Monthly Archives: December 2017

Time for change: junk the Anglo-Saxon model* in 2018

The FT reports that senior executives at several of the largest US banks have privately told the Trump administration they feared the prospect of a Labour victory if Britain were forced into new elections.

It then referred to a report by analysts at Morgan Stanley arguing that a Corbyn government would mark the “most significant political shift in the UK” since Margaret Thatcher’s election and may represent a “bigger risk than Brexit” to the British economy. It predicted snap elections next year, arguing that the prospect of a return to the polls “is much more scary from an equity perspective than Brexit”.

Jeremy Corbyn gave ‘a clear response’ to Morgan Stanley in a video (left) published on social media reflecting anti-Wall Street rhetoric from some mainstream politicians in the US and Europe, saying: “These are the same speculators and gamblers who crashed our economy in 2008 . . . could anyone refute the headline claim that bankers are indeed glorified gamblers playing with the fate of our nation?”

He warned global banks that operate out of the City of London that he would indeed be a “threat” to their business if he became prime minister.

He singled out Morgan Stanley, the US investment bank, for particular criticism, arguing that James Gorman, its chief executive, was paying himself a salary of millions of pounds as ordinary British workers are “finding it harder to get by”.

Corbyn blamed the “greed” of the big banks and said the financial crisis they caused had led to a “crisis” in the public services: “because the Tories used the aftermath of the financial crisis to push through unnecessary and deeply damaging austerity”.

The FT points out that donors linked to Morgan Stanley had given £350,000 to the Tory party since 2006 and Philip Hammond, the chancellor, had met the bank four times, most recently in April 2017. The bank also had strong ties to New Labour: “Alistair Darling, a Labour chancellor until 2010, has served on the bank’s board since 2015. Jeremy Heywood, head of Britain’s civil service, was a managing director at Morgan Stanley, including as co-head of UK investment banking, before returning to public service in 2007”.

A step forward?

In a December article the FT pointed out that the UK lacks the kind of community banks or Sparkassen that are the bedrock of small business lending in many other countries adding: “When Labour’s John McDonnell, the shadow chancellor, calls for a network of regional banks, he is calling attention to a real issue”. And an FT reader commented, “The single most important ethos change required is this: publish everyone’s tax returns”:

  • In Norway, you can walk into your local library or central council office and see how much tax your boss paid, how much tax your councillor paid, how much tax your politician paid.
  • This means major tax avoidance, complex schemes, major offshoring, etc, is almost impossible, because it combines morality and social morals with ethics and taxation.
  • We need to minimise this offshoring and tax avoidance; but the people in control of the information media flow, plus the politicians, rely on exactly these methods to increase their cash reserves.

But first give hope to many by electing a truly social democratic party.

Is the rainbow suggesting a new party logo?

*the Anglo-Saxon model

 

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Prem Sikka: a critic of the Pin-Stripe Mafia

Accounting professor Prem Sikka received the Abraham Briloff award from The Accountant and International Accounting Bulletin at a conference and awards dinner in London on 4 October – The Digital Accountancy Forum & Awards 2017.

The award is named after Abraham Briloff (19 July 1917 –12 December 2013) who would have been 100 this year.

Abe was a professionally qualified USA accountant and accountancy professor who gained fame through his prolific writing and fierce criticism of malpractice within the profession (left).

He called upon the profession to act ethically and argued that in return for enormous social privileges and status, it must have a genuine commitment to society and be able to “see beyond the numbers” as he told The Accountant in an interview in 2013 a few months before his death.

Sikka is emeritus professor of accounting at the University of Essex, which he joined in 1996. Before that he worked at the University of East London between. He qualified with ACCA in 1977 and held various accounting positions in industry and commerce before committing to a career to academia.

Many of his articles may be read here. To get the real flavour of his outspoken assessment of the Big 4 accounting firms, listen to The Pin-Stripe Mafia: How Accountancy Firms Destroy Societies.

  • In 2003, Sikka helped the launch of the Tax Justice Network and is now one of its senior advisers (unpaid).
  • He has advised and given evidence to the EU and UK parliamentary committees.
  • Most recently, he was an adviser to the UK House of Commons Work and Pensions Committee for its investigation into BHS and related pension matters.
  • His research on accountancy, auditing, corporate governance, money laundering, insolvency and business affairs has been published in books, international journals, newspapers and magazines.

Sikka was given the award for his extraordinary contribution in promoting transparency and public accountability of businesses

This award recognises the work of an individual who has sought to improve transparency and accountability by asking the hard questions and questioning the dominant apparatus of truth, recognising that accountancy goes beyond debit and credit to subsume a broad canvas of disciplines involving the liberal arts and sciences. This recognises that accounting is a moral and political practice rather than a technical one.

The Accountant and International Accounting Bulletin editor Vincent Huck said: “No one other than Prem Sikka fits the bill better to receive an award named after Abraham Briloff. Not only do they share a common set of ideas, but they have the same insatiable drive and passion in promoting them. The accountancy profession and professionals often boast of occupying a moral high ground and claim that they act in the ‘public interest’, but such claims are now increasingly met with public scepticism. Rather than addressing the criticism, professionals have often been too quick to dismiss it, even when it comes from their own ranks. The profession needs to nurture its critics as, ultimately, a profession is only as good as its critics.”

The UK Shadow Chancellor of the Exchequer John McDonnell presented the award to professor Prem Sikka. He said: “It’s an honour to be asked to present this for someone who I think will be long known for the work that he’s done and laying the foundation of a fair, just, open and transparent tax system.” He praised Sikka for his role in setting up the Tax Justice Network in 2003 at a time when people where not necessarily interested in tax avoidance and evasion and for his contribution as an advisor to the House of Commons select committees, various individual MPs, the Labour party as well as other parties.

“Many of the policies that we are advocating at the moment are based on the work that Prem has done over the years,” McDonnell said, including:

  • The importance of opening up the books,
  • the importance of having a register of beneficial interest and
  • the importance of having an effective HMRC.

The Shadow Chancellor added that Sikka and his team have just undertaken a review of the HMRC and the resources that they need to ensure that there is an effective tax operation within this country, ending:

“And much of the legislation that you will see us promoting in parliament, often on all sides of the house, will be done as a result of the work that he’s done and the advice that he’s given us as to how we can establish fairness and transparency within the tax system.”

 

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