Treasure Islands - Nicholas Shaxson [22]
Tax is the missing element in the corporate social responsibility debate. Modern company directors face a dilemma. To whom are they answerable—to shareholders only or to a wider set of stakeholders? There are no useful guidelines.54 Irresponsible players treat tax as a cost to be minimized, to boost short-term shareholder value alone. Ethical directors recognize that tax is not a cost of production but a distribution out of profits to stakeholders, ranking on the profit and loss account alongside dividends. It is a distribution to society, and it pays for the things like roads and education that help the corporations make their profits.
The corporate world has lost its way, and nowhere is this more true than with the Big Four accountancy firms. Paul Hogan, the star of the film Crocodile Dundee, put his finger on something important in 2010 when talking about an investigation by Australian tax authorities into his offshore tax affairs. “I haven’t done my own tax for thirty years,” he said. “They talk about me going to jail. Erm, excuse me: There’s about four law firms and about five accounting firms—some of the biggest ones in the world—that’d have to go to jail before you get to me.”55 On this point, Hogan is right—or at least he should be. These firms, responding to their clients’ wishes to escape taxes and other duties that come with living in democratic nations, have grown to become steeped in an inverted morality that holds tax, democracy, and society to be bad and tax havens, tax dodging, and secrecy to be good. Serial tax avoiders are made knights of the realm in Britain and promoted to the top of high society in the United States; journalists seeking guidance in this complex terrain routinely turn to these very same offshore cheerleaders, the accountancy firms, for their opinions. Bit by bit, offshore’s inverted morality becomes accepted into our societies.
The fight against the offshore system will differ from other campaigns to fix the global economy. Like the fight against corruption, this struggle does not fit neatly into the old political categories of left and right. It does not involve rejecting cross-border trade or seeking solace in purely local solutions. This fight needs an international perspective, where countries try not to engage in economic warfare against each other. And it will provide a rubric for taxpaying citizens in both rich countries and poor to fight for a common cause. Wherever you live, whoever you are, or what you think, this affects you.
Millions of people around the world have for years had a queasy feeling that something is rotten in the global economy, though many have struggled to work out what the problem is. This book will point to the original source of where it all went wrong.
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TECHNICALLY ABROAD
The Vestey Brothers, the American Beef Trust, and the Rise of Multinational Corporations
ONE WINTER IN 1934 THE ARGENTINE COAST GUARD detained a British-owned ship, the Norman Star, as it was about to sail for London. The raid had been triggered by an anonymous tip-off during an investigation into a cartel of foreign meat packers who were suspected of manipulating prices and shipping profits illegally overseas.
Ordinary Argentinians, amid the Great Depression, were furious about just about everything at that time. Their economy was still mostly in the hands of a few hundred landowning families, and British and American meatpacking houses, which engaged their employees under humiliating conditions, had organized a cartel so effective that while the prices they paid locals for their beef had plummeted, the investors’ profits actually rose. The beef export industry was a major plank in the growth of the political power of the Argentine elites; in his book The Rise and Fall of