The Inside Scoop/Interesting Reads

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All about: The 'Banks, The Inside Scoop, Their Dealings, Their Tax Avoidance'

Interesting Reads:

THE BUDENBERG AFFAIR

“WE want the banks to pay not just by the letter of the tax law, but by its spirit,” insisted George Osborne last week, announcing a new push to stop tax avoidance. So he won’t be too pleased to hear of the past antics of one of his lieutenants, Robin Budenberg.
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As chief executive of the UK Financial Investments arm of the Treasury, Budenberg is responsible for the taxpayer’s stakes in RBS, Lloyds Banking group and others. But he is also, it turns out, a fully signed up, big time tax avoider!

Jersey here we come
Back in 2003 Budenberg was a managing director of Swiss bank UBS when it hatched an audacious fiscal Great Escape, only now exposed in a tax tribunal, in which its 426 top bonus-earners in London would tunnel out of tax and national insurance bills on £100m worth of bonuses through a complex offshore arrangement.

The scheme – known within the bank as NECAP and planned with the help of tax avoidance specialists Ernst & Young – involved routing bonuses for bankers who were entitled to more than £20,000 for 2003 through Jersey trustees and an offshore nominee company, Lively Ltd, into another Jersey company called ESIP Ltd. Even UBS’s own officials admitted to the tribunal that it was “a tax avoidance scheme”.

A Freudian slip?
As a managing director Budenberg was almost certainly entitled to a much higher bonus than the average £235,000 or so. He was described in a recent book by welfare minister and ex-UBS banker Lord (David) Freud, Freud in the City, as “the most respected mainstream financier in the bank”. And Freud also reported that “for the senior bankers, hovering below managing director level, the [bonus] figures moved up from $1m to $1.6m [by 2000]… Certainly nothing I saw over the years made these figures look unrealistic”. ([size=5]Freud retired from UBS in December 2003 and that he was unaware of the scheme).

Which puts Budenberg in a tight spot. When he was exposed former UKFI chairman Glen Moreno last year as a trustee of the Liechtenstein Global Trust, home to many a tax dodger’s secret stash, the then shadow chancellor George Osborne pounced. “It was an error of judgement to have appointed someone who advised an offshore tax haven to look after the taxpayer’s stake in our banking system,” Quoted. Moreno, who at least hadn’t avoided his own tax bill, stepped down. What hope then for Budenberg, one of whose jobs is to enforce the clampdown on banking tax avoidance?

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The Westminster Spiv

Vince Cable the Secretary of State for Business said on (22nd September) that "Markets are often irrational or rigged," [size=5](Link http://www.bbc.co.uk/news/uk-politics-11382047) "So I am shining a harsh light into the murky world of corporate behaviour. I agree, so I will shine some light on some of Vince's murky behaviour
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It was back in 2006 [size=5]http://www.nytimes.com/2006/10/18/bu...8369.html?_r=2 that the EU commissioner for the internal market, at the time Charlie McCreevy, told Member State governments across the European Union that they must scrap their monopoly on delivering letters by 2009.

[size=5]EU Directives for the regulation of Royal Mail

Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 (came into force in February 1998)

Directive 2002/39/EC of the European Parliament and of the Council of 10 June 2002 amending Directive 97/67/EC

Directive 2008/6/EC of the European Parliament and the Council of 20 February 2008 amending the initial Postal Directive 97/67/EC as amended by Directive 2002/39/EC

Prior to the implementation of the 1997 European Union Directive, the UK postal service sector was governed by the Post Office Acts of 1953 and 1969 and the Telecommunications Act 1981. This legislation set out the responsibilities of the British Government towards postal services and gave the Post Office its powers and duties.

The Postal Services Act 2000 (PSA) implemented the 1997 European Union Directive in the UK. Statutory Instrument 2002 No. 3050 amended the PSA to take account of the changes required by the 2002 European Union Directive.

Other News today announcement:
Royal Mail to raise the cost of a first-class stamp by 5p to 46p next April...viewtopic.php?p=29950#p29950

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Re: The Inside Scoop/Interesting Reads

Why the Treasury won't illuminate 2010 bank pay

Over a 10-year period, the share price performance of Britain's banks has been appalling (in the case of Royal Bank of Scotland and Lloyds/HBOS) or lousy (Barclays and HSBC).

Over the same period (you probably won't need reminding) the remuneration of top bankers has soared, both for those who run the banks and for their star traders and advisers; the early part of this millennium was the period when the multi-million pound bonus package proliferated and became entrenched into the system.

As for dividends, after the crash of 2008 banks either eliminated them (RBS, Lloyds, Barclays) or slashed them (HSBC). So it's been a great time to work for a bank, and simply the worst time to own shares in a bank. Which would look like prima facie evidence that the balance between rewards for bank employees and rewards for the owners have been skewed too far in favour of the employees.

That is bad news for those of us still brave enough to save for a pension, since there'll be a slug of bank shares in our portfolios (whether we asked for them or not).

So why on earth haven't the owners or those who manage big pension and insurance funds on behalf of the ultimate owners (that's us by the way) demanded more for themselves and insisted on less for those who destroyed the value of their (our) banks?

There is another facet to this puzzle. Research by the Bank of England shows that if banks reduced the proportion of their revenues that they pay out in pay and bonuses back to what it was in 2005 (which was a pretty good year for the banks), they would free up £10bn - which could be used to strengthen themselves by retaining it as capital (which is what the Bank of England and FSA would prefer) or to pay higher dividends.

To put it another way, the failure of the owners to insist that this £10bn be deployed to reinforce the foundations of their banks or provide an income to them is one of the great mysteries of our time. The previous government spotted that when it came to setting pay, shareholders appeared to have abdicated all responsibility. So it took advice from a senior banker and former regulator, Sir David Walker, and decided to help the owners put pressure on banks that were paying too much, by forcing the banks to disclose much more detail about what they pay.

It prepared draft legislation that would have forced bankers to disclose every year how many of their people earned more than £500,000 but less than £1m, how many earned more than £1m but less than £1.5m, and so on, in bands of £500,000, until the threshold of £6m was breached, at which point the disclosure bands would have widened to £1m.

The legislation never made it on to the statute book, because the general election intervened. But both George Osborne, the Chancellor, and Vince Cable, the Business Secretary, always said they were in favour of improved disclosure of bankers' pay, so the widespread assumption was that the statutory instrument would become law in time for the pay information to be included in the banks' next annual reports.

That's not going to happen: the new law on executive remuneration in financial services has been shelved, as the prime minister confirmed during Prime Minister's Questions yesterday. Why? Well, you probably won't need telling that those who run British banks have for some time been telling me how much they dreaded having to reveal how many of their people earn seven figures and above.

However, in defending the status quo, David Cameron pointed to a public change of heart by Sir David Walker, who earlier this week wrote in the Financial Times [registration required] that he didn't think it was appropriate for UK banks to be forced to disclose more information on what they pay than US banks, or French banks, and so on.

This is what Sir David said:

"[A]ny attempt to require banded disclosure for UK banks in isolation would be commercially sensitive vis à vis their non-disclosing competitors elsewhere. It could also stimulate higher executive turnover, and (as a perverse unintended consequence) lead to higher remuneration as a defensive retention measure."

You'll have to judge whether you think the potential competitive cost to British banks outweighs the potential benefits for the owners of banks in having the information that would enable them to engage in an informed dialogue with bank bosses on an aspect of management with profound consequences for the strength and sustainability of banks.

The Treasury says that Mr Osborne will write to European Union finance ministers, to press for a Europe-wide bank pay disclosure regime. It insists that a light may yet be shined on what bankers are paid.

We'll see. What however is as dead as any dead thing is the notion that British banks could be forced to lead global moves towards greater illumination of bankers' pay.

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Re: The Inside Scoop/Interesting Reads

Buzz Lightweight

ED Miliband was laughed at today as "Buzz Lightweight" for relaunching his party with a Toy Story-style slogan.[attachment=0:3r0qcvbr]Buzz Lightweight.jpg[/attachment:3r0qcvbr] Using the catchphrase "Beyond New Labour", he said the faithful must learn the lessons of defeat and fight the next election as a changed party.

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Re: The Inside Scoop/Interesting Reads

Your 1p is worth more than 1p How:

When they were first brought into circulation in 1971, 1p coins were made of 97% copper. Using today's metal prices, it meant each coin would cost 1.6p, or 60% more, to produce than it was worth.
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However, in 1992 the government decided to produce a lower cost alternative, meaning all 1p coins made after this date are worth just 0.12p*.

According to the Royal Mint, the new coins have a "mild steel core and are electroplated with copper - consequently they are magnetic."

*[size=5]Using the latest steel price estimate of $509.50 a tonne.

and 2p whats its really worth: 3p ? Why:

If you have a 2p coin in your pocket that was minted between 1971 and 1992, it's actually worth 3.3p in terms of the raw materials required to make it.
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As with the 1p coin, the government responded by introducing a low cost copper-plated metal version in 1992, which is worth a piffling 0.23p*.

[size=5]And did you know that the 2p coin is legal tender up to just 20p? In other words, you can be refused if you try to spend more than 20p's worth of 2p coins at one time.

*[size=5]Using the latest steel price estimate of $509.50 a tonne

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As the Royal Mint makes it clear that it is an offence for a member of the public to melt down a coin of the realm, taken into account the current coin weights and metal prices to estimate

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Re: The Inside Scoop/Interesting Reads

Groundhog Day 16

[size=5]EU accounts not signed off… for the 16th consecutive year
You wont have read this in the MSN but The European Union Court of Auditors has refused to sign off the EU accounts for yet another year, making this the 16th year in a row that the EU accounts have failed to receive a clean bill of health.
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This year’s report found discrepancies in 90% of last year’s EU budget, and yet the European Parliament is currently demanding a 2011 budget increase of 6%, which has, unsurprisingly, gone down like a lead balloon with cash-strapped and budget-slashing national governments.