Trouble in Paradise

The latest revelations about how the richest protect their wealth and minimise their tax burden tell us little but confirm a great deal. The information in the Paradise Papers show us a truly glittering pageant of celebrities using offshore tax havens, including fine upstanding members of the community, such as Queen Elizabeth II herself, Trump’s Commerce Secretary with shady friends in Russia, Wilbur Ross and, regrettably, the mostly admirable Prime Minister of Canada, Justin Trudeau.

Why, it seems that even Bono, fine humanitarian and protector of the poor in the Third World, may have been benefitting from tax regulations that protect the rich of the Old World. Ironically, I read (in a piece from the Sunday Express, not the most reliable of sources, but this story has the ring of truth), that Bono’s own foundation was set to denounce the tax haven system until it realised that he was a beneficiary.

Still, it isn’t these fine luminaries that interest me here, but just two specific individuals, for what they reveal of how our system works more generally.

(Lord) Michael Ashcroft
Worthy citizen, tax avoider and major contributor to the Tory Party

The first of these is Michael Ashcroft, Lord Ashcroft, former Deputy Chairman of the British Conservative Party and one of its main individual contributors. For many years, he held “non-domiciled” status in the UK, meaning he could live in the country without paying its taxes. When he was raised to the House of Lords, he pledged to give up that status and become a full UK resident, but failed to do so for ten years, when a change in the law would have forced him to give up his peerage otherwise.

It now turns out that he’s a major tax haven investor. That saves a power of tax. Who needs non-dom status when you have tax havens you can take advantage of – and without even giving up your peerage? You might feel, and I’d tend to agree, that the law needs changing again, so that a member of the House of Lords can’t benefit from tax havens any more than from being non-domiciled in the UK.But let s see why that s not likely to happen.

The use of a tax haven saves someone like Ashcroft a great deal of tax. That sets up a fine cycle of mutual benefit. With so much more money to play with, it’s easy for him to make contributions to his favoured political cause, in this case the Conservative Party. For the 2017 election campaign, he stumped up £500,000, which by British standards is a massive contribution to a political party.

Now, isn’t that neat? Serious money for a political party. The party that happens to be in government. In government at least in part thanks to that money.

Now, how much priority would you expect that government to set on changing the law to deal with the abuse of tax havens?

The second person is something of a favourite of mine.

Glencore is one of the world’s major commodities companies. The Paradise Papers reveal that Glencore “loaned” £45m to a shady Israeli businessman, on the basis that it would be repaid if they failed to win a lucrative deal in the blood-soaked, deeply corrupt so-called Democratic Republic of the Congo. Nothing illegal seems to have happened, but that only highlights the weakness of the law. It may have been legal, but there was nothing edifying about this transaction.

So how about this favourite character of mine? He wasn’t with Glencore at the time, but he is now. He’s the company’s non-executive chairman.

His name is Anthony (Tony) Hayward. Not a name to conjure with, you may feel, and I’d agree though I have mentioned him before. If you’ve heard of him at all, it’s likely to have been in the context of the Deepwater Horizon disaster in the Gulf of Mexico, when an oil exploration platform caught fire and the ensuing oil spill polluted vast swaths of the Gulf.

Deepwater Horizon: fitting monument to reign of Tony Hayward

The oil rig belonged to BP. And the Chief Executive of the time? Why, Tony Hayward.

He came to fame with a series of brilliant gaffes. The one I like the best was his apology for the damage and, indeed, loss of life caused:

We're sorry for the massive disruption it's caused their lives. There's no one who wants this over more than I do. I would like my life back.

I’m sure he wanted all that unpleasantness over. As I’m sure that the millions whose lives or livelihoods were affected by the oil spill, to different degrees but seldom positively, couldn’t have given a flying curse for how much he wanted his life back.

Now just as the tax haven issue proves how little consideration of integrity or any kind of principle drives our governments, the Tony Hayward story reveals how little high business office owes to competence or even basic humanity. The colossal remuneration these people receive is often justified as being a reflection of the responsibility they accept. But far from being driven into the outer darkness where there is wailing and gnashing of teeth, Hayward simply stepped from BP into a series of lucrative and comfortable directorships, including at Glencore.

He wasn’t with Glencore at the time of the Congo deal. But still, it’s interesting that it was a company with as savoury a reputation as Glencore that offered him its non-executive chairmanship. And that a man with his track record accepted it.

Might that be just a coincidence? Speaking for myself, I doubt it.

They deserve every penny they receive: the case of Glencore and Tony Hayward

Spare a thought for that poor fellow, Tony Hayward.

I use the word “poor” in the moral sense, of course, rather than the financial. He’s reported to have made about £2.3 million in 2013, and rather more last year, so I don’t think he’s likely to fall victim any time soon to, say, any cuts in benefits support the UK government will be pushing through in the next few months.

However, £2.3 million is terrible cut from his maximum remuneration, o £3.2 million back in 2009, his last full year as Chief Executive of BP.

Ah, yes, it’s all falling into place now, isn’t it? You remember. Hayward was the man who revealed his diplomatic skills when, a few weeks after the Deepwater Horizon oil spill in the Gulf of Mexico, he announced to the press that “I would like my life back.” Since he was at the head of the company ultimately responsible for the drilling rig which caused the disaster, that was a sentiment that was received with less enthusiasm than he might have been hoping for.

It was like the acclaim that greeted Jeb Bush recently when he commented on the latest school shooting in the US, that left nine dead, that “stuff happens.”

The awkwardness at Deepwater Horizon
It caused some discomfort to that unfortunate Mr Hayward

Hayward quite soon got his life back, when BP decided that it might be better all round, taking everything into account and weighing one thing against another, if their ways parted.

He then faced all the problems that those of us who lose our jobs know and dread. He was forced eventually to settle for a much less well-paid job. You can no doubt imagine the feeling of despair: going from £3.2 million to £2.3 million represents a drastic pay cut, not far off 30%. It must have felt like virtual pauperisation.

In fact, things were so bad that poor Mr Hayward, like so many inhabitants of US trailer parks, say, was forced to take not just one job, but two. As well as the interim chairmanship of Glencore, he also took charge of energy company Genel. He had a number of other charitable appointments around the City of London to make sure he could keep the wolf from the door, but you can no doubt picture the stress he had to undergo, with all those jobs.

Fortunately, Genel was able to increase its remuneration package to him last year, by 41.5%, taking him to £2.5 million. And since he’s moved from interim chair of Glencore to take the post definitively, his salary went up to £685,000. With other payments – bonuses, etc. – there’s every chance that he’ll have moved beyond where he was with BP.

All this goes to prove that you can’t keep a good man down. You deliver the goods, and you’ll be paid a reasonable, proportionate return.

For instance, the generous increase in Hayward’s salary from Genel came in a year in which he presided over the company making a loss of £213 million.

Meanwhile, and this is why I’m talking about this at all, Glencore is back in the news these days. It’s the world’s tenth largest company, but what’s most important about it is that it’s massively dependent on the trade in metals – it controls 60% of the world's trade in zinc, apparently, and 50% of the world’s trade in copper. So it’s a barometer of the problems building up for the world right now. The economies, notably China’s, on which we’ve all been relying on for growth in recent years, are slowing; they want less metal; the prices fall; Glencore’s taking a hit. 

On a single day at the end of September, Glencore shares collapsed so badly that Chief Executive Ivan Glasenberg lost $500 million of his personal fortune. That left him in relative penury, with just $1.4 billion, down from $7.3 billion in July 2014. It seems Glencore has recovered most of its most recent share price fall, but taking a longer view, shares that were trading at £5 in 2011 are now down to £1.

At least Hayward managed a small increase in salary last year despite these problems.

Aditya Chakrabortty has given us a fine piece in The Guardian, predicting the difficulties George Osborne will face in 2017, as UK Chancellor of the Exchequer, in accounting for the economic crash that’s coming. Where copper goes, he points out, the world follows, and copper’s on the way down. So Glencore’s troubles are a warning of global troubles to come.

Isn’t it sad that Mr Hayward seems again to have got himself involved in a company that’s facing a degree of unpleasantness? Why, he may be called on to dazzle us once more with his fabled communication skills, perhaps a little honed since Deepwater Horizon. This time, the disaster he fails to avert will be far more far-reaching, affecting the globe and not just the Gulf of Mexico.

In any case, we must surely be left with a sense of the general rightness of things, in a world where top executives of the companies that determine our destinies, deserve and receive the remuneration their skills command.

Good news story

In tough times, it’s a blessing to find an instance of triumph over misfortune from which we can all draw encouragement.

For months, we’ve been wondering whether Britain was going to experience a ‘double-dip recession’ – back into recession a few months after climbing painfully out of the last one – as the opponents of the present government claim, or avoid that fate, as its supporters hope.

The jury’s still out, but the early signs are ominous. Provisional figures for the last quarter of 2010 show that the economy contracted 0.5%, which is massive as these things go. The definitive numbers may not confirm that gloomy picture, but if they do, and if there’s no upturn this quarter, we’ll be back into the textbook definition of a recession: two successive quarters of contraction.

This would be bad news for a lot of people. Jobs will go, those on the edge will be precipitated into poverty, a lot of hopes and ambitions will die.

So let’s take comfort from the uplifting tale of Tony Hayward. Last summer, he was Chief Executive of BP. You may recall that he was involved in some unpleasantness involving oil in the Gulf of Mexico, when the locals became restive and a number expressed views that can only be called intemperate.

Tony Hayward: poster boy for overcoming adversity

In the end, although he’d faced a crisis which manifestly required steady nerves, his particular brand of quiet calm, cruelly interpreted as indifference, led to his being forced out of his position. To console him for his loss, he left with little more than a few millions, and not many of them at that.

Well, it was announced last week that Glencore, the world’s largest commodities trading group, has approached him about the possibility of joining its board. It seems that Tony hasn’t even decided to take the offer if it’s formally made: he’s building a ‘portfolio’ of top jobs from which he’ll choose the one or ones that best suit him.

It’s a tremendous relief, isn’t it? I mean, it’s awful for these people who’ve grown used to living on eight-figure salaries to have to cope without them, and it looks as though Tony won’t be in that position for much longer.

It’s all very well saying that senior executives are highly paid because they have to take responsibility when things go wrong. It’s a good principle, but do we really want to see it ruthlessly applied in practice even to people this likeable? It was, after all, just unfortunate that during that spot of bother in the Gulf he was perceived as the most hated man in America. There comes a time when we have to move on and put all that behind us.

Perhaps Tony could demonstrate his commitment to our government’s bright new idea of an all-inclusive ‘Big Society’ by going on a speaking tour of the unemployment black spots of this country. His theme could be ‘Bouncing back from Adversity: how I showed that losing a job can be the beginning, not the end, of something worthwhile.’

I’m sure his unemployed audiences would derive great comfort from sharing his experience of dealing with difficulties so similar to their own, and overcoming them.

Getting it wrong isn't so bad if you say it right

The elegant use of language has always struck me as a highly desirable goal. I don’t claim to achieve it all that often, but I always aim for it, on the basis that if I try hard enough, I might actually pull it off from time to time.

One habit of English usage that always grates on me is putting a plural verb with certain singular nouns. People justify it on the grounds that the noun is a collective of some kind. A government, a team or a company contains multiple individuals and so, they say, a plural verb is appropriate. My view is that there’s only one Manchester United, Cameron government or BP drilling operation – one too many, you might feel, in each case – so let’s use a singular verb for each of them.

That’s why I’m so pleased, when standing on a railway platform, to hear announcements in the form ‘Capital Connect apologises for the late running of this train and the inconvenience caused.’ ‘Apologises’ instead of ‘apologise’ – one company, one subject, one singular verb. I’m also pleased that they’ve dropped the time-honoured formula ‘any inconvenience caused’. That ‘any’ seemed to suggest ‘well it probably isn't any real inconvenience, since wasting your time doesn't add up to much in the broad sweep of things, but for pure form, we felt we'd apologise anyway. But with bad grace.’ Now they admit that it will undoubtedly cause inconvenience and apologise for it without reservation.

Of course, if I wanted to get picky, I might say that it would be even better if we heard the apology a little less frequently. But I suppose I shouldn’t be too demanding. So my congratulations, train companies, on at least getting the form of what you say right. Working on the content and eliminating the delays in the first place: could that be your next objective?

Gulf oil spill: how many good guys are there, really?

The oil spill in the Gulf is, of course, a disaster. It is, however, rich in fascinating lessons.

It was amusing that Aaron Viles of the Gulf Restoration Network suggested that hopes that the crisis was past were premature and said ‘we are terrified that there is going to be this “mission accomplished” moment.’ Is that going to be Dubya’s lasting legacy? To have turned ‘mission accomplished’ from a declaration of well-deserved pride at a job well done, to an expression of scorn for hubristic ignorance and an inability to recognise failure masquerading as apparent success?

And another Dubya moment: I saw a headline ‘Bush running half marathon for oil spill.’ Bush didn’t manage to get to New Orleans after hurricane Katrina, from Texas, the state next door. Now he's running thirteen miles for the victims of the spill? Assuming, that is, that ‘running for oil spill’ actually means running for the victims. Which I hope we can assume, though with Bush you couldn’t be sure.

In any case, the story turned out to be about an actress called Sophia Bush. Whoever she is.

But the best story of all came from Ewell Smith of the Louisiana Seafood Marketing Board.

Now let me make it clear that I enjoy a fairy tale as much as anyone. I don’t just watch, I enjoy chick flicks. In case anyone has difficulty coping with the complex plots of these films, let me tell you they go something like this.

A woman of great good looks, wisdom, warmth, wit and charm is single at the age of 25/35/45 (delete as applicable) and not making any progress in her career as a chef/dancer/singer/professor/boxer. She recently broke up with a man whose imperfections she had failed to spot despite her extraordinary insight (did I mention that quality?) until he made them glaringly obvious by confessing to having slept with her best friend/three groupies from a nightclub/her brother-in-law. Now she meets a man who is absolutely perfect – apparently. The romance goes swimmingly and he even helps her towards a breakthrough as a dress designer/PR guru/financial expert/political lobbyist until a terrible confusion of misleading clues leaves her convinced that he’s married/about to get married/working for the KGB. Fortunately, her daughter/best friend/mother sorts out the confusion and reveals that Mr Perfect really is flawless. The film ends, with a marriage in the offing, immediately after her first film/new record/latest painting is received with delirious critical acclaim.

Now I really like these films. They don’t strain the intellect. They leave me feeling good about myself and the world. But I realise they’re pure escapism, so I try to watch something like The Pianist or The Hurt Locker from time to time, to remind myself that films can be insightful and truthful too, even do a bit of gritty realism. That way I can make a clear distinction between fairy tale and reality. What I find hard to take is when we confuse the former with the latter.

So I was never comfortable with the narrative about the oil spill. Plucky Gulf fishermen, plying a tough and honest trade as their forefathers had for centuries, have their meagre but honest livelihoods put in jeopardy by an evil corporation based in Mordor. Or Britain. Or wherever.

Riding to their rescue, on a white steed and in shining armour, comes Barack Obama seeing off and defeating the pantomime villain, Tony ‘I want my life back’ Hayward.

It all seemed too pat to me, as though it might have been scripted by George Lucas. And then I heard Ewell Smith. What was he telling us? The waters of the Gulf are now clean enough to start fishing again. But he’s trying to raise money to pay the fishermen a 30% premium to get them out fishing before the restaurants run out of seafood.

Why won’t they fish? Because BP is paying them so much more to take part in the cleanup operation. That grand old tradition of the plucky men plying an honest trade in the waters of the Gulf isn’t proof to the temptations of the Evil Empire’s dollars.

Warms the cockles of the heart, doesn’t it? It restores my faith in human nature.

BP made the monster profits and was responsible for the appalling damage, but at least the little guys are getting their fair share of the cynicism.