Treasure Islands - Nicholas Shaxson [24]
They lived by the maxim that it is not what you can earn that makes you rich but what you can keep. They lived on the interest on the interest on their income. Peers of the Realm, Masters of the Foxhounds, personal friends of the Prince of Wales, and that sort of thing, the extended Vestey family still enjoys so much inherited money today that some have only discovered they are heirs when presented, on their eighteenth birthday, with checks for startling amounts. One distant heir, suddenly presented with a quarter of a million pounds in the 1990s, said, “I can’t handle it” and turned it down.
The brothers lived by two business rules above all: first, never reveal what you are up to; and second, never let other people do something for you if you can do it yourself. They were, at heart, monopolists. They gave their different companies different names to disguise their ownership and bought up rivals, and if one resisted they would use their extraordinary market power—derived from their owning the whole supply chain from the grass, via the cows, to the slaughtering houses, the freezers, the ships, and then distribution and retail outlets—to drive them out of business. “If you mention his name near a meat market, people look over their shoulders,” wrote one critic. A weaker competitor said bitterly: “We’re not doing business with them. They’re in everybody’s business and they want everybody’s business.”
As their business grew increasingly multinational, it became ever harder for anyone to even guess what they were up to. “The juggling acts El Inglés [the Vestey company] performed with the packing houses were enough to give the best aviator a dizzy spell,” an Argentinian businessman wrote. “It is not surprising that the company tax inspector had a difficult job to unravel it all when El Inglés, in the end, was left with just one packing house.”7 In partnership with the Americans, the brothers showed the same controlling behavior at the retail ends too.
So when Senator de la Torre’s investigation stumbled across the documents on the Norman Star he had achieved quite a coup. Top members of the Argentinian government were colluding in, and even profiting from, their subterfuges, he alleged, and dirty political brawls broke out. Insults and counter-insults ricocheted around the Argentine political landscape, culminating in an assassination attempt on de la Torre in which an aide died after taking a bullet intended for the senator.8
The Vesteys’ basic formula for gaining market power—squeeze them at the producer end, squeeze them at the consumer end, and push all the profits into the middle—was a philosophy that they also deployed, with astonishing success, in the area of tax. It is a formula that underlies the size and power of multinational corporations today.
In those early days the tax haven world was in its infancy, and governments were groping in the dark to understand and to tax emerging multinational corporations. (They still are.) Relatively few tax havens existed then, focusing mostly on the financial affairs of extremely wealthy individuals. Rich Europeans looked primarily to Switzerland, while wealthy Britons tended to use the nearby Channel Islands and the Isle of Man. Wealthy Americans were busy too, as a letter from U.S. Treasury Secretary Henry Morgenthau to FDR in 1937 suggests.9 “Dear Mr. President,” it begins. “This preliminary report discloses conditions so serious that immediate action is called for.” American