Archive for category Finance

One 71 year old that leaves our politicians standing – a man to be greatly admired.

Colour and excitement returned to the City yesterday as Glencore announced a former French foreign legionnaire, Algerian war veteran, author, explorer and financier as its new chairman.

Photo of Simon Murray CBE

Simon Murray CBE (via Vodafone)

Simon Murray (pictured) will be tasked with leading the firm’s up-to $11bn (£6.7bn) float, valuing it at about $60bn, the details of which were confirmed yesterday.

The move heralded a return to the days when interesting and complex characters, rather than faceless executives, ran the City.

Earlier this week, Murray said: “This is very exciting, but you are talking to someone who has been chased by a leopard. You are talking to someone who has been shot at with a machine gun and missed.”

Murray, whose tales of derring-do include carrying two severed heads in his backpack during his time in the French Foreign Legion, was born in Leicester in central England. As a teenager in 1960 he joined the Foreign Legion on a whim, going on to fight for five years in Algeria. He later wrote a bestseller, “Legionnaire”, about his time in north Africa.

It was made into a film in 2002.

Educated at Bedford School, one of England’s oldest public schools, Murray was turned down by the British Army before signing up with the Foreign Legion.

“I think perhaps I was just a young buck without much confidence in himself setting an extreme challenge to see if he could hack it in a man’s world,” he says in his book.

He has since run a 240km race in the Moroccan desert, climbed Mount Everest and become the oldest man to walk unsupported to the South Pole. Glencore unveiled its blockbuster initial public offering (IPO) to the market yesterday, following months of speculation.

According to Wikipedia, he has been awarded the CBE (Commander of the British Empire) by H.M. The Queen, and the Order of Merit of the French Republic and is a “Chevalier de La Legion d’Honneur”. He holds an Honorary Degree in law, from Bath University and attended the (SEP) Stanford Executive Programme in the US.  He also trekked to the South Pole in his sixties.

Murray married long-time sweetheart, the former Jennifer Mather, with whom he has three children. Jennifer Murray was the first woman to fly around the world in a helicopter.

What a family

Read the full article in the City A.M. newspaper.

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Cuddly furry animals explain Quantitive Easing

Please don’t drink your coffee anywhere near the keyboard when watching this…

Ampers

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The difference between Barclays Bank and the Gardian Media Group

The following has been lifted unashamedly from Guido Fawkes website, Order-Order.com

 

On Saturday morning The Guardian decided to give UK Uncut a front page boost.  The protestors managed to shut down three dozen of the 1,720 branches of Barclays bank. Surprised they found any branches to occupy given Saturday opening hours.

The gist of the shabby story was Barclays bankers are evil tax dodgers. The evidence was a hatchet job with the paper making the spurious claim that Barclay’s only paid 1% tax on their £11.6 billion profits. In arriving at a profit before tax figure of £11.6 billion, The Guardian has added the profit from the ongoing business (£4.5 billion) to profits from a disposed business (£726 million) and the gain made on disposal of that business (£6.3 billion) to reach a total of £11.6 billion.

What they chose to ignore however was the total tax take Barclay’s had to pay; payroll taxes, bank levy, non-recoverable VAT, employers NI, SDRT and so on. Over the weekend Tim Worstall and the FCA Blog tore chunks out of the piece:

The article compares the cash paid to HMRC in respect of UK corporation tax in 2009 (£113 million) to the profits generated by the consolidated Barclays group worldwide in 2009. In the UK, tax is paid in arrears, so 2009 taxes would relate to widespread 2008 losses, not 2009 profits.

Multinational companies such as Barclays pay tax in a number of jurisdictions. Generally speaking Barclays only pays UK corporation tax on profits it generated in the UK.  Anything earned outside the UK doesn’t get taxed here. So it’s a howler to compare the UK corporation tax payment to the global consolidated profit. Most of those profits were taxed where they were made.

In 2002 (under Gordon Brown, Chuka), the UK government introduced the substantial shareholdings exemption, a corporation tax exemption for UK businesses disposing of a substantial shareholding in a part of their business. The idea was that businesses should be able to restructure their businesses without having to worry about chargeable gains implications. Barclays are heavily criticised by The Guardian for using it.  The last time that Guido saw this being used was by the, err, Guardian Media Group to save themselves some £60 million of taxes in 2008:

“In 2008 GMG sold half of Auto Trader publisher Trader Media Group and made an exceptional (one-off) profit of more than £300 million. No tax was payable on the return from that sale because under UK law GMG qualified for SSE”

In 2008 The Guardian made £302 million in profits and paid no corporation taxes. The CEO, Carolyn McCall, was paid an £827,000 package. Yet we don’t see the UK Uncut crowd kicking up a stink about The Guardian’s tax structures or their fat cat pay and bonuses.

Over the weekend the Guardian editor Alan Rusbridger (half-a-million a year since you asked) tweeted about Barclay’s offshore holding corporations. Guardian Media Group holds hundreds of millions in assets in a Caymans Island domiciled offshore corporation.

Guido put it to the GMG press office that GMG has £223.8 million invested in an overseas/offshore hedge fund managed by Cambridge Associates which trades currency derivatives. They don’t deny it and have declined to confirm the fund’s structure for tax purposes.

Guardian readers seem to be under the illusion that it is owned by a not-for-profit charity. The Scott Trust was wound up in October 2008 and the Guardian is a for-profit-privately-owned media business, the well paid directors of which confirm in their annual accounts that they operate tax strategies in line with their fiduciary duty to the shareholders – just like any other business.

The old Scott Trust was set up in 1936 to avoid inheritance taxes and wound up in 2008 so that GMG could cynically exploit the SSE capital gains tax shelter to pay 0% in corporation taxes on their £302 million in profits that year. GMG claim that it was about modernising the holding structure, in fact it was a disingenuous cover for corporate venality.

For three quarters of a century the The Guardian has been shirking taxes, Guido has no problem with them acting in their shareholders’ best interests. The hypocritical cant from them however about others doing the same is beyond contemptible…

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How the Government steals your money

John Maynard Keynes wrote…

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

So have you stocked up on beans or gold yet?  Have you taken Guido’s advice?

Inflation is always and everywhere a monetary phenomenon, if we don’t figure out a way to exit QE we will inevitably suffer double digit inflation. This is not an accident, it is as the Chinese have pointed out, the deliberate intention of policymakers in Washington and London to inflate away their debts. The cost of that policy will fall hardest on savers and pensioners who will be the collateral damage of this policy.

It is entirely cynical of Mervyn King and Ben Bernanke to scaremonger by talking of a bogus threat of deflation…

Thanks to Guido Fawkes at order-order.com for this reminder, he has a really good website and often gets the political news before the newspapers..

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The two Eds – it gets worse and worse

The IMF (International Monetary Fund) told the incumbents at the Treasury (Gordon Brown and Ed Balls) as early as 2004 that it was borrowing too much and spending too much.

But our illustrious duo totally rejected the IMF findings and, further more, bullied the officials into keeping schtum (silent) and not to broadcast their findings to all and sundry. During this time Ed Milliband was the economic adviser to the Government.

A new report finds that information was not only withheld from the public, but from the IMF as well, by our then Government.

In addition, IMF officials were intimidated and because of the withheld information, regulators at home and abroad failed to spot serious risks to the financial sector and the economy.

The story gets worse but I will keep it short here and you can watch this unfolding over the next week or so. One high point in the following week will be PMQs (Prime Minsters Questions) in the House of Commons. On Sky News at noon on Wednesday for half an hour. Look out for fireworks there.

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Banking in the UK

When people see my cheques they are surprised that I bank with a building society instead of a “proper” bank. OK until last year I used to bank with Citibank as they issue Euro and Dollar accounts complete with chequebooks and credit and debit cards. But I am retired, no longer in business, and no longer need the services of an international bank – although I have kept my sterling account still live. In addition to this, I no longer have any “real” money to play with!

Last year I decided to move to Nationwide. There are some points which I do like. For example, when I pay in, I don’t have to use a paying in slip, I just hand the teller my Nationwide debit cart and the cheque or cash, and she swipes the card on her till and it is done. Citibank do this but as we normally used Lloyds to pay in as Citibank only have six branches of their own in the UK (and have a special arrangement with Lloyds) this wasn’t a help to me. However, I am not aware of many other banks being so up to date.

The other thing I like is they send me a text every Saturday showing me the account movements since the previous Saturday so I can see if there has been any funny business. Not sure if they offer a text if your account is below a certain amount, but this would be very useful to younger people out there.

Finally, they are giving me around 3.5% p.a. interest on my meagre savings and that is very fair considering the 0.5% bank rate!

If you look on the Internet you will see a string of complaints about every bank and building society out there. I was with Citibank for around a decade and never made a complaint. This was probably due to the fact that I had never been overdrawn and obeyed their rules. No doubt if I had broken any rules and they chastised me, I would have been angry with wounded pride.

The staff in my local bank are always exceedingly polite with me but that is probably because I keep my account in credit.

If you are unhappy with your bank, sit down and have a long think at the reason for it. Could it be a little of your own causing?

Finally if you are unhappy with your bank, changing to another bank can be fraught with difficulties. Also, the entire bank structure doesn’t revolve around one branch and if you have bad people in one branch, consider just changing branches. Moving then is a lot simpler. Especially if you have a chequebook and debit card, and a lot of standing orders and direct debits!

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I could separate the Banks investment arms from their high street banking in five minutes flat!

I have been following Cameron’s attempts to persuade them to split up over the months and wonder at the ineptitude of it.

If I were Prime Minister, I would make a phone call to the newspapers saying that the Government will be withdrawing the £50,000 savings guarantees for peoples savings as from 31st December 2011, and after that will only guarantee the savings of savers who save with banks who do not have an investment arm.

There, it will be done.

You can bet your bottom dollar than by the end of this year, most of the banks will have separated the two business otherwise they would have dead high street branches.

Ampers.

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