November saw the continuation of the corporate tax avoidance scandal in the UK, with further information emerging on a number of multinational companies. Google, Starbucks and Amazon were all called to face questions from MPs at the Public Accounts Committee (PAC). MPs of all parties voiced concern over this type of ‘legal’ tax avoidance and pressure was also exerted by campaign groups such as UK Uncut and the Tax Justice Network. Members of the wider business community also spoke against the multinationals’ behaviour: Andy Street, the managing director of John Lewis’s stores, said the UK Government should urgently “address the Amazon problem” and create a level playing field, or risk putting companies like his out of business. In response to the scandal, the Chancellor of the Exchequer, George Osborne, signalled a crackdown on multinationals using aggressive tactics to cut their tax bills. In a joint statement with the German finance minister at a G20 meeting in November, Mr Osborne called for concerted co-operation to close gaps in international tax standards. Margaret Hodge, who chairs the PAC, said that the Treasury should look into a sales tax as a way of raising extra revenue from global companies. The European Commission offered its own solution – a common tax system across Europe for businesses, apportioning tax revenues to member states – to reduce the scope for shifting profits to low tax jurisdictions. (Guardian, Reuters, BBC, Independent, Times*, BBC, Financial Times*)
M&S reaches a billion sustainable products
Over a third of Marks & Spencer products sold, amounting to over a billion items a year, now boast some form of sustainability credential. Interim results for the retailer's pioneering ‘Plan A’ sustainability strategy show 35 percent of its products have an eco or ethical feature that goes beyond the market norm. Adam Elman, head of ‘Plan A’ delivery at M&S, said the company was confident it would reach its targets of embedding sustainability features into half of its products by 2015 and its entire range by the end of the decade, but he also acknowledged there was still "work to do". Plan A contributed savings of £105m for M&S last year and could grow to include investment in renewable energy. (Business Green)
Asia (Asia Pacific)
Bangladeshi workers protest over fatal fire
Thousands of Bangladeshi workers protested in the streets of a Dhaka suburb in late November, throwing stones at factories and smashing vehicles, as they demanded justice for the 112 people killed in a garment factory fire that brought unsafe conditions in a pressurised, global industry to light. Some 200 factories were closed for the day after the protests erupted in Savar, the industrial zone near the capital, where the fire occurred. Investigators suspect that a short circuit caused the fire, which was made so deadly by the lack of safety measures in the eight-storey building in which it occurred. The building had no emergency exits and no fire drill protocol. The factory is owned by Tazreen Fashions, a subsidiary of the Tuba Group. The Tuba Group is a major Bangladeshi garment exporter whose clients include Walmart, Carrefour and Ikea. In the midst of the unrest, which lasted for days, three supervisors from the clothing factory were arrested, accused of stopping workers from leaving the building and of padlocking exits. The supervisors allegedly told the workers that it was just a drill and they had nothing to worry about. (Financial Times*, Guardian, BBC)
Natural disasters hinder progress in Asia
Asia’s rapid economic progress risks being undermined by the rising number of floods, landslides and other natural disasters that hit the region, according to a new report by the Asian Development Bank. The bank’s study provides a stark reminder that Asia and its many densely populated and rapidly expanding coastal cities are particularly vulnerable to weather-related disasters such as storms and floods. Disaster-related losses could top $19bn a year, and the increasing frequency and severity of natural disasters could “slash economic growth and development,” the report commented. Weeks of flooding in low-lying areas of Thailand, for example, paralyzed much of the country’s manufacturing sector and caused billions of dollars in damages late last year. Similarly, floods and landslides cost China some $18bn in 2010 alone, the bank said. (New York Times)
Africa
Liberia watchdog reviewing $8bn of deals
A Liberian Government transparency watchdog is auditing more than $8bn worth of oil, mining, and agricultural contracts for possible fraud and mismanagement. The review by the Liberian Extractive Industries Transparency Initiative (LEITI) comes amid mounting pressure on President Sirleaf to clean up the sector after complaints about unfair and illegal deals. The audit is being conducted by UK firm Moores Stephens LLC and the results could be ready as soon as January. Liberia is one of the world's poorest and least developed countries, and the Government is hoping a recent flood of foreign investment will help it rebuild after 14 years of civil war. Around $14bn worth of mining, forestry, agriculture and oil projects have been announced since the end of fighting in 2003. The review will cover some $8bn worth of those deals signed since 2009, when Liberia joined EITI, a global organisation that seeks to boost transparency in resource industries, particularly in poor nations. Contracts signed by the mining giant BHP, oil companies Chevron and Anadarko, and agricultural firm Golden Veroleum will be included in the audit, according to LEITI documents. (News 24)
Pressure on Shell/Eni over Nigeria deal
A Nigerian oil deal that saw a $1.1bn payment from Shell and Eni passed on to a company controlled by a former oil minister “could fall foul of anti-corruption legislation”, according to the transparency campaigners, Global Witness. The multinationals paid the money in April 2011 to Nigeria’s Government for a deep-water concession. The Government then transferred the exact proceeds, $1,092,040,000, to Malabu Oil & Gas, which had been locked in a dispute with Shell for ownership of the concession. Malabu is controlled by Dan Etete, oil minister under the late dictator Sani Abacha and a convicted money launderer. Details of the transactions only emerged this year in New York, where Mr Etete is being sued for a $66m commission by a Russian consultant. Shell and Eni said in November that they only paid the Nigerian authorities and were not involved in the Government’s simultaneous settlement with Malabu. But Global Witness said that evidence suggests the multinationals knew the $1.1bn would flow to the Nigerian company. (Financial Times*, Reuters)
Latin America
Venezuelan oil workers on strike at 30 wells
According to newspaper reports from El Universal, a national newspaper in Venezuela, workers at 30 oil wells in the western Venezuelan state of Zulia have gone on strike, paralyzing production. The workers say they haven’t been awarded retroactive pay of 29m bolivars ($6.75m) due collectively since July following the renegotiation of contracts. Houston-based Halliburton Co., Maracaibo-based Petrosema, Kuala Lumpur-based Scomi Group and Tuboscope Brandt de Venezuela have told workers they can’t pay them as they haven’t been paid themselves by state oil company Petroleosde Venezuela. (Bloomberg)
Havana Energy to sign Cuban biomass plant deal
In late November, Havana Energy signed a joint venture agreement in Cuba to produce renewable energy with cane refuse and other biomass vegetation. The venture will burn sugar cane bagasse, the fibrous residue left after cane crushing, and marabu, a hardwood brush that quickly overgrows and renders the land useless. As much as a third of Cuba’s arable land is over-run with marabu, according to the Government. Zerus, a subsidiary of the Cuban state’s sugar monopoly Azcuba, will hold 51 percent of the new company, named Biopower and Havana energy, a subsidiary of the Esencia Group, will have 49 percent. “The agreement between Havana Energy and Zerus…will help create jobs, build a greener economy and support the positive economic changes happening in Cuba,” said Tim Cole, Britain’s ambassador to Cuba. Biopower will set to work early in 2013 harvesting marabu on an experimental basis toward building the first of what it hopes will be five 30-megawatt power plants attached to sugar mills around the country. (Financial Times*, Cubasi)
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