Israel and Palestine.

The one word and one image which comes to mind every time I read of spates between these two peoples are “proportionality” and “David and Goliath”.
“Echoing his friend Donald Trump, Mr Netanyahu has told reporters that Israel can choose its leadership only at the ballot box and not through legal investigations, which are a “witch-hunt”.
Like the US president, the message from Mr Netanyahu is that democratic norms, those unwritten rules of toleration and restraint, are for the weak, not for the strong.
Yet without robust norms, constitutional checks and balances are less mainstays of democracy than a mirage.”

The Guardian view on Israel’s democracy: killing with impunity, lying without consequence? | Editorial

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Davos, World Economic Forum. Jan 2019

This very week the good and the great {100 state leaders, and at least 1,000 business leaders and “special invitees”, {eg Prince William?  David Blaine illusionist and thrill seeking performer? and the odd film star} are gathering in Davos, at the World Economic Form, whose stated aims are “to make progress happen, to improve the state of the world by encouraging influential people to meet and work together”.
Looking at some of the numbers involved, to attend you have to be a member of the WEF, a “run of the mill member” costs $52,000 pa, an Industry Partner $260,000 pa and there are higher categories of Strategic Partners at crazy prices, in addition a ticket cost for the 4 day event itself costs another $28,000, of course then there’s travel, accommodation and drinkies!
For a Complete list of those attending

A little background. Davos refers to the Alpine village in which the World Economic Forum has been meeting for the last few years. The original gathering commenced in 1971, HQ Geneva and was the European Management Forum, the new title WEF was adopted in 1987. In addition to the aims stated above its PR blurb boasts that it has been “a catalyst for global initiatives historic shifts, industry breakthroughs, economic ideas and thousands of projects.”
Lets have a broad overview of where the WEF has helped us to get to in the 47 years since 1971. There are not many organisations who take a global view of the economic health of the world but two which I will use to provide reliable information are the UN, specifically UNHCR, its Commission for Refugees and Oxfam.
The UNHCR estimates that in 2018 the total number of displaced people in the world was about 68 Million, roughly the population of the UK. There is a multitude of reasons why so many are displaced but it will help you to understand the reasons if you use my old guidelines of 1. Follow the money and 2. Who are the Winners and Who are the Losers?

UNHCR. 2018 Displace People. 68 Milliom

Her World. Our World ?

Oxfam has just released its latest report which gives an up to date overview of how successful we have been in achieving widely agreed upon goals such as reducing poverty and hunger and establishing conditions in which people have a fair opportunity to live a healthy and fulfilling life.
Numbers living in absolute poverty have indeed fallen world wide, however this statement deserves closer examination. Most of the reduction happened in China and India and thats wonderful, however other areas of the world has got worse! EG. Nigeria whose population is 190 Million has 87 Million, almost 50%, living in extreme poverty. In the DRC 60 Mil, 72%, of its 83 Mil live in extreme poverty.
The other important caveat when analysing these poverty figures is, how is absolute poverty measured? A widely accepted figure is the numbers living on $1.25 or $2.00 a day. Realistically this level of income would hardly keep body and soul together.

If we accept a meaningful figure of $4 or $5 a day the numbers in poverty balloon by hundreds of millions. As a basis of some comparison, the 3.6 Mil garment workers in Bangladesh got their first negotiated pay increase since 2015 in December 2018. It was a 51% increase taking their monthly wage to $95. The best estimate of a living wage in Bangladesh is $160 a month. I cannot resist mentioning that Europe’s richest man is the owner of Inditex, its brands are Zara, Stradivarius, Berksha and a few others. Could we afford to give these Bangladeshi women a decent pay increase?
In another part of the world Mexico, recent calculations show that if Mexican garment workers had their wage doubled it would add less than 2% to the cost of a $100 garment in USA.

Reverting to the billionaires and heavy hitting millionaires of the world in Davos figuring out how to “steady the ship”, just as OXfam’s Report highlighted that the 26 wealthiest folk have more wealth than the bottom 3.8 Billion of the world, and in 2018, the wealth of billionaires in general {not just those 26} grew by 12% and to complete the story the above mentioned 3.8 Billion saw their store of wealth fall by 11%. If this 3.8 Billion and their supporters became restless I can imagine the ship could become fairly unsteady. Throughout 2018 a new Billionaire was created every 2 days, in the 10 years since the crisis their numbers doubled, in a decade of very low inflation.
This is not the first time I have tried to understand what Davos meetings achieve and it is now my considered opinion that it amounts to little more than the Champions League of networking events for Fat Cats, a socialising institution for the emerging global elite, globaliation’s ‘Mafiocracy’ of bankers, industrialists, oligarchs, technocrats and politicians.
“They promote common ideas, and serve common interests: their own”.
I morally support those who make the effort to demonstrate at its meetings, protesters who believe organisations like the Forum, the International Monetary Fund, the World Bank and the World Trade Organisation, exacerbate poverty and environmental destruction by promoting corporate interests and profit-driven business practices over humanitarian concerns.

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Harvard University.

A little item I picked up regarding Harvard. We are talking about the richest University in the world, value of its investment bursary for financial year end 2017 was a whopping $37 Billion. These funds are managed through a Harvard investment group and the value of the bursary is now slightly higher than it was before the 2008 crash, so they have recovered well.

About 2 years ago Harvard launched a fund raising drive, quite separate to the activities of the management of their $37 Billion, a drive to raise additional funds. That drive is just about concluded and to date you may be surprised to learn, or even astonished as I was, that the total value of “gifts”[Harvards term] contributed by 155,000 wealthy families came to $9.4 Billion! I believe being charitable is a good thing Period.

I think its fair to refer to these families as wealthy, the average gift was just north of $60,000. These gifts are tax deductible, both at state and federal level, for these families, that’s the law. Depending on what level of state and federal taxes one counts,  the taxes saved equal between $2.5 and $3 Billion. As I’ve often said, where movement of funds is concerned always ask, Who are the winners and Who are the losers.

The Winners in this case are quite clear, firstly the richest University in the world,and one of the most exclusive, picks up $9.4 Billion. Secondly the 155,000 wealthy families save billions in taxes.

The Losers are the state and federal governments who will now have between $2.5 & $3 Billion less to spend on provision of services, educational facilities, infrastructure and various public works.

It is very much an individual value judgement as to whether it’s better for these families to save on average at least $15,000 each while helping Harvard or whether the state and federal authorities could have made better use of these funds.

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The Big Four Family Trees

An update on where they came from. Much of their growth has come from mergers and / or takeovers.

However they got to where they are, they have become way too dominant but there is a serious head of steam building up to have them broken up. Way overdue in my opinion.  I will add a blog soon on the sneaky way by which they moved from being Partnerships to being Limited Liability Partnerships.



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The Big Four

We all know who they are PwC, Deloitte, KPMG & EY who are my least favourite as an Irish person.

EY audited Lehman Bros and more importantly Anglo Irish Bank which cost the Irish Taxpayer about €29 Billion +/- a Million, KPMG deserve a mention in this context since they audited Irish Nationwide Building Society which was in cohoots with Anglo in a variety of accounting gymnastics which cost taxpayers another €5 Billion.

Over the next few weeks I intend to give a bit of background on each of these LLPs, Limited Liability Partnerships. (In a later piece I will explain the significance of this recent corporate setup of LLP)

Apart from all the usual means of research available these days I have delved deeply into these 4 publications.

1)”Bean Counters”(2018) and “The Great Tax Robbery”(2014) both by Richard Brooks.

2) “The Big Four” (2018) by Ian D. How and Stuart Kells.

3) “Moneyland”(2018) by Oliver Bullough.

I have added some peripheral reading below which will help to put in context the negative impact of much of what the Big Four do, eg. Helping those who have most to pay least tax which often results in Governments struggling to provide basic public services, of course those who have most have little interest in or need of public services.

An example of the obscene level of their fees. PwC doing liquidation work on Carillion (whose internal auditors were Deloitte and their external auditors KPMG) were charging Hourly Rates of £1,156 & £1,060 for Partner & Director-level specialists, Senior manager specialists £816. You can see how they easily cranked up £20.4 Million in the first 8 weeks, 57,500 hours at an average of £356 per Hour. (Construction News, 16.08.2018)

“Treasure Islands” (2012) by Nicholas Shaxson… “Spirit Level” (2009), “The Inner Level”(2018) by Richard G Wilkinson, Kate Pickett… “Capital” (2014) Heavy going, by Thomas Picketty… “The Divide” (2018) Jasón Hickel… “Profit Pathology” (2016) Michael Parenti. And finally these 2 perennials that no one should reach maturity without reading. “The Ragged Trousered Philantrophists” (1914/1918) Robert Tressell… “The Jungle”(1904) Upton Sinclair.

The following picture will give you an idea “in numbers”  of the worldwide size and possible influence of the Big Four all of whom make the majority of their income from “management services”, eg. Deal Advice, Risk Consultancy, Tax Advice & Mgt Consulting while the minority of their fees come from regular Auditing, in KPMG’s case less than 30%.

The figures below are as accurate as reasonably possible taking into account that the cut off dates vary and the time and effort to get greater accuracy would not contribute to the general picture which the figures portray. I have added figures for the 5th and 6th LLP accounting firms to underline how totally dominant the Big Four are in this area.


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USA Steel Tariffs & China

Trump complains about the imbalance of trade with China, and so he should. USA export $130 Bil to China (lots of it raw materials to be converted into finished goods for export back to USA!!) China exports $506 Bil to USA (2017 figs) Imbalance of $376 Bil. More on this later.
Steel has nothing to do with this situation, hence new Steel Import Tariffs will impact most on those countries who export steel to USA. These are.
1) Canada 16%.
2) Brazil 13%.
3) S Korea 10%.
4) Mexico 9%.
5) Russia 9%
followed by Taiwan, India, Turkey.
China’s exports to USA less than 2%.
Canada, Brazil & Mexico export 35% of their domestic Steel production to USA.
The ability of USA Steel companies to find markets overseas has been abysmal. Between 2009 & 2016 their exports rose 32%, but imports rose 219%.
USA companies clearly cannot get the domestically made steel either due to quality or price or both combined. Tariffs on imports will make steel more expensive, whether users buy higher priced local steel or pay more for their imports, hence USA products which use steel (and aluminium) will become more expensive for USA consumers and make steel using exports more expensive.
Difficult to see exactly who is going to benefit most from this potential tariff war.

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We’re all in EU together, or are we?

Google (parent company Alphabet) and Facebook are representative of a number of multinationals based in Ireland. We just love them because they employ lots of people who all pay their taxes and PRSI. Unfortunately they tend to crowd around Dublin which puts a lot of pressure on city infrastructure and because they can afford to pay good wages (you’ll see how they do later), Dublin rents and house prices get nudged steadily upwards making it difficut for those not employed by well paying multinationals to find a reasonably priced place to rent or buy.
Since Ireland joined the EU it has benefitted by being a member, but how good a member are we of this club at the moment?  Back to Google and Facebook: it is probably a fair estimate to say that the business these companies do in the countries in the EU is propotionate to that country’s  population. This is where things get tricky; the invoicing for virtually all the revenue earning activity of these two companies, and many other multinationals, are booked through mainly Ireland or Luxembourg.  
We all know why they do this. An estimate has been done whereby their total EU revenue is broken down by country in proportion to population and the corporation tax of each country applied to their extimated profits. Okay, a lot of estimating but for the purposes of this article it’s good enough. If these two companies alone for the last two years for which we have accounts had paid tax in this manner our neighbours in the EU would have collected between €5.0 and €5.4 Bill additional taxes.
Looking at an even bigger picture, the proportion of revenue paid as taxes by Google outside the EU is between 6% / 9%. Within the EU it’s 0.36% / 0.86%! In the case of Facebook, outside EU, 28/34%, within the EU 0.03% / 0.1% !!
One would imagine that Ireland should be well rewarded by these firms by way of paying some decent taxes for enabling them to perform such financial gymnastics. You gotta be joking! For example, in one year in which Facebook Ireland Ltd generated a profit of €1.75 Bill, even a miserly 5% tax would have chipped almost 9 Mil to help run the country, but oh no, by the time this FB company paid more than €1.75 Bill in “administrative expenses” tied to the use of Intellectual Property to its other Irish registered subsidiary, Facebook Holdings Ltd, the Profit became a Loss of €626,000.{F.Times article}
Meanwhile the Government provides educational facilities, primary secondary and third level to prepare citizens to be highly employable by these multinationals. In addition infrastructure is put in place, roads with flyovers and flyunders, LUAS, hospitals, fire stations, broadband etc to an able them all to operate effectively in Ireland. Does the Tax & PRSI come close to covering a decent proportion of these costs? Not on your life
So here we are now, after having got a good leg-up since becoming a member of the EEC club many years ago, providing facilities for some of the richest corporations in the world to avoid paying their fair share of taxes in the countries in which they earn their profits. As I often say, “just ‘cos its legal doesn’t mean its fair”.
What can we do! Well publish in any and every way you can the unfairness of these sneaky arrangements and by conveying our view to the local TDs and Ministers they may just come to agree that Multinational Corps have a responsibility to pay their fair share of taxes in the communities in which they make their profits. “Taxes are the price we (individuals & corporations) pay to live in a civilised society”.

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The shennigans of Yahoo !

Yahoo was taken over in June 2017 by another huge USA corp. Verizon for $4.5 Billion. Thats a whole other story.
Now I just want to tell you a little of Yahoo’s structure. Yahoo Inc. has 58 registered subsidiaries, they don’t have to have a subsidiary in every country in which they operate, they can license another company in that jurisdiction to provide their service. What is interesting is how many of the 58 subsidiaries are is “strange” locations, specifically Tax Havens.
They have 8 in the Caribbean Sea, 7 in the Cayman Islands and 1 in the “boutique” Tax Haven of Nevis, a sister island of St Kitts.
This will give you a flavour of what you can achive by “doing business” in Nevis.
The Cayman Islands, a British Overseas Territoery, are 3 islands in the West Caribbean,just south of Cuba. The population is 61,000 and there are over 92,000 companies registered there. On income and profits from any source/activity earned outside the Cayman Islands there is No income tax, No corporation tax, No capital gains tax, No inheritance tax, No payroll tax, No property tax Etc.
Accountants and lawyers selling you on the advantages of having a company there refer to it as being “Tax Neutral”! After having paid No Taxes, you’re not off the hook though, the accountants and lawyers want their pound of flesh.
Back to Yahoo Inc. who just seem to be drawn like a fly into a spiders web when it comes to having subsidiaries in in Tax Havens, 3 in Netherlands/Netherlands Antilles (a favourite spot for U2’s profits), 2 in Switzerland, 2 in Singapore, 3 in Hong Kong and last but not least in our very own little Tax Haven, Ireland, where there have 7 subsidiaries!
Up until 9 June the most important one was “Overture Search Holdco.(Ireland)” registerted in Dublin, but tax resident in ??? you guessed it, in that British Overseas Territory, the Cayman Islands. Overture collected Millions from fees paid for the use of Yahoo’s Intellectual Property, Royalties. On 31/05/17 it paid E229 Mil to a company in Mauritius in exchange for acquiring more Intellectual Property Rights. Later that very same day Overture transferred “all its IP rights” to “Yahoo!Emae” based in Dublin.
As a result of all this legal and financial shenniganns Overture reckoned it had an “estimated gain” of E815 Mil. (Yahoo’s IP rights are not sold on the open market, so their value/worth can only be estimated, and who better to make that estimate than a Yahoo subsidiary!) Then on 09/06/2017 the day before Verizon acquired Yahoo, this E815 Mil gain was declared as a dividend payable to Yahoo Inc. You would think they’d be delighted to receive it…. as long as it was received anywhere but in USA where they’d have to pay Corp Tax, so they instructed it to be paid to a Netherlands subsidiary, where no tax would be paid since it was probably only in transit, heading to some other “No Tax Jurisdiction” np doubt.
As far as I know Overture has folded up its tent and disappeared; the shuffling of Millions earned from IP Royalities worldwide will now flow into Yahoo!Emae.
When John Gogarty was in a car with a couple of Developers on their way to deliver a “brown envelope” to Ray Burke, he asked “will we get a receipt for this?”, the response paraphased only slightly was ” You will in your f**k!” My question is, “will we get corporation taxes paid in Ireland as a result of these companies registered in Dublin making so much profit”? You can take it the answer is similar to that received by John Gogarty.

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Irish citizens badly served by their Gov’t

People always make money in times of crisis. Some of the world’s most lasting fortunes have been accrued during recessions, depressions and even wars. It is just the way of things. We have seen it again in recent years in Ireland.

Just as international hedge funds profited by shorting our banks as the crisis escalated, a small number of global investment titans will, without doubt, make colossal fortunes acquiring distressed assets from those broken banks at knockdown prices.

The world of international finance which helped create the Irish bubble, has in turn profited from our country’s collapse and its recovery. When money is lost, it is also won. It is, after all, just the way of things.

Yet, the real issue is not with the people who have bought Ireland. Instead, it is with the people who have sold it. After all, it is the job of business to deliver profits and shareholder return. It is the job of government to regulate, to tax and to protect citizens. Somehow, Ireland’s policymakers managed to sell vast swathes of the country to a handful of vulture funds in a manner that left them broadly unregulated and largely untaxed. Should this be the way of things?

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For a number of months earlier this year, I worked on a television documentary on the flight of speculative capital into post-crash Ireland. The programme, The Great Irish Sell Off, was broadcast again last night. The response has surprised me. The production team has been contacted by an army of individuals whose loans – both personal and business debts – have been sold to vulture funds. Many had harrowing stories, and had, until the programme was broadcast, felt that they were alone.

But beyond the people directly involved, it has also led to broader debate about public policy. People are now discussing why so much was sold so quickly, and why so little tax has been paid on the upside. They are also asking if there was an alternative or another way.

The government has long maintained that there was not, and that offloading the toxic debts from the national balance sheet allowed bond yields to fall and Ireland to exit the bailout successfully. They also argue, not unreasonably, that the policy prescription was imposed by the troika.

Yet, in reality, the government made two key decisions that dramatically escalated the disposal strategy. The first was in early 2013, when the government liquidated the IBRC, the bank established to clean up the carcass of Anglo Irish Bank and Irish Nationwide Building Society.

This allowed the government to eradicate the dreaded promissory notes, but it also meant that €21.7 billion of assets would be auctioned off within a matter of months. When the bank was liquidated, the government thought as little as 10 per cent of this would be snapped up by cash rich international buyers.

In the end, they bought all but 10 per cent. The success owes much to the ingenuity of the special liquidators KPMG, but also showed the wall of money that was interested in Ireland – at a low price.

The second decision came later that year when Michael Noonan, the finance minister, asked Nama to examine fast-tracking its asset disposal timeline. The move came just months after vulture fund Lone Star cornered Noonan at the World Economic Forum in Davos and asked to buy all of Nama outright.

Noonan said no, but it planted a seed. A formal decision was made the following year when it was agreed Nama would offload much of its remaining loan book by the close of 2016, four years ahead of the original timeline. Again, this decision brought billions of euro in distressed debt to the market.

The government was conscious that other countries such as Spain would also try to sell toxic assets, and it wanted to capture as much of the foreign capital before it was lured elsewhere.

The strategy, however, also allowed Noonan and Fine Gael to tick some political boxes, and claim credit for shutting Anglo and calling time on Nama.

But those decisions had massive consequences and we are seeing this now. For a start, the expedited nature of the sales process meant that Nama, and to a lesser extent IBRC, has been forced to sell multibillion portfolios rather than smaller debt bundles. This limited the number of potential buyers to a handful of massive funds such as Lone Star, CarVal, Cerberus and Goldman Sachs.

It also meant that we were left unprepared for the arrival of such funds. This has been seen numerous times, and on each occasion, the government has been left playing catch-up. First, we saw the fact that many of the buyers of mortgages were unregulated and outside the scope of the Central Bank. Many have signed up to a code of conduct, while intermediaries are now regulated. The owners of the mortgages, however, remain unregulated.

Second, we saw it in the case of Tyrrelstown, whereby a deal between the developer of an estate and Goldman Sachs resulted in eviction letters sent to 40 tenants. This exposed Ireland’s lack of rental security.

We have also seen it in terms of tax. As our programme revealed, 25 subsidiaries of vulture funds paid less than €18,000 in tax on assets of close to €20 billion, with an estimated loss to the exchequer of €700 million.

Vulture funds were ready for Ireland. Yet Ireland, despite courting them heavily, was not prepared for vulture funds.

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This is not a debate about sovereignty in a “who really owns Ireland” manner. Yes, it is about where the profits go, what these assets are used for, and how these assets are taxed. But ultimately it is a problem we will still be dealing with in 20 years’ time. That is the legacy of bad policy, poor vision – the missed opportunity that led to worse outcomes for our citizens.

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Brexit..Hard or Soft is a problem

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