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Corporate Social conscience

We’re all equal, but some of us are more equal than others.

In times of social crisis multi-national corporations and their spokespersons like to promote the façade of standing shoulder to shoulder with ordinary people, with the subliminal message, "We are suffering as much as everyone else, yet we're doing our bit to keep the country going".

With the generous assistance of Her Majesty's Treasury (otherwise known as the British taxpayer) companies large and small were promised financial help to survive the latent pandemic. Boris said, "No one should suffer as a consequence of Covid". All well and good unless you were a small self-employed business! They weren't mentioned until the government was pressurised into including them in its plan. Yet again the multinational corporate giants get preferential treatment funded by the taxpayers. Remember the 2008 Financial Crisis when multinational banks were bailed out at the taxpayers’ expense, rather than their shareholders bearing the risk of their reckless business dealings. The whole point of being a shareholder in a Limited Liability Company is that the people funding the business bear the risks of the company; they take the profits if the company is run efficiently and bear the losses if it is not. That bailout gave rise to the expression "Socialism for the rich, capitalism for the poor”. Or put another way, “Privatize profits and socialize losses."

Governments appear too keen to hand over taxpayer’s money when large corporations are in trouble (often trouble of their own reckless making as per the financial crisis). Yet when these same companies return to profit they get to keep the profits and the taxpayer sees little or no recompense.

Although we do not know the Chancellor’s plans to stimulate the economy, whatever course of action is taken, it should be borne in mind it is the taxpayer i.e. the ordinary person in the street who will ultimately foot the bill. So will the taxpayer get value for money when normal service is resumed?

Precedent does not bode well. The aforementioned Financial Crisis demonstrated the thoughtlessness with which the public's money is thrown at corporations who had made obscene profits on morally questionable schemes while taking advantage of corporation friendly regulation. Will things be different this time? I seriously doubt it.

Which brings us to the question of a corporation’s ethical behaviour. A company's Articles of Association sets out the rules by which the company directors and managers run the company. In the UK this document broadly states that the company is run for the benefit of the company's shareholders. In the light of stories regarding immoral business conduct reported in the UK press by particular Company CEO’s along with highly inflated director’s bonus and pension arrangements. Taken with well documented tax avoidance schemes, perhaps there should be a clause in the Articles of Association to force the company to resist any conduct that does not benefit the public or society. Or put it another way immoral business dealings and practices, such as moving vast amounts of money to low tax friendly countries to avoid tax rates paid by ordinary people, should be outlawed.

The problem with this is that companies undertake this immoral behaviour with the connivance of the Government and HMRC. A case in point is the "negotiation" of Google's 2014/15 UK tax bill. Note the wording “negotiation”, since when does an ordinary person get to negotiate their tax payments? Questions were asked in Parliament by the then Shadow Chancellor John McDonnell. He quoted Google's tax rate over a 10 year period as 2.5% per annum instead of 20% per annum normally paid on corporation tax. This was arrived at after “negotiations” with HMRC and was apparently enthusiastically endorsed by Number 10. It transpired instead of paying £200 million a year in tax, over the 10 years Google actually paid £200 million, a nice deal if you can get it, especially when their turnover was close to £1 billion a year! What a morally upstanding enterprise!

Google was in good company, newspaper reports have also included Amazon and Starbucks among other companies using similar methods to evade their social responsibility. Whilst these companies may argue they are merely following legal practice, it does not take a genius to recognise the actions of their Financial Directors and their Board of Directors are socially reprehensible. Indeed, if any further proof were needed, these examples show who really has the upper hand in these situations and it's not national Governments. Modern multinationals have become so powerful and operate in so many countries they are able to dictate terms to Government Ministers, who are cowed into acceptance for fear of whatever reprisals the corporation threatens them. This normally means a threat to shut down the Company operations in that country causing significant unemployment.

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