the first and so far the only bank to admit it manipulated the Libor rate between 2005 and 2009, in a settlement with U.S. and U.K. regulators in June. Its CEO, Robert Diamond, Jr., has resigned despite claiming he knew nothing about the false submissions. The bank has agreed to pay U.K. and U.S. regulators $453 million in civil fines.

Investigators believe it would have been impossible for Barclays to increase its profits and or reduce losses from false reports without acting in collusion with other banks. According to the New York Times’ DealBook, HSBC, Citigroup and JPMorgan Chase are among other Libor-setting banks being investigated. Bloomberg BusinessWeek reports that the EU Competition Commission views the collusion as “a cartel arrangement.” Investigators say two motives influenced Barclays’ manipulation of the Libor rate. E-mails throughout the four-year period show bank traders brazenly requesting bank executives’ help in forestalling an anticipated move in the Libor rate to protect profits from a particular trading position, then thanking those executives, saying things like, “Dude. I owe you big time!”

Then, as the financial crisis of 2007-2008 evolved, the banks had institutional incentives to manipulate the rates. When the Libor rate is published, the individual banks’ submissions are published along with it. The bankers knew that investors, analysts and regulators could use that information to gauge each bank’s financial health during the financial crisis beginning in 2008. Quoting a lower borrowing rate conveyed that the bank had more reserves than it really had, and tended to boost Barclays’ stock price at a time when reserves were thin.

Much still remains to be discovered about both the scandal itself and its effects on the economy, leading into and following the Wall Street collapse. At this point, it is unclear who the winners and losers were, but it is possible that some of the financial institutions preparing to sue for losses will learn, when all the facts are known, that the unplanned effect of Libor manipulation was to improve their financial positions.

The biggest cost to be borne by businesses and investors is arguably going to be destroyed confidence in the banking system, and in the leadership of the major banks. As many commentators have noted, the Barclays’ emails show major, respected institutions infected with greed – a dramatic change from the staid image of bankers as risk-averse professionals who cared about the soundness of their banks above all. The banks were permitted to establish Libor, a crucially important benchmark for capital, without any regulatory oversight only because every financial entity that used Libor as a benchmark for pricing loans assumed the world’s leading bankers could be trusted. That presumption of trustworthiness is gone, but it is uncertain what can replace it. ••• John Stodder is national affairs correspondent for The Mississippi Business Journal. Source article:- MBJ Business blog