Carillion; Corporatism and the Establishment Racketeers

Tax Dodgers

A series of delusional characters maintained that everything was hunky dory until it all went suddenly and unforeseeably wrong

Rachel Reeves MP and Frank Field MP following evidence given by former Carillion executives

The collapse of Carillion has revealed the ways in which members of the British establishment work to the detriment of its citizens. Intriguingly, some of these racketeers have even campaigned hard for Brexit while their commercial activities have served to undermine a major British company, putting at risk the jobs and services of millions of Britons!

The collapse of Carillion a few weeks ago again revealed the dangers of the control of large sectors of state activity by powerful private interest groups. It is clear that the company borrowed heavily whilst aggressively grabbing more and more contracts in a bid to squeeze competition out of the marketplace.

The situation culminated in a company which we are told was ‘too big to fail’. But this claim implies that we are left with no option but to help it out in some way. As with the banks, this should ring alarm bells; moreover the Government is complicit in creating these unaccountable behemoths which can hold a gun to the heads of taxpayers. It would seem that some of the biggest losers will be small businesses providing valuable employment and services which are often operating on narrow margins.

The Public Finance Initiative artful tax dodgers

The whole issue of Corporatism and the dangers it presents is now, thankfully, a matter of public debate. But in this post I want to look more closely at the activities of Carillion and the financial casino system which has become a corrosive part of the economy.

Let’s start with the selling of PFI contracts. The debate around corporatism has focussed around Private Finance Initiatives (PFI) and the enormous drag they are now having on our public services. What is less well known is that PFI contracts can be traded in the same way as other assets. So even if the Government has good reason for allocating a contract to a particular company it cannot be sure that the contract will not be sold on to someone else. This is exactly what Carillion has done and (surprise, surprise) involves tax dodging.

According to analysis by the European Services Strategy Unit (ESSU), Carillion made £500m from selling PFI projects, the most profitable being the sales of three NHS hospital buildings in Staffordshire, Swindon and Glasgow in 2007. These netted Carillion a 38.7 per cent annual return, Several of the purchasers are based offshore meaning they pay no UK corporation tax on the profits they derive from the schemes, which are ultimately paid for by all of us. An article in The Independent Newspaper pointed out that:

Several projects were bought by Secondary Market Infrastructure Fund and Land Securities Trillium, both of which are earlier names for what is now Semperian, a company based in Jersey and part-owned by the Daily Mail Senior Executives Pension Fund.[My italics]

Equitix, which also bought PFI projects from Carillion, was previously based in the UK but has now been sold to offshore funds.

Just to be clear about this, executives from the Daily Mail are benefitting from a company receiving public money but pay no UK tax on the profits.

What links Elizabeth Windsor’s banker to schools in East Dumbartonshire?

Though not related to Carillion it is instructive to consider the East Dunbartonshire Schools PFI project. This contract is currently half owned by Innisfree Nominees Ltd, which is in turn owned by Innisfree Group Ltd. The main shareholders in this firm is Jersey based Coutts and Co Trustees (Jersey) Ltd, and a part of the taxpayer-owned Royal Bank of Scotland group Coutts, the bank used by the Queen. Moreover as the Scottish Herald points out:

Coutts, whose chairman is Tory peer Lord Waldegrave, was named recently in the leaked Panama papers for asking offshore law firm Mosack Fonseca to set up almost 500 offshore companies for its clients.

Semperian PPP Holdings, which has a parent company also registered in Jersey, holds the other 50% stake in this project, which built six new schools in East Dunbartonshire including Bearsden Academy, Douglas Academy and Bishopbriggs Academy.

Semperian again! But it is hardly surprising since they now own many PFI contracts. So Daily Mail executives, the Conservative party chairman and peer of the realm and Elizabeth Windsor’s bankers. What a cabal!! But that’s not all, lets look at a side issue of the Carillion collapse involving hedge funds.

A hedge fund is an investment vehicle, often administered by a company. Amongst its socially useless activities is what is known as short selling where fund managers gamble that a company’s share price on the stock market will fall. As this Guardian article reports:

The biggest winner from July’s share price crash was hedge fund Marshall Wace, whose co-founder Sir Paul Marshall was a major backer of the leave campaign in the Brexit referendum.

Another institution that took out big bets on Carillion’s downfall is BlackRock, the US-based investment institution that hired former chancellor George Osborne as an adviser last year, on a £650,000 salary.

Marshall was actually employed by the Government and was a board member at the Department of Education (yet another one – how big is this ‘board’). Given a knighthood for services to charity and education he has been busy making money out of the collapse of a major British Company. That should improve the ‘educational outcomes’ for the children of laid off workers no end!

We should also mention his long association with leading Liberal Democrats (until he became a Brexiteer), co-authoring the Orange Book which advocated choice and competition. No wonder the LibDems jumped into power with the Conservatives in 2010!

If we look past the superficial aspects of the Carillion collapse we find the vultures of the British establishment syphoning off public money for their own gain or betting on the collapse of major companies, making money out of misery. Whether the Carillion executives are delusional or not, the company was both perpetrator and victim. But this just shows the closely interconnected nature of the problems we face ending this disgusting charade.

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