by ChrisCook
Mon Oct 8th, 2007 at 01:04:25 PM EST
There's been some interesting stuff dug up by Richard Murphy - of Tax Research LLP and the Tax Justice Network - and this has even found its way onto the FT blog, here:
The (un) charitable core of Northern Rock
Here are a couple of Richard's blog posts on the subject
Northern Rock - a Rotten Abuse of Charity
and the one that kicked it off....
Northern Rock - the questions needing answers
complete with DNA molecule structures and followed by a nice little thread with a few comments along the lines of:
"well, there's nothing wrong with it, and anyway everyone else is doing it, and anyway I vos only obeying zer orders..."
Top marks to Richard, who is a class act with a clear view of the underlying morality,
or lack of it, of this whole horrendous "rat's nest".
In other words that trust is not real. Northern Rock controls Holdings, but pretends not to via complex legal structures for certain purposes to try to avoid some of the risk of ownership arising from doing so, no doubt. Why else do this?
I call this three things:
a) An abuse of the charity involved, who (I stress) need not even have given their assent to be used in this way;
b) A contempt for those who take the real risk on financial markets, which is at the end of the day as this fiasco is showing, you and me and the government;
c) The construction of an arrival device to ensure that as few people as possible, almost certainly the Northern Rock directors included, know just how this deal works. I guarantee you it’s a tiny number that do.
And it’s this wholly artificial construction, seeking to shift liability and to avoid responsibility and abusing common sense decency with regard to the abuse of charity to achieve commercial aims that is pulling Northern Rock down.
Of course it’s not alone. This type of deal is constructed every day off shore. It’s the bread and butter of international finance.
It’s why we can’t trust markets. It’s why regulation is needed. It’s why ownership has to be revealed. It’s why declaring where you’re working is so important. It’s why accountants have once more to put substance over form.
The contradistinction between:
(a) the sham charitable basis to Northern Rock's "Granite" special purpose vehicles; and
(b) the great work carried out by the Northern Rock Foundation - which not only receives and distributes 5% of Northern Rock profits, but is also entitled to 15% of Northern Rock shares in the event of a takeover;
is quite mind-boggling - Jekyll and Hyde comes close....
But what is to be done with Northern Rock now to cut the Gordian Knot - or maybe clean the Augean Stables....?
