Fighting Corporate Abuse

Corporate Reform Collective

Description

Fighting Corporate Abuse demonstrates, through compelling and revelatory analysis, the legislation and regulation needed to deal with the abuses in the corporate sector that have been revealed in recent years. It highlights the more general contribution of company law and practice to the current crisis in capitalism.



The first section develops a controversial argument, using detailed illustrations and vivid examples which show how the various abuses of predatory capitalism have been carried out through the manipulation of the corporate form and the creation of highly complex corporate groups. The group of authors, all experts in their fields, tackle head-on the issues of tax evasion, extraction of value and asset stripping, environmental destruction and managerial self-interest. In doing so, they paint a picture of a system that is abusive, and degenerated, but also a system which can be reformed.



In the run up to the UK general election, the authors develop of a set of practical proposals for an incoming government, outlining how each of these abuses could be curtailed and how a more acceptable and accountable form of corporate capitalism can be developed through national and international action.



Drawing on the group's activism, as well as their academic experience in law, politics, economics and human rights, this will be an authoritative as well as a highly practical book.
Introduction

Part I: The Abuses

1. Tax Evasion and Avoidance

2. Cover-Up Accounting and Auditing

3. Avoiding Liability

4. Extracting Value

5. Managerial Self-Interest

6. The Mirage of Corporate Social Responsibility

7. Bad Banking and Market Manipulation

Part II: The Reforms

8. A New Political Economy for the Corporation

9. Controls on Multinationals

10. Controlling International Tax Avoidance and Evasion

11. Reforming Systems of Governance, Accounting and Auditing

12. Banking Reform and the Control of Market Manipulation and Short-Termism

13. Small and Locally Based Alternatives

14. Towards New Corporate Forms

Notes and Additional References

The Corporate Reform Collective

Index

Sujets

• Political Process
• Political Science
• Taxation
• Reino Unido
• Political corruption
• United Kingdom
• Tax
• Economics
• Great Britain
• Imposition (fiscalité)
• Union européenne
• Royaume-Uni
• Europe

Informations

• Publié par: Pluto Press
• Date de parution: 20 juillet 2014
• Nombre de lectures: 0
• EAN13: 9781783711956
• Langue: English

Extrait

FIGHTING CORPORATE ABUSE
Fighting Corporate Abuse
Beyond Predatory Capitalism
Corporate Reform Collective
First published 2014 by Pluto Press 345 Archway Road, London N6 5AA
www.plutobooks.com
Copyright © Corporate Reform Collective 2014
The right of the individual contributors to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library
ISBN 978 0 7453 3517 9 Hardback ISBN 978 0 7453 3516 2 Paperback ISBN 978 1 7837 1194 9 PDF eBook ISBN 978 1 7837 1196 3 Kindle eBook ISBN 978 1 7837 1195 6 EPUB eBook
Library of Congress Cataloging in Publication Data applied for
This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin.
10 9 8 7 6 5 4 3 2 1
Typeset by Curran Publishing Services Text design by Melanie Patrick Simultaneously printed digitally by CPI Antony Rowe, Chippenham, UK and Edwards Bros in the United States of America
Contents
Introduction
Part I     The Abuses 1 Tax Evasion and Avoidance 2 Cover-Up Accounting and Auditing 3 Avoiding Liability 4 Extracting Value 5 Managerial Self-Interest 6 The Mirage of Corporate Social Responsibility 7 Bad Banking and Market Manipulation
Part II The Reforms 8 A New Political Economy for the Corporation 9 Controls on Multinationals 10 Controlling International Tax Avoidance and Evasion 11 Reforming Systems of Governance, Accounting and Auditing 12 Banking Reform and the Control of Market Manipulation and Short-Termism 13 Small and Locally Based Alternatives 14 Towards New Corporate Forms
Notes and Additional References
The Corporate Reform Collective
Index
Introduction
People are very angry about recent corporate abuses and about the way in which the capitalist system is operating. This is not just about one or two cases of unlawful or unethical conduct. It is about the nature of capitalism itself. The list of abuses that have emerged since the boom and bust over the last five years keeps growing: • The level of tax avoidance by major international companies like Amazon and Google and many other household names is shocking. Some estimates put the total of corporate tax avoidance in the United Kingdom alone at some £12 billion a year, enough to plug almost one-tenth of the annual public sector deficit for 2012–13. • The level of fat cat salaries for bankers and corporate executives just keeps growing more or less regardless of the performance of the companies they run. The latest figures for top salary increases stands at 14 per cent for 2013 while most ordinary employees have seen a real reduction in their take-home pay. • The prices for gas and electricity and rail fares keeping rising well above inflation, and so do the dividends paid out by the utility companies to their international shareholders. The leveraged financing of these and other such companies is built on complex offshore corporate structures that are difficult to monitor or control. • When things go wrong, as in all the major banks and with some railway franchises, it is the taxpayer who is expected to pick up the tab. ‘Too big to fail’ and ‘essential services must be maintained’ combine to protect the interests of private sector bosses and investors at public expense. • And no one ever seems to be held accountable even when there is evidence of criminal, unlawful or grossly incompetent conduct by senior directors and executives. ‘Fred the Shred’ Goodwin is not the only senior banker who has walked away from the catastrophe he presided over with a massive pay out for failure.
It is no wonder that there is growing public anger at this kind of corporate capitalism The campaigns of activists in the Occupy Movement and in UK Uncut and other pressure groups have reflected a widespread public mood. Ed Miliband and others have struck a chord with the focus on ‘predatory capitalism’ and the need to curtail the dominance of major utility suppliers, the power of the multinationals and the dangerous and unproductive operations of international investment banks.
And yet corporate capitalism is essential to current economic systems throughout most of the world. It has produced generally better results in terms of economic activity and individual prosperity than most forms of state-controlled economic activity. Market forces and competition between different suppliers, producers and retailers have generally proved to be more efficient in the allocation of resources than strict state socialism, which has its own common forms of abuse and corruption. And the largest multinational corporations have undoubtedly introduced some much-needed forms of economic development in many developing economies, and have often paid higher salaries to their employees than more traditional businesses. But they have also exhibited and benefited from the standard practices of economic imperialism.
So there are no political or economic certainties in the choice of structures for business enterprise. The underlying concept of the corporation as the legal basis for large business enterprises is quite sound – the creation of a legal entity through which people or bodies with surplus resources can supply capital for investment in economic enterprises, the development of natural resources or the delivery of essential services. Company law provides the basic structures. But the providers of capital, whether they are private individuals or state bodies, have a good deal of freedom to determine the detailed structures for the management of the business by the directors and executives they have appointed, and can in return expect a fair share of the resulting operating returns or profits after the payment of wages and other costs of operating. If the business is unprofitable they must either provide more capital or lose what they have already contributed. Whether the model is state or private capitalism is less important than formal operating structure of a self-contained operating company or corporation which is expected to run the business or utility as efficiently as practicable.
It is this formal operating structure, usually contained in the memorandum and articles of association of a standard company, that is the key to an understanding of any corporate body. These are designed to deal with the obvious conflicts of interest between the investors, the managers and the employees within the company, not to mention the impact on external consumers and the public at large. In the standard model the investors or shareholders are granted the power to appoint and dismiss the directors, who in turn are granted formal control of the operation of the business. This normally gives the directors the power to decide on how to allocate the company’s resources between the payment of dividends to shareholders and reinvestment in the business, how much to pay their employees and themselves, and most other major decisions on how the business or enterprise is run. But the standard model is not the only one. In co-operatives the memorandum and articles of association grant most of these major powers to the members or employees rather than the providers of capital, who are usually entitled only to a fixed rate of interest on their contributions. In state corporations the government, whether national or local, is usually given the power to give instructions to the directors on all major decisions, including how much of the available resources to pay to the national or local exchequer.
The obvious point is that there is a huge range of possible structures for corporate enterprises. So how did things go so wrong with the standard model, and how can they be put right? Some activists argue that it is the system of corporate capitalism itself that is the problem, and that the system must be smashed and replaced by something better, though precisely what and how we might get there is not usually explained or argued in any depth. ‘Smash capitalism’ is a great slogan but not a convincing policy option. A return to state control of all major economic activity is not on any realistic political agenda. And the record both of capitalism and of the more extreme forms of state socialism suggests that other more pragmatic reforms may be more effective and achievable.
A History of Success and Recurrent Scandal
The history of corporate capitalism shows that the system can work but that it is inherently open to manipulation and abuse. Since the invention of the modern form of financial capitalism in northern Italy and in the chartered trading companies in Britain and France, its progress has been regularly interrupted by scandals and crashes. • The chartered companies, the Africa Company, the Hudson Bay Company and the East India Company in Britain, and their equivalents in France and Holland, which were formed in the 16th and 17th centuries and funded by the sale of shares, initially on a more or less private basis and later traded on the emerging stock exchanges, were a key element in initial exploitation and trade in the East and the Americas. But the public market in shares and the inflation of expectations soon led to bubbles and crashes – the Tulip bubble in Holland and the South Sea Bubble in London – and to legislation to control unauthorised flotations, leaving it to parliaments and governments to authorise any new public trading companies. • Statutorily authorised companies funded by the sale of shares built the canals and railways in Britain and elsewhere in the 18th and 19th centuries. But some were fraudulently promoted and failed in the crash of the Railway King in the 1850s. • Open access to incorporation, as an alternative to parliamentary authorisation for chartered publ