Yesterday, I reblogged a good article from the Guardian entitled “Charity watchdog’s ‘astounding’ failure to detect tax avoidance“. I received a very robust response from John Gelmini challenging the Guardian article and citing biased reporting, avoiding a much wider problem in UK society. John provides some practical recommendations.
Personally, I endorse the broad thrust of John’s arguments although have no evidence to support some of the assertions. However, I feel that his comments are in the wider public interest and worthy of open debate.
Let me know what you think?
Charities, Watchdog, Tax Avoidance the Guardian Newspaper and the Thin Edge – John Gelmini
The Guardian is a “Lady that protests too much”, even though Dame Suzi Leather is typical of a number of fairly useless “quangocrats” who gets paid vast amounts of money for sitting on boards, appearing on Any Questions and talking nonsense.
Headhunters specializing in the sector such as Saxton Bamfylde, Odgers and Penna PLC do their best to find the right candidates for these roles but in the end the same tired group of time servers appear on shortlists with the inevitable result that no-one with any commonsense or hard nosed business experience is ever appointed and those who are engaged in Charity scams are free to run rings round them.
The same applies to regulators, whereby powerful business people and the streetwise run rings round those they are supposed to be regulating.
The FSA, the former Governor of the Bank of England, the Care Quality Commission and Ofsted are the more obvious examples that spring to mind.
A casual reading of Private Eye will tell you that 67% of LLPs and so called charities are never investigated and never pay tax, and a look at the boards of most charities and quangos tells you that the main qualification is that you are a connected person, one of the “Great and the Good” rather than someone competent to do the job.
Out of 5000 registered charities listed with The Charity Commission barely 10% are remotely solvent and many, if they were in corporate life would be struck off.
If we turn to HMRC itself, we know from the antics of Dave Hartnett its former CEO that the rule for large companies is that tax is voluntary and that everyone else is in the cross hairs.
However they (HMRC) lack manpower and do not pay their investigators enough money so they rely on cuckolded husbands, scorned wives, jilted lovers, reward seekers who would sell their own grandmothers and the jealous to “shop people” through their “confidential helplines”.
I know from consultancy work on fraud risk prevention marketing that I did for an excellent security, risk management investigative analysis firm founded by ex murder and robbery squad detectives during 2002 that there are 269 ways to commit fraud with a mobile telephone and thousands of ways for a fraudster to appear to be one thing and yet be a very clever wolf in sheep’s clothing.
A lot of business-people see this fraud prevention activity including fraud risk process mapping as a cost which they are not willing to bear either a little or at all, reasoning that the risks are small and that “It is not something that will happen to us”.
PERSONALITY TYPES/CHARACTERISTICS OF QUANGOCRATS/SYMPATHETIC HARMONISERS
West Associates produces a test battery which when completed puts people into 4 quadrants. One category is “Objective Analyticals”, which is usually composed of people who look at facts, figures, trends, people and data to arrive at conclusions, develop strategy and who have more than a passing understanding of human nature and what things motivate people.
They tend to see the world as it is and the potential of people to do good or ill for what it is which makes them better at engineering out the risk of fraud and mendacity by following a policy of “trust but verify” rather than taking everything at face value.
Charities and those who regulate them generally employ people who fall into the “Sympathetic Harmoniser” category of people who are kind, see the world through rose-tinted spectacles, always see the best in people, lack commonsense and for fraudsters simply represent “easy marks” to be fleeced at will.
With Dame Suzi Leather and others like her the issue is slightly compounded by the fact that she sees the issue of fraud against taxpayers as something that will be dealt with by the Government and a matter that has very little to do with her.
Someone else, probably a bone headed, swivel eyed member of the proletariat and a taxpayer will step into the breach and cough up!
In short, she is complacent, probably doesn’t care and has staff who are mentally incapable of matching wits with a fraudster let alone major “scamsters” who pulled off this particular caper.
She is not untypical in thinking this way because she is very much a creature of the Old Labour/New Labour regime and the Common Purpose /Guardianista faction that is still very much in evidence in Quangos, the NHS, regulatory bodies like the FSA, the Care Quality Commission , the Heritage Lottery Fund etc.
THE GUARDIAN NEWSPAPER/GUARDIAN MEDIA SERVICES PLC AND TAX AVOIDANCE
It is clear to anyone who makes international comparisons that the UK is doing very badly economically and has an un-competitive tax regime.
It is also clear that the UK has more offshore tax havens than any other country on the planet and our rich and powerful and foreigners have used these tax havens to launder money on an industrial scale, to the point where 92% of the wealth of this country is held offshore, 85% of the wealth of America is held offshore and others are catching up.
Most major UK companies, Glaxo Smith Kline, Unilever, Vodaphone, Arcadia PLC, Tesco PLC, Hanson Trust, Union International, Vestey Group, Virgin PLC etc are assiduous tax-avoiders just as much as Amazon, Apple, Microsoft, Google, E-Bay.
Yet from the Guardian we hear little or nothing about our home grown firms just a lot about Eric Schmidt of Google who just happens to be very close to David Cameron and his ministers.
Guardian Media Services Group is very coy about its tax affairs but a look at Private Eye can tell you that their tax structure is not dissimilar to that of Tesco PLC a company who they used to lambast for tax avoidance.
Our Lord’s words “Let he who is without sin cast the first stone” are clearly lost on the Tofu eating leader writers of the Guardian who are not very keen to look at the behavior of their own group.
WHAT CAN BE DONE TO FIX THE PROBLEM
–Charities and regulatory bodies to seek and appoint people with more commercial nous,more and better understanding of human nature
–The UK tax regime to be made more competitive to encourage money now held offshore to be brought back onshore
–The Guardian to put its own house in order before criticising others
–Charity fraudsters when caught to be very severely punished by the courts
–A fraud risk process mapping regime to be introduced to all charities to protect the charities and taxpayers