How to become a better citizen through dodging tax, causing hunger and financing climate change
Date: 10 February 2012
In his speech to the inaugural BBC Today business lecture in November last year, Barclays chief executive Bob Diamond argued that banks needed to rebuild the trust they had lost with the public. Bankers need to ‘become better citizens’, he said.
Fast forward two months and his tune had changed. Speaking to the Treasury select committee at the beginning of January he claimed that banks had now made amends for their past excesses and should be left alone to ‘take risks’ and make profits.
The aptly-named Diamond could not be less out of touch with the people he supposedly wants to rebuild trust with. Following a week that saw Fred Goodwin being stripped of his knighthood, Stephen Hester being forced to give up his £1million bonus and a Yougov poll for the Sunday Times showing the public strongly supporting curbing banker pay, Diamond is refusing to say how big his bonus will be, but it’s expected to be around £2 million.
Some might argue that, as Barclays was not bailed-out by the state, it should be free to do as it likes with its money. This ignores a number of facts. Firstly, although Barclays did not receive a direct subsidy from the taxpayer, it receives large amounts every year in indirect subsidies. Research by the new economics foundation has shown that in 2010 Barclays enjoyed a ‘too-big-to-fail’ subsidy of £10 billion from the British public. This subsidy refers to the fact that banks with government guarantees are able to access finance at a significantly lower rate than would be otherwise possible. No other industry enjoys such as subsidy.
Secondly, Barclays is allegedly involved in large-scale tax avoidance. It has over 300 subsidiary companies registered in known tax-havens like Jersey, the Cayman Islands and the Isle of Man. And in 2009, it paid just £113 million on a profit of £11.6 billion, a paltry one per cent. According to documents handed to the Guardian by a whistleblower, Barclays operated at least seven complex tax avoidance schemes, moving more than £20 billion in loans between the Caymans and Luxemburg. It then took out an injunction to force the Guardian to remove the documents from its website.
What Barclays does with its money is clearly of interest to the British taxpayer. And then there is the issue of rising food prices, currently contributing to the famine in East Africa. Our research shows that its investment banking unit, Barclays Capital, is the largest food speculator in the UK, making up to £340 million a year from this scandalous business. Its role in food speculation recently earned Barclays the Public Eye Award for the worst company of the year.
As if that wasn’t bad enough, a new report shows that between 2005 and 2010, the period of the Kyoto Protocol, Barclays bankrolled coal fired power stations and coal mining to the tune of over £10 billion. This makes it the largest UK financier of climate change, ahead even of the Royal Bank of Scotland.
Giving out multimillion bonuses during the worst austerity for generations, avoiding tax through dodgy companies in the Cayman Islands, causing hunger and poverty by speculating on food prices and spending billions of pounds on causing climate change is not the way to become a better citizen, Bob. It’s clearly time for all of us to move our money.
