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Assange Seeks Seat in the Australian Senate


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SYDNEY, AustraliaJulian Assange, the founder of WikiLeaks, formally inaugurated a new political party bearing the name of his antisecrecy organization on Thursday and declared his own unorthodox candidacy for a seat in the Australian Senate in national elections to be held later this year.

In a telephone interview, Mr. Assange said he had every confidence in his ability to run a campaign from the Ecuadorean Embassy in London. He has been living under asylum there for more than a year to avoid being extradited to Sweden, where he is wanted for questioning on sexual assault accusations.

“It’s not unlike running the WikiLeaks organization,” he said. “We have people on every continent. We have to deal with over a dozen legal cases at once.”

“However, it’s nice to be politically engaged in my home country,” he added.

Mr. Assange, 42, an Australian computer hacker who rose to prominence as an evangelist for radical government transparency and a critic of United States foreign policy, is a deeply polarizing figure. Many believe that the WikiLeaks Party is simply a vanity project for Mr. Assange, although several polls conducted since plans to establish the party emerged earlier this year suggest that it could fare better than expected.

The Australian Senate has a long history of successful protest candidates, John Wanna, a political-science professor at Australian National University in Canberra, said in an interview. Mr. Assange is probably hoping to trade on his name recognition and follow in the footsteps of other rabble-rousing, single-issue senators, Professor Wanna said.

“He’s basically a nuisance candidate who may attract a bit of attention, because he’s not really about governing and sitting in Parliament,” he said. “He’s not standing to do the work, he’s standing for the nuisance value.”

If elected, Mr. Assange said, his party will work to advance “transparency, justice and accountability.”

“My plans are to essentially parachute in a crack troop of investigative journalists into the Senate and to do what we have done with WikiLeaks, in holding banks and government and intelligence agencies to account,” Mr. Assange said.

Supporters of Mr. Assange laud him as a hero for what they see as his dogged pursuit of government transparency, but prominent critics have described his releasing of classified information as a reckless act.

Mr. Assange is perhaps best known for WikiLeaks’ 2010 release of a huge trove of American diplomatic cables. His supporters maintain that the United States and its allies have fabricated the sexual assault case against him in Sweden to hamper his ability to release further classified materials and to punish him for those already released.

Under Australian law, Mr. Assange would have to take his seat within one year of being elected, although the Senate could technically grant him an extension if he is unable to physically take his seat. The British government has stated its intention to arrest him if he leaves the embassy in London.

Although he is best known for his views on international affairs, Mr. Assange was eager on Thursday to offer WikiLeaks’ position on the most contentious issue in contemporary Australian politics: the record number of people trying to reach Australia each year in rickety boats to claim political asylum.

Mr. Assange assailed a tough policy announced last week by Prime Minister Kevin Rudd, under which all asylum seekers arriving in Australia by boat are to be sent to refugee-processing centers in Papua New Guinea.

He compared his own situation, and that of Edward J. Snowden — the former National Security Agency contractor who leaked documents about American surveillance programs — with the plight of those trying to reach Australia by boat.

“I am a political asylum seeker, awarded political asylum by the Ecuadorean government, and another state, the United Kingdom, and other states are interfering with that,” he said.

via Assange Seeks Seat in the Australian Senate – NYTimes.com.

“We Were Told Nothing Could Be Done In Ireland”


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The 32-year-old woman, who was a foreign national living in Ireland, underwent an abortion at a Marie Stopes clinic in west London. However, she died in a taxi hours after the procedure.

The woman, who was legally resident in Ireland, had sought an abortion at a maternity hospital in Dublin but had been told that it was not legally possible to provide one in this jurisdiction.

The woman died in January 2012. An inquest has not yet been held into the woman’s death as the police investigation is continuing.The husband said the couple was told that treatment of the condition could involve a procedure that would leave her infertile. “We were worried about what would happen when she became pregnant again,” he said.

She was sick, but we were told that nothing could be done in IrelandWe were left on our own to deal with it. We didn’t get any help at all,” he said.

Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets


Are there any markets that have not been corrupted by lax regulation, and as a consequence by Banks who have been emboldened in their insatiable greed by the lack of effective enforcement of the rules and equal justice for all?

It is somewhat ironic that this news of routine price rigging comes on the revelation that Obama is replacing Gary Gensler, Chairman of the CFTC, for being too aggressive in seeking to regulate the Swaps markets and angering some foreign banks (read London trading operations of the big multinational banks).

London has become a favored haven for corrupt financial practices such as ‘the London Whale.’

I will suggest to you that this is still just the tip of the iceberg.  And for those who assert that there is no manipulation in the precious metals markets, despite all the odd price action and blatantly predatory selling raids, I would suggest that they are obviously lacking in something, exactly what I cannot say.

There will be no sustainable recovery until the impediments to honest price discovery and the pernicious tax of corruption is eliminated through greater transparency, equal enforcement of existing laws, and serious reform.

One can seriously wonder how confident they can be that the governments of the US and the UK, and of Europe as well, are seriously committed to performing the basic function of maintaining honest markets for their constituents.  If market confidence breaks, there will be hell to pay.

Even if they hide and tolerate this corruption for the sake of ‘confidence, ‘ markets have a significant role to play in the economy.  That function has become warped and perverted through corrupt practices, with serious real world results, which accumulate and worsen over time, with consequences that we have yet to discover.

 

“Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter…”

via Jesse’s Café Américain: Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets.

Ireland and the Basque Country: Massive Flight (Emigration) or General Strike?


Introduction

Many billions of Euros are being extracted from Europe’s vassal-debtor nations – Spain, Greece, Portugal and Ireland – and transferred to the creditor banks, financial speculators and swindlers located in the City of London, Wall Street, Geneva and Frankfort. Under what have been termed ‘austerity’ programs, vast tributary payments are amassed by ruling Conservative and Social Democratic regimes via unprecedented and savage budget cuts in salaries, public investment, social programs and employment. The result has been catastrophic growth in unemployment, under-employment and casual labor reaching over 50% among workers under age 25, and between 15% and 32% of the total labor force. Wages, salaries and pensions have been slashed between 25% and 40%. The age of retirement has been postponed by 3 to 5 years. Labor contracts (dubbed ‘reforms’) concentrate power exclusively in the hands of the bosses and labor contractors who now impose work conditions reminiscent of the early 19th century.

o learn first-hand about the capitalist crisis and the workers’ responses, I spent the better part of May in Ireland and the Basque country meeting with labor leaders, rank and file militants, unemployed workers, political activists, academics and journalists. Numerous interviews, observations, publications, visits to job sites and households – in cities and villages – provide the basis for this essay.

Ireland and the Basque Country: Common Crises and Divergence Responses

The Irish and Spanish states, societies and economies (which presently includes the Basque country, pending a referendum) – have been victims of a prolonged, deep capitalist depression devastating the living standards of millions. Unemployment and underemployment in Ireland reach 35% and in the Basque country exceeds 40%, with youth unemployment reaching 50%. Both economies have contracted over 20% and show no signs of recovery. The governing parties have slashed public spending from 15% to 30% in a range of social services. By bailing out banks, paying overseas creditors and complying with the dictates of the autocratic ‘troika’ (International Monetary Fund, European Central Bank and European Commission), the capitalist ruling class in Ireland and the Basque region have undermined any possible investments for recovery. The so-called ‘austerity’ program is imposed only on the workers, employees and small businesspeople, never on the elite. The Brussels-based ‘troika’ and its local collaborators have lowered or eliminated corporate taxes and provided subsidies and other monetary incentives to attract multi-national corporations and foreign finance capital.

The incumbent bourgeois political parties, in power at the beginning of the crash, have been replaced by new regimes that are signing additional agreements with the ‘troika’ and bankers. These agreements impose even deeper and more savage cuts in public employment and a further weakening of workers’ rights and protection. The employers now have arbitrary power to hire and fire workers at a moment’s notice, without severance pay, or worse. Some contracts in Ireland allow employers to demand partial repayment of wages if workers are forced to leave their jobs before the end of their contract because of employer abuse. The Spanish economy – including in the Basque country – is subject to a modern form of ‘tributary payments’ dictated by the ruling imperial oligarchy in Brussels. This oligarchy is not elected and does not represent the people it taxes and exploits. It is accountable only to the international bankers. In other words, the European Union has become a de facto empire – ruled by and for the bankers based in the City of London, Geneva, Frankfort and Wall Street. Ireland and the Basque country are ruled by collaborator vassal regimes which implement the economic pillage of the electorate and enforce the dictates of the EU oligarchy – including the criminalization of mass political protests.

The similarity in socio-economic conditions between Ireland and the Basque country in the face of crisis, austerity and imperial domination, however, contrasts with the sharply divergent responses among the workers in the two regions due to profoundly different political, social and economic structures, histories and practices.

Facing the Crisis: Basque Fight, Irish Flight

In the face of the long-term, large-scale crisis, Ireland has become the ‘model’ vassal state for the creditor imperial states. The leading Irish trade union federation and the dominant political parties – including the Labor Party currently in coalition with the ruling Fine Gael Party – have signed off on a series of agreements with the Brussels oligarchs to slash public employment and spending. In contrast, the militant pro-independence Basque Workers Commission, or LAB, has led seven successful general strikes with over 60% worker participation in the Basque country – including the latest on May 30, 2013.

The class collaborationist policies of the Irish trade unions have led to a sharp generational break – with older workers signing deals with the bosses to ‘preserve’ their jobs at the expense of job security for younger workers. Left without any organized means for mass struggle, young Irish workers have been leaving the country on a scale not seen since the Great Famine of the mid-19th century. Over 300,000 have emigrated in the past 4 years, with another 75,000 expected to leave in 2013, out of a working population of 2.16 million. In the face of this 21st century catastrophe, the bitterness and ‘generational break’ of the emigrating workers is expressed in the very low level of remittances sent back ‘home’. One reason the Irish unemployment rate remains at 14% instead of 20-25% is because of the astounding overseas flight of young workers.

In contrast, there is no such mass emigration of young workers from the Basque country. Instead of flight, the class fight has intensified. The struggle for national liberation has gained support among the middle class and small business owners faced with the complete failure of the right-wing regime in Madrid (ruled by the self-styled ‘Popular Party’) to stem the downward spiral. The fusion of class and national struggle in the Basque country has militated against any sell-out agreements signed by the ‘moderate’ trade unions, Workers Commissions (CCOO) and the General Union of Workers (UGT). LAB, the militant Basque Workers Commission, has vastly more influence than their number of formally affiliated unionized workers would suggest. LAB’s capacity to mobilize is rooted in their influence among factory delegates, who are elected in all workplaces, far exceeding all trade union membership. Through the delegates meeting in assemblies, workers discuss and vote on the general strike – frequently bypassing orders from central headquarters in Madrid. Direct democracy and grass roots militancy frees the militant Basque workers from the centralized bureaucratic trade union structure which, in Ireland, has imposed retrograde ‘give backs’ to the multi-national corporations.

In the Basque country, there is a powerful tradition of co-operatives, especially the Mondragon industrial complex, which has created worker solidarity in the urban-rural communities absent among Irish workers. The leading Irish politicians and economic advisers have groveled before the multi-national corporations, offering them the lowest tax rates, biggest and longest-term tax exemptions, and the most submissive labor regulations of any country in the European Union.

In the Basque country, the nationalist-socialist EH Bildu-Sortu political party, the daily newspaper Gara, and the LAB provide mutual political and ideological support during strikes, electoral contests and mass mobilizations based on class struggle. Together, they confront the ‘austerity’ programs as a united force.

In Ireland, the Labor Party – supposedly linked to the trade unions – has joined the current governing coalition. They have agreed to a new wave of cuts in social spending, layoffs of public employees, and wage and salary reductions of 20%. The trade union leadership may be divided on these draconian cuts, yet most still support the Labor Party. The more militant retail workers’ union rejects the cuts, but has no political alternative. Apart from support from the republican-nationalist Sein Fein and smaller leftist parties, the political class offers no clear progressive political program or strategy. [The Sein Fein has made the ‘transition’ from armed to electoral struggle.] According to the latest (May 2013) polls, it has doubled its voter approval rating from under 10% to 20% due to the crisis. However, Sein Fein is internally divided: the ‘left’ pro-socialist wing looks to intensify the ‘anti-austerity’ struggle while the ‘republican’ parliamentary leaders focus on unification and downplay class struggle. As a result of its collaboration with the ‘troika’ and the new regressive tax laws, the Labor Party is losing support and the traditional right-wing party, Fianne Fail, which presided over the massive swindles, speculative boom and corporate giveaways, is making an electoral comeback – and may even return to power. This helps to explain why Irish workers have lost hope in any positive political change and are fleeing in droves from the perpetual job insecurity imposed by their elite: ‘Better a plane ticket to Australia than a lifetime of debt peonage, regressive bankruptcy laws and boss-dictated contracts approved by trade union chiefs who draw six digit salaries’.

The Basque country’s revolt against centralized rule from Madrid is partly based on the fact that it is one of Spain’s most productive, technologically advanced and socially progressive regions. Basque unemployment is less then that of the rest of Spain. Higher levels of education, a comprehensive regional health system, especially in rural areas and a widespread network of local elected assembles, combined with the unique linguistic and cultural heritages, has advanced the Basque Nation toward greater political autonomy. For many this marks the Basques as a political ‘vanguard’ in the struggle to break with the neo-liberal dictates of the EU and the decrepit regime in Madrid.

Conclusion: Political Perspectives

If current austerity policies and emigration trends continue, Ireland will become a ‘hollowed out country’ of historical monuments, tourist-filled bars and ancient churches, devoid of its most ambitious, best trained and innovative workers: a de-industrialized tax-haven, the Cayman Island of the North Atlantic. No country of its size and dimensions can remain a viable state faced with the current and continuing levels of out-migration of its young workers. Ireland will be remembered for its postcards and tax holidays. Yet there is hope as the left republicans of the Sein Fein, socialists, communists and anti-imperialist activists, join the unemployed and underpaid workers in forming new grassroots networks. At some point the revolving doors of Irish politicos in and out of office may finally come to a halt. Unemployed and educated angry young people may decide to stay home, stand their ground and turn their energies toward a popular rebellion. One consequential socialist leader summed it up: “Deep pessimism and the influence of bankrupt social democracy and imperialist ideology within the labor movement are very strong. As you know we can’t start a journey other than from where we are”. The determination and conviction of Irish trade union militants is indeed a reason to hope and believe that current flight will turn into a future fight.

In the case of the Basque country, the rising class and national mass struggle, linked to the legacy of powerful co-operatives and solidarity based worker assemblies, provides hope that the current reactionary regime in Madrid can be defeated. The ruling neo-fascist junta (the ruling party still honors the Franco dictatorship and military) is increasingly discredited and has to resort to greater repression. With regard to the militant Basque movements, the regime has taken violent provocative measures: criminalizing legal mass protests, arresting independence fighters on trumped up charges and forcefully banning the public display of the photos of political prisoners (called ‘terrorists’ by Madrid). It is clear the government is increasingly worried by the strength of the general strikes, the rising electoral power of the pro-independence left and has been trying to provoke a ‘violent response’ as a pretext to ban the press, party and program of the EH Bildu-Sortu and LAB.

My sense is that Madrid will not succeed. Spain as a centralized state is disintegrating: the neo-liberal policies have destroyed the economic links, shattered the social bond and opened the door for the advance of mass social movements. The bi-party system is crumbling and the class-collaborationist policies of the traditional trade union confederations are being challenged by a new generation of autonomous movements.

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BY JAMES PETRAS ON AXIS OF LOGIC

© Copyright 2013 by AxisofLogic.com

This material is available for republication as long as reprints include verbatim copy of the article in its entirety, respecting its integrity. Reprints must cite the author and Axis of Logic as the original source including a “live link” to the article. Thank you!

via Ireland and the Basque Country: Massive Flight (Emigration) or General Strike? | Featured |Axisoflogic.com.

Anti-austerity News


1000s expected at historic anti-cuts conf in London Press TV Thousands of British anti-cuts supporters will descend on London today to mark the launch of coordinated actions against the government’s austerity measures nationwide. The national mobilization by the People’s Assembly Against Austerity and backed by 

Thousands march in Rome antiausterity demo Times of Malta Italy’s three largest labour unions joined force in Rome today to demonstrate against rising unemployment and unfair taxes. Organisers from the unions CGIL, CISL and UIL expected around 200,000 people to join the two marches through the centre of Rome 

Union’s roadshow exposes how Con-Dem cuts have affected lives of ordinary … Scottish Daily Record The Austerity Uncovered tour, which hit Glasgow yesterday, will take in all the main cities in Scotland, culminating in the Anti-Bedroom Tax Conference in Edinburgh on June 29. Yesterday, as the battle bus – organised by the Scottish TUC – rolled from one

People’s Assembly hears union leaders promise anti-cuts action
BBC News
Unite general secretary Len McCluskey said anti-union laws should not get in the way of strikes against austerity. The UK’s biggest union earlier released results of a survey suggesting many people have employment or money worries and want the 

Shell to resume talks on Niger Delta oil spills


guardian.co.uk,June 2013 17.19 BST

Oil company Shell will resume talks next week in London with lawyers representing 15,000 of the poorest people in the world who are claiming millions of pounds’ compensation for oil spills on the Niger delta. But Martyn Day, of Leigh Day law firm which is acting for the communities, said the case could still go to a full high court trial in London in 2014.

The Shell petroleum development company of Nigeria (SPDC) has admitted liability for two spills from a pipeline in the Niger delta in 2008, but the company disputes the quantity of oil that was spilled and the damage that was done to livelihoods and the environment near the coastal village of Bodo in Rivers State. Oil spill experts working for the communities estimate that nearly 500,000 barrels leaked from the company pipeline over several months, Shell claims it was far less.

The legal action, represents the first time Shell or any oil company has faced claims in the UK from a community from the developing world for environmental damage. “We have agreed to negotiate over the next two to three weeks. Probably the talks will go on into the autumn when a deal will become more likely,” said Day.

The legal development came as Netherlands National Contact Point(NCP), which oversees the implementation of OECD guidelines on the human rights and environmental records of multinational companies, broadly backed claims by Amnesty International and Friends of the Earth International that Shell’s repeated assertions that sabotage is responsible for most of the oil spilt in Nigeria is based on flawed investigations which rely on information provided by the company itself. The two organisations offered NCP video evidence of “serious flaws” in the system used by Shell for investigating oil spills.

NCP accepted there were problems in the spill investigation system but criticised Shell. “Shell management should have had a more cautious attitude about the percentage of oil spills caused by the sabotage. The data they are based on is not absolute,” it said.

But FoeI and Amnesty said today that NCP should have gone much further in its criticism of Shell. “Sabotage is a problem in Nigeria, but Shell exaggerates this issue to avoid criticism for its failure to prevent oil spills,” said Audrey Gaughran of Amnesty International. “The oil companies are liable to pay compensation when spills are found to be their fault but not if the cause is attributed to sabotage – but it is effectively the company that investigates itself. This is clearly a system open to abuse.”

Shell replied that oil companies did not devise the investigation system and that they had acted within the Nigerian law. “Any spill is a serious concern, and SPDC staff and contractors are working hard to eliminate operational spills. Unfortunately the high incidence of oil theft and illegal refining in the Niger delta exacerbates the problem and has a devastating impact on the environment. This criminality is the real tragedy of the Niger delta. SPDC regrets that some NGOs continue to take a campaigning approach rather than focusing on on-the-ground solutions that bring societal benefits,” said the Shell spokesman Jonathan French.

Shell’s 2012 sustainability report states that 95% of the 26,500 barrels of oil spilled from Shell facilities in Nigeria which were as a result of sabotage. Of the 173 oil spills over 1.5 barrels from SPDC facilities, the company said 80% were caused by illegal activity.

via Royal Dutch Shell plc .com.

Wed June 19th will mark a year since WikiLeaks editor Julian Assange entered the Ecuadorian embassy in London seeking sanctuary


Wed June 19th will mark a year since WikiLeaks editor Julian Assange entered the Ecuadorian embassy in London seeking sanctuary. The Ecuadorian government was immediately threatened in private correspondence from British Foreign Minister Hague with the loss of diplomatic status and a consequent raid. The Ecuadorian government made the private threat public, held their ground and conducted an inquiry into the Assange case. This was the same government that had previously responded to a U.S. request for a U.S. military base in Ecuador with, “if you let us have an Ecuadoran base in Florida?”

Photos & Short vids (thanx to Bradleylibero)
http://tinyurl.com/mrclbpa

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Wed June 19th will mark a year since WikiLeaks editor Julian Assange entered the Ecuadorian embassy in London seeking sanctuary. The Ecuadorian government was immediately threatened in private correspondence from British Foreign Minister Hague with the loss of diplomatic status and a consequent raid. The Ecuadorian government made the private threat public, held their ground and conducted an inquiry into the Assange case. This was the same government that had previously responded to a U.S. request for a U.S. military base in Ecuador with, “if you let us have an Ecuadoran base in Florida?”

During this period of inquiry, the London Met were deployed in large numbers around the embassy with 30 police stationed there 24/7. Anti-War, human rights, Latino, Veterans for Peace, Catholic Worker, Occupy & other activists maintained a solidarity vigil at the embassy. Following the completion of the Ecuadorian inquiry and the formal granting of asylum for Julian Assange in August 2012, the Met bobbies left to be replaced by 10 members of the Diplomatic Protection section of the Met and a police conference van permanently parked. This 24/7 police presence has been maintained for the past year at a cost of 4 million quid. On a significantly smaller budget, a daily vigil of solidarity activists has been sustained (presently 4-6pm).

Sunday June 16th. 2013 was chosen as a time to mobilise as Ecuador’s Foreign Minister Ricardo Patino was to visit Julian Assange before his meeting with British Foreign Minister William Hague the following day.

The first sight that greeted activists on exiting the Knighstbridge tube station http://tinyurl.com/lydl5ap was Sue & Roland’s motor home transformed into the “Free Tea, Free Assange” takeaway. The caboose was parked next to an exclusive Gran Cafe facing Harrods, serving folks throughout the afternoon. We started setting up banners and were soon joined by the Ecuadorian community. Support grew to about 130+ by about 4pm. Word came through that the foreign minister had been delayed with an ETA of 6.30pm. We were blessed with fine weather and settled in for the duration. Fortunately, John McClean had brought his guitar! Songs alternated between an Aussie Kiwi combo http://tinyurl.com/ktm9j7m and the Ecuadorian community http://tinyurl.com/mztg4v8 .

In breaks between songs, media interviews were conducted and the Ecuadorian folks led us in chanting. At 6.30 the Ecuadorian foreign minister arrived waving to the crowd and entered the embassy. Singing resumed and after a while curtains were drawn back and Ricardo Patino and Julian Assange appeared at the window of the embassy. Between us and them were the London Metropolitan Police, mainstream media and a sealed U.S. Grand Jury indictment for the WikiLeaks founder.

In other places, Jeremy Hammond & Bradley Manning are already in chains, Edward Snowden is hotly pursued by the same powers. The courage of these people, the WikiLeaks crew and the Ecuadorian people inspires us all. Hopefully such courageous and solidarity is contagious. The world literally depends on its transmission. If that sunny afternoon on a sidewalk in Knightsbride/ London with the the Ecuadorian community and friends is anything to go by, it’s worth the effort.

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G8 – Updates


Update 18/06/13

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G8 Summit 2013:The most important issue in the civil war Syria at Belfast 
National Turk English
The Prime Minister David Cameron was speaking ahead of the opening of the G8 summit in Northern Ireland, which looks set to be dominated by international tensions over Syria. The leaders of the world’s most powerful countries come together today in 

G8 Summit Opens With Revelation That UK Spied on Delegates in 2009
U.S. News & World Report
Documents leaked by former Booz Allen Hamilton employee Edward Snowden reveal that the British and American governments spied on delegates to the 2009 G20 summit in London, the Guardian reported Sunday, on the eve of the 2013 G8 meeting in 


U.S. News & World Report
G8 summit: 8000 police officers and drones deployed with thousands of 
Metro
Security has been stepped up as the G8 summit gets under way with up 2,000 protesters expected to take part in an anti-capitalist march. Prime minister David Cameron is hoping to kick-off the summit with progress on a free trade deal between Europe and 

As G8 kicks off, Snowden documents reveal snooping at past summit
Christian Science Monitor
By Arthur Bright, Staff writer / June 17, 2013. President Barack Obama and British Prime Minister David Cameron watch as students work on a school project about the G-8  The Christian Science Monitor Weekly Digital Edition. The latest leaks from the


Christian Science Mon

Safe sex in Nigeria -Royal Dutch Shell plc .com


Safe sex in Nigeria By John Donovan

ROYAL DUTCH SHELL

 

Tom Mayne of Global Witness, an NGO, has followed the case closely; he believes things were structured this way so that Shell and ENI could obscure their deal with Malabu by inserting a layer between them. Mr Agaev, Malabu’s former fixer, lends weight to this interpretation. It was, he says, structured to be a “safe-sex transaction”, with the government acting as a “condom” between the buyers and seller.

Court documents shed light on the manoeuvrings of Shell and ENI to win a huge Nigerian oil block and on the dilemmas of their industry

DEALS for oilfields can be as opaque as the stuff that is pumped from them. But when partners fall out and go to court, light is sometimes shed on the bargaining process—and what it exposes is not always pretty. That is certainly true in the tangled case of OPL245, a massive Nigerian offshore block with as much as 9 billion barrels of oil—enough to keep all of Africa supplied for seven years.

After years of legal tussles, in 2011 Shell, in partnership with ENI of Italy, paid a total of $1.3 billion for the block. The Nigerian government acted as a conduit for directing most of that money to the block’s original owner, a shadowy local company called Malabu Oil and Gas. Two middlemen hired by Malabu, one Nigerian, one Azerbaijani, then sued the firm separately in London—in the High Court and in an arbitration tribunal, respectively—claiming unpaid fees for brokering the deal.

The resulting testimony and filings make fascinating reading for anyone interested in the uses and abuses of anonymous shell companies, the dilemmas that oil firms face when operating in ill-governed countries and the tactics they feel compelled to employ to obfuscate their dealings with corrupt bigwigs. They also demonstrate the importance of the efforts the G8 countries will pledge to make, at their summit next week, to put a stop to hidden company ownership and to make energy and mining companies disclose more about the payments they make to win concessions. On June 12th the European Parliament voted to make EU-based resources companies disclose all payments of at least €100,000 ($130,000) on any project.

The saga of block OPL245 began in 1998 when Nigeria’s then petroleum minister, Dan Etete, awarded it to Malabu, which had been established just days before and had no employees or assets. The price was a “signature bonus” of $20m (of which Malabu only ever paid $2m).

The firm intended to bring in Shell as a 40% partner, but in 1999 a new government took power and two years later it cried foul and cancelled the deal. The block was put out to bid and Shell won the right to operate it, in a production-sharing contract with the national petroleum company, subject to payment of an enlarged signature bonus of $210m. Shell did not immediately pay this, for reasons it declines to explain, but began spending heavily on exploration in the block.

Malabu then sued the government. After much legal wrangling, they reached a deal in 2006 that reinstated the firm as the block’s owner. This caught Shell unawares, even though it had conducted extensive due diligence and had a keen understanding of the Nigerian operating climate thanks to its long and often bumpy history in the country. It responded by launching various legal actions, including taking the government to the World Bank’s International Centre for the Settlement of Investment Disputes.

Malabu ploughed on, hiring Ednan Agaev, a former Soviet diplomat, to find other investors. Rosneft of Russia and Total of France, among others, showed interest but were put off by Malabu’s disputes with Shell and the government. Things moved forward again when Emeka Obi, a Nigerian subcontracted by Mr Agaev, brought in ENI (which already owned a nearby oil block). After further toing and froing—and no end of meetings in swanky European hotels—ENI and Shell agreed in 2011 to pay $1.3 billion for the block. Malabu gave up its rights to OPL245 and Shell dropped its legal actions (see timeline).

The deal was apparently split into two transactions. Shell and ENI paid $1.3 billion to the Nigerian government. Then, once Malabu had signed away its rights to the block, the government clipped off its $210m unpaid signature bonus and transferred just under $1.1 billion to Malabu.

Tom Mayne of Global Witness, an NGO, has followed the case closely; he believes things were structured this way so that Shell and ENI could obscure their deal with Malabu by inserting a layer between them. Mr Agaev, Malabu’s former fixer, lends weight to this interpretation. It was, he says, structured to be a “safe-sex transaction”, with the government acting as a “condom” between the buyers and seller.

It is not hard to see why the oil giants would want to avoid being seen to be dealing directly with Malabu, a shell company with tainted provenance. Its ultimate beneficial owner is widely believed to be Mr Etete, the very minister who had awarded it the block while serving under Sani Abacha, the late, staggeringly corrupt dictator.

In 2007 Mr Etete was found guilty of money-laundering by a French court. His conviction was upheld in 2009. The trial centred on bribes he had allegedly demanded from foreign investors while in government. He used these to buy, among other things, a French mansion and about €1m-worth of Art Deco furniture, according to French court documents.

Then in 2011 Mr Obi, one of the middlemen in the final deal with Shell and ENI, took his claim for unpaid fees to the High Court in London, calling on Mr Etete to give testimony. For unclear reasons, he agreed to do so—but the hearings had to be moved briefly to Paris so that Mr Etete could give evidence, because he had been barred from Britain for failing to disclose his French conviction on entering the country.

Mr Etete claims he has never been more than a consultant to Malabu. If so, he is unusually hands-on. He was the company’s main negotiator and its representative in the High Court, where he admitted to being the sole signatory on its bank accounts. Indeed, there is no evidence of anyone else making decisions for Malabu.

When asked in court about others purportedly linked to the company and its record-keeping, Malabu’s company secretary, Rasky Gbinigie (who describes Mr Etete as a “family friend”), insisted that he had lost the firm’s copy of the register of shareholders and all minutes of meetings, that there was no written correspondence between him, the directors and the shareholders, and that he had no documents to verify who put up the company’s original share capital.

A not-so-secret alias

Last year Nigeria’s Economic and Financial Crimes Commission (EFCC) looked into Malabu after Mohammed Abacha, a son of the former dictator, complained that he had been a founding shareholder but had been illegally cut out. In an interim report later in the year, the commission said that one Kweku Amafegha “stood in” as a nominee director for Mr Etete. In the High Court’s hearing in Paris Mr Etete admitted that he had himself used the surname Amafegha to open accounts in the past. It was, he said, an alias that “I have always used when I go out for secret missions internationally.”

In the same hearing Mr Etete said of OPL245: “I put my blood, I put my life into this oil block”—quite a commitment for a mere consultant. Yet, when asked directly if he was its owner through Malabu, he denied it. When presented with transcripts of a recording in which he supposedly claimed that “It is my block”, he dismissed the transcripts as inaccurate.

Shell and ENI did not respond to The Economist’s questions about whom they believed to be the beneficial owner of Malabu. Whether or not they suspected it to be Mr Etete, their dealings with him were extensive. He met ENI executives repeatedly. High Court testimony indicated that Shell officials had met him as recently as December 2009, after his money-laundering conviction was upheld. In an e-mail that came out in court, a Shell man talked of having had lunch and “lots of iced champagne” with Mr Etete, who had requested figures from Shell on what it was willing to pay Malabu for the block.

ENI says it considered cutting a deal with Malabu directly, until it emerged that the firm might not have full ownership of the oil block because of “existing disputes”, including with Mr Abacha. Mr Obi testified that Shell broke off direct talks with Mr Etete for the same reason, and because he was “an impossible person to deal with”.

But the oil giants were clearly reluctant to throw in the towel. Shell was loth to walk away from a block in which it had already invested tens if not hundreds of millions of dollars. (The company will not say how much.) ENI was attracted by the size of the block, the prospect of accompanying tax holidays and a waiver of the usual requirement that production revenues be shared with the national oil company.

Shell and ENI reject the suggestion that their joint purchase was a thinly disguised transaction with a dodgy brass-plate company. Shell says it made payments to the Nigerian government only and that it has acted at all times in accordance with Nigerian law. It previously said it had “not acted in any way that is outside normal global industry practice”. ENI says its payments to the government “were made in a transparent manner through an escrow arrangement with a major international bank”. That bank was JPMorgan Chase. A Lebanese bank had earlier declined to handle the payments, it emerged in court.

The companies’ claim that they bought the block from the state, not Malabu, is disingenuous, says Mr Mayne of Global Witness. It is also contradicted by Nigeria’s attorney-general, Mohammed Bello Adoke, who told a parliamentary committee last July that the companies “agreed to pay Malabu”, with the government acting as an “obligor” and “facilitator.”

The attorney-general was unusually active in helping the deal along. He held meetings with Shell, ENI and Malabu, helped to structure the final agreement and even advised on payments to middlemen, according to Mr Obi. In Nigeria it is highly unusual for an attorney-general to be so involved in a big oil deal. The lead is typically taken by the petroleum ministry, which in this case was said to be livid at being sidelined—particularly when Mr Adoke requested that it extend the deadline it had given Malabu to pay its long-owed signature bonus. Mr Adoke, it was suggested in the High Court, had been lawyer to none other than Mr Etete before serving in government. (Mr Adoke could not be reached for comment.)

Where did the money go?

The attorney-general has rejected as “without basis” claims in the Nigerian press that much of the money the government paid to Malabu in the 2011 deal was “round-tripped” back to bank accounts controlled by public officials. But where that money did end up is shrouded in mystery. Of the $1.1 billion, $800m was paid in two tranches into Malabu accounts. This was then transferred to five Nigerian companies that appear to be shells. One of these, Rocky Top Resources, received $336.5m, some of which seems to have been passed on to unknown “various persons”, according to the EFCC’s report. Some $60m went to an account controlled by Mr Etete, who has said that he received $250m in total for his role in the deal. He said in court that “Malabu shareholders decided to spend their money the way they deemed fit” and that he is investing on their behalf.

Among the listed owners of three of the recipient companies is Abubakar Aliyu, who is reported to have close business ties to a senior politician, Diepreiye Alamiesegha, the former governor of Bayelsa state. Mr Alamiesegha’s skills in escapology would impress Houdini. Detained in Britain on money-laundering charges in 2005, he jumped bail. After returning to Nigeria, he was sentenced in 2007 to two years for each of six corruption-related charges, though he served only a few hours in prison. In March 2013 he received a controversial pardon from Goodluck Jonathan, Nigeria’s president. Local press reports have made unsubstantiated allegations linking both the president and Mr Alamiesegha to the Malabu deal.

The EFCC’s report states: “Investigations conducted so far reveal a cloudy scene associated with fraudulent dealings. A prima facie case of conspiracy, breach of trust, theft anmd [sic] money laundering can be established against some real and artificial persons.” Officially, the EFCC’s investigation is still open, but a source familiar with it says that its sleuths have been discouraged by higher-ups from moving forward. However, other countries’ fraudbusters have taken an interest. At least one of the parties involved in the oil-block sale has been contacted by America’s Department of Justice.

As for the legal actions brought in London against Malabu by the middlemen, the High Court is expected to rule soon on Mr Obi’s claim for $200m. Mr Agaev’s separate arbitration case, in which he sought payment of a $65.5m “success fee”, was recently settled behind closed doors.

Shell and ENI now each own half of an attractive oil block. To get it, however, they have had to strike a deal that brings with it reputational and legal risks. They might conceivably face action under their home countries’ anti-corruption laws, if enforcers reject their claim to have dealt only with the Nigerian government, not Malabu. Shell “would obviously have preferred to secure OPL245 without going within a million miles of Malabu and Etete,” says someone who was involved in the negotiations.

Ethical dilemmas

The saga is a striking example of an ethical dilemma that is growing more acute for international oil companies. They are desperate to replace their shrinking reserves with new finds, but many of the most attractive fields are in unstable or poorly governed places. Worse, the industry has to contend with increased resource nationalism in oil-producing countries, making it harder for outsiders to secure reserves, and with greater competition from state-owned firms in Asia, Latin America and the Middle East, which may not have to operate to the same ethical standards.

As a result, firms that refuse to touch any deal with the slightest whiff of impropriety risk eventually going out of business, says Peter Hughes, an energy consultant and former BP executive. They may feel that the best they can do, short of walking away, is to put as much distance as possible between them and the source of the bad smell, as Shell and ENI apparently tried to do with their two-part transaction.

How arm’s-length is arm’s-length enough? That depends on the company’s “threshold of ambiguity”, says Cory Harvey of Control Risks, which helps companies to manage political and reputational risk. This will vary from company to company and will be perceived differently by management, regulators and NGOs. Ms Harvey has seen oil-industry clients walk away from deals because of concerns about the reputation of, or lack of reliable information on, a seller or local partner. But energy transactions in difficult places can be “spectacularly complex”, she says, making it hard to gauge the acceptable level of risk. Nigeria is “arguably the most complex environment of all”.

Mr Hughes argues that when foreign companies turn a blind eye to questionable aspects of a deal, it can sometimes benefit developing countries with natural resources. The publicly traded oil majors are, on balance, a force for good, raising overall standards of behaviour by trying to operate as cleanly as possible in most circumstances, he says; better that than leaving the field to less scrupulous operators. Ethically speaking, the industry “has to be viewed in relative, not absolutist, terms,” he argues. Mr Hughes points out that Shell periodically talks of scaling back its Nigerian operations, which he believes to be “part of a political-risk management strategy” to exert pressure on the government to act more cleanly and predictably.

Global Witness prefers to see the OPL245 affair as “a lesson in corruption” that demonstrates how important it is for rich-world governments to press on with transparency initiatives, on two fronts. The first front concerns payments to governments. In the past year America and the EU have begun to require resources firms listed there, and large unlisted firms in the EU, to report, project-by-project, their payments to governments. Had this been in force at the time, it would have picked up the $1.3 billion transaction with Nigeria. This would have prompted public scrutiny of the deal and the subsequent money flows through Malabu, which in the end came to light only because the two middlemen decided to sue.

Shell says it favours greater transparency, if applied globally. It opposes the existing project-by-project initiatives because they omit companies not listed in America or Europe, thereby handing them a competitive advantage.

The second front for improving transparency concerns the use of murky corporate vehicles. Hopes are growing that the G8, which meets next week with Britain’s David Cameron in the chair, will take steps towards ending the use of anonymous shell companies. Had corporate registries been collecting, and making publicly available, information on beneficial owners back in 1998, the identity of Malabu’s owners might have been clear from the start. And it would have been much more difficult to move the proceeds of the sale to Shell and ENI into the corporate equivalent of a black hole, seemingly out of the reach even of Nigeria’s anti-corruption commission.

via Royal Dutch Shell plc .com.

G8 NEWS- Update


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Syria tops agenda as G8 opens in Fermanagh

David Cameron embarrassed by revelations that British secret service spied on delegations at G20 meetings in London

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Read more at

http://www.irishtimes.com/news/syria-tops-agenda-as-g8-opens-in-fermanagh-1.1431148

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Obama, Putin face tough talks on Syria at G8 summit
Reuters UK
At their first private face-to-face meeting in a year, Obama will try to find common ground with Putin on the sidelines of a G8 summit in Northern Ireland after angering the Kremlin by authorising U.S. military support for the Syrian president’s opponents.

Ventura County Star
Britain’s Prime Minister David Cameron speaks at the G8 UK Innovation Conference at the Siemens Crystal Building in London, Friday June 14, 2013. As part of UK’s G8  June 13, 2013. The Resort is due to host the G8 summit on the 17th and 18th June.

NSA reveals US spied on Russian president Dmitry Medvedev at G20 summit in …
News Tribe (blog)
By Web Desk Jun 17th, 2013 ( No Comment ). Print Friendly and PDF. LONDON: Hours before the start of G8 summit, the documents uncovered by NSA whistleblower Edward Snowden have revealed that back in 2009 US spies intercepted top-secret communication of 

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If Centrica is prepared to risk earthquakes in Blackpool, big oil will want a share of shale


Whether the UK can get shale gas flowing as fast as the US has remains in doubt, but Centrica seems ready to give it a try

Expect to see more big names from the oil industry, such as Shell, ExxonMobil and Statoil, moving into the British shale sector now that one of their competitors – Centrica – has taken the plunge. The international companies have always taken a keen interest in the UK fracking scene, despite endless statements from their chief executives that there are better prospects in China and elsewhere.

There is some speculation this weekend that the reason Centrica paid a fairly toppy price for the stake in the Bowland Shale licence from Cuadrilla Resources was because it faced competition from Shell and others.

It is not so much the geological uncertainty that made big oil hesitate in the past, but the fear of reputational damage. And as one of the industry players told the Observer: “That all changes now because Centrica has elected to become the lightning rod for the industry.”

Indeed it will. Green groups opposed to fracking because of the chemicals used and because they believe more gas use means more carbon emissions have already condemned Centrica. A couple of small earthquakes in the Blackpool region that helped to trigger an 18-month drilling moratorium have heightened public concerns. Fracking remains banned in France, Bulgaria and some other countries.

In fact it was always likely that the British Gas parent group would be first out of the blocks, not least because it has the largest retail supply business in this country.

Equally, if anyone is going to have the inside track on what government is thinking about the future taxation structure planned for a shale gas regime, it is going to be homegrown Sam Laidlaw, chief executive of Centrica, rather than say Peter Voser, the boss of Shell, who spends much more time in The Hague than London.

Laidlaw is constantly in and out of Whitehall. Until recently he was part of David Cameron’s Business Advisory Group, while Centrica, as one of the UK’s few, and by far the biggest, British-owned power suppliers, stands most to gain from changes in UK energy policy.

Was British Gas pushed by ministers to front UK shale? Certainly Centrica had privately expressed reservations about the flack it might take if it got involved at an early stage. Ministers were keen to give credibility to a sector populated by small firms, even if some have big backers behind the scenes, such as IGas’s connections with the partly state-owned China National Offshore Oil Corporation.

But it seems more likely that Laidlaw, who as recently as January had expressed the view that UK shale was no “game changer”, just changed his mind and decided it was worth having first-mover advantage.

He had no doubt spent much time talking to John Browne, whose chief executiveship at BP was characterised by being first off the blocks (into Russia, mega-mergers with Amoco etc) and just happens to be a director of Cuadrilla and the UK government’s lead non-executive board member.

So Centrica is to spend £100m helping Cuadrilla with an exploration programme which restarts in earnest next year with a new, fourth, well. A further £60m is promised if the exploration turns into production.

But the size and scale of the shale sector in Britain remains unclear. The British Geological Survey is shortly expected to come up with some encouraging new reserve estimates. Equally, the Treasury will confirm the level of tax breaks available before the parliamentary recess next month.

But the issue that will decide whether Britain can replicate the enormous success of the shale frackers in America, where prices have dropped like a stone, is whether the gas can be made to flow from the rocks easily and in large quantities. That will only be known once more wells are drilled, but Centrica is clearly optimistic.

Deflation could be the way forward

Hard though it is to believe, historically Britain has been as prone to bouts of deflation as it has to inflation. Not in the past half-century, of course, but in the three centuries or so since the Bank of England was founded in 1694, there have been as many years when prices have fallen as there have when they have risen.

Indeed, until quite recently deflation was the natural order of things. Competition resulted in downward pressure on prices and it was only during wars that inflation moved upwards. The price level in the UK was lower at the outbreak of the first world war than it was when the guns fell silent after the battle of Waterloo.

Dhaval Joshi, an investment strategist at BCA Research, says we are on the cusp of returning to this sort of environment. The age of inflation, he says, has also been the age of credit growth, with a strong correlation between the annual increase in the cost of living and the annual increase in debt.

But debt is likely to rise far more slowly in the future than it has in the past, argues Joshi. Why so? Because debt levels are already uncomfortably high; the collateral against which the debt is secured is impaired; and there has been a widespread backlash against debt that was sparked off by the financial crisis.

As a result, the only way the age of inflation could be extended into the future is if central banks decide that it is a lesser evil than deflation. In the short term, that is certainly the case, which explains why central banks have been pumping credit into their economies through quantitative easing.

But will central banks really be comfortable with the next stage on from QE, helicopter drops of money into economies?

Joshi says that ultimately policymakers will prefer modest falls in the price level to the risk of runaway inflation, and that deflation will become the new normal.

Cosy chair awaits Tucker

Paul Tucker’s decision to quit his job at the Bank of England was not unexpected. He has been at the bank for more than 30 years, risen to deputy governor and had been regarded as the nailed-on certainty to take over from Sir Mervyn King. Missing out on the top job meant he was always likely to walk.

He now plans what Threadneedle Street describes as a sojourn in “US academia”.

But it is unlikely that Tucker, an expert in the way that banks work, will disappear into a black hole of research and quiet contemplation. He will without doubt be top of many headhunters’ lists when they cast around for candidates to chair UK banks in the coming years. And it just so happens a couple of jobs might just come along to suit his timing: Sir Win Bischoff has already made it clear that he won’t be hanging around at Lloyds Banking Group beyond next May. And if that is a tad too, soon then there will be a berth at Royal Bank of Scotland as soon as it has bedded down a new chief executive.

Tucker will be back.

via If Centrica is prepared to risk earthquakes in Blackpool, big oil will want a share of shale | Business | The Observer.

The Severn Trent takeover – corporate profiteering and tax avoidance on Britain’s water supply | openDemocracy


 

To the people of Ireland please note this is the future direction of your water system. Is this what you want?

Severn Trent is the latest water company to be targeted for takeover by a motley group of investment funds. An analysis of their past deals reveals huge profits, meagre tax bills and a seemingly casual approach to ethical concerns. Once again public assets are turned into wealth for the few.

As more and more people struggle to pay their water bills, the financial world has been getting itself into a lather over the attempted takeover of Severn Trent, the company supplying water across the Midlands and parts of Wales, by an investment consortium called LongRiver Partners. Severn’s board has so far rejected two offers but financial commentators reckon LongRiver will keep coming back until they get what they want (they have until 11 June to make a final offer).

People living in the areas that Severn Trent is ‘serving’ haven’t been asked about any of this, and they’re not going to be. The decision rests with Severn Trent’s board and shareholders, not the eight million people they call “customers”. As the water supply is a captive market (odd, given that privatisation is generally meant to get rid of monopolies and increase competition) they have no choice over who profits from them each time they turn on their taps.

But should they be worried? LongRiver is an unimaginative front name for a grouping of three investment funds: Borealis Infrastructure Management, the Universities Superannuation Scheme  and the Kuwaiti Investment Office. Let’s look at each in turn.

Borealis, with its obscure name, central London office and slick website, at first glance looks like a typical investment fund, run to make some already-very-rich people even richer. But there’s a twist. It is actually owned by the Ontario Municipal Employees Retirement System, the pension fund for over 400,000 municipal workers of the Canadian province. Unfortunately its previous UK investments suggest it doesn’t take a public service ethos into its work.

In the last few years, Borealis has bought three other companies providing important services and infrastructure to various parts of the UK: Scotia Gas, which supplies gas to Scotland and other parts of England, Associated British Ports, which owns and operates 21 ports in England, Scotland, and Wales, and HS1, which operates the rail link between London and the Channel Tunnel. Their accounts show Borealis and its fellow owners (different for each company) are using financial structures that means huge payouts for them, but meagre amounts for the public purse.

All three companies have borrowed huge amounts to finance investment – around £4 billion for each company. The exorbitant debt levels of water companies privately owned by investment funds have been criticised by a range of bodies, coincidentally including Severn Trent, which even wrote a report about it.

However, it is the identity of some of the lenders that should raise eyebrows highest in the case of Borealis’ three companies. Look further into their accounts and it turns out they have borrowed huge amounts from subsidiaries of Borealis and their other owners. Scotia Gas and HS1 each owe around £500 million, while Associated British Ports owes over £2 billion. And the interest rates on these loans are far higher – between 10 and 12% – than they are paying to banks or other third parties for the rest of their debt.

The interest payments – around £70m for Scotia and HS1 in 2012, and £255m for Associated British Ports – on these loans help to slash, and sometimes completely wipe out, the companies’ taxable UK profits. Their corporation tax bills are therefore significantly reduced – and sometimes non-existent – while the interest is accrued annually to Borealis and the other owners whether or not the company has had a good year. This isn’t the only way to invest – Borealis and co could have put the money into the company as equity, and received dividends instead of interest. But dividends are paid after a company has been taxed, so do nothing to reduce that bill.

It gets trickier. If Borealis was lending from its home in Canada, HMRC would keep 10% of the interest payments through what is called “withholding tax”. But the loans have been made through the Channel Islands Stock Exchange. Thanks to a loophole HMRC knows about but refuses to close (called the “quoted Eurobond exemption”), no tax is withheld.

Perhaps unsurprisingly, this type of financing is already popular in the water industry. A Corporate Watch investigation earlier this year found seven companies are using this loophole. It is popular with a range of companies, from private healthcare company Spire to Classic FM owners Global Radio. But the most dispiriting thing about all may be that it is being done to ensure service workers in another part of the world can have as comfortable a retirement as possible.

Which leads us onto the Universities Superannuation Scheme. As its name suggests, it too is a pension fund, for university staff across the UK. The USS describes itself as an “active and responsible” investor that says its will take “material corporate, governance, social, ethical and environmental issues” into account when making investment decisions.

Its track record though, doesn’t provide much hope for the people who may soon be relying on it for their water supply. Its investment portfolio contains a range of companies not generally known for their social, ethical or environmental principles. Oil giants Shell and BP, currently under investigation for oil and petrol price fixing, to add to their other various misdeeds, are both in the top five, as is HSBC, itself being investigated for money laundering. There’s also Vodafone, which could teach even Borealis a thing or two about tax bills, arms company BAE, British American Tobacco and notorious mining giants BHP Billiton and Rio Tinto. The USS has also been criticised for its investments in companies profiting from illegal Israeli settlements in Palestine, for example Astom, a French company involved in the construction of a light railway in occupied East Jerusalem (see here for more details).

And don’t hold out too much hope that the Kuwait Investment Office, a sovereign wealth fund set up with the country’s oil revenues, will be keen to ensure water drinkers get a good deal. The fund’s managers may have first met their USS counterparts at the BP AGM, where they are a major shareholder. The fund also has a hugely valuable property portfolio, especially in the City of London, and bought sizeable stakes in both Citigroup and Merril Lynch when the credit crunch first hit, later selling its Citigroup stock for a tidy profit two years later.

So things aren’t looking good for Severn Trent “customers”. But are they that good anyway? The company’s shares are currently traded ‘publicly’ on the stock exchange, and a lot is being made in the press of the difference between the listed water companies and those owned by consortia like LongRiver, with massive debt and tax avoidance schemes more popular with the latter (download an ownership table here). But the similarities are greater than the differences.

It’s true that Severn Trent’s bills are lower than many of their peers, but they’re still pretty damn high – £311 a year is a lot to be paying for water. Bills have increased by 50% in real terms since privatisation in 1989. A parliamentary briefing produced last month estimated 23% of households across England and Wales “now spend more than 3% of their income on water and sewerage bills” and suggested water bills “might not be affordable for a large number of people”.

Rising bills – approved by the government regulator OFWAT – are justified as necessary for  investment in creaking infrastructure. But the money is also going to satisfy shareholders’ demand for a return. Severn Trent paid out dividends of almost £160m in 2012 and has said they will be higher this year. There’s a reason its current management are holding out for more than a 16% premium on its current share value: they know guaranteed rising prices for monopoly control of a resource everyone needs is a deal they can charge extra for.

Add to this chief executive Tony Wray’s £1 million remuneration in 2012 – the second highest of all the water companies – and the £300 million it paid in interest on its £4bn of borrowings in 2012 and the investment figures start to look less impressive (there are no Borealis-style related party loans, but their banks and bondholders are charging them around 6% on average). And Severn Trent’s public listing hasn’t kept it scandal free. It had to pay a record £36m fine and promise to cut customer bills in 2008 after orchestrating what the Independent newspaper called “one of the largest customer overcharging scandals ever perpetrated in the UK”. It was fined £2m in the same year for falsifying leakage data.

So perhaps the choice we should be talking about is not private or publicly-listed, but private or public. Earlier this year, Corporate Watch calculated that £2 billion a year could be saved – or £80 per household – if the water supply was in public ownership. The government can borrow much cheaper than the companies and there would be no private shareholders demanding their dividends (see here for the full piece).

This isn’t to say that a public supply would automatically work well – the pre-privatisation supply was criticised for under-investing and lack of accountability – but there are many examples from around the world of water supplies being run more efficiently and democratically when public (see a short video on this here). And there’s certainly no shortage of examples from around the world of privatisation failing to provide a decent or equitable service,*. England’s water supply**, currently, is one of the them.

*  See the Public Services International Research Unit website for more information

** Scotland, Northern Ireland and the rest of Wales have public or not-for-profit- supplies.

via The Severn Trent takeover – corporate profiteering and tax avoidance on Britain’s water supply | openDemocracy.

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