Is the state starting to stand up to multi-national corporations?
The BBC have reported that the Serious Fraud Office have launched a criminal investigation into Tesco, in light of accounting irregularities…which resulted in them overstating their profits by a cool quarter of a billion pounds. This news, which has already resulted in the departure of Tesco Chairman Sir Richard Broadbent, just a few months after former CEO Philip Clarke resigned after a profits warning in the summer, has rocked the retail giant, but is it symptomatic of a wider change in the air? Just a month ago Wonga, one of the leading pay day lending companies in the UK, wrote off debts of £220m owed by 330,000 customers in line with new regulation of lending. This came just a few weeks after the company was ordered to pay £2.6m compensation to customer following a deal struck with the Financial Conduct Authority. Last year payday lender, First Financial, were fined £175,000 by the Information Commissioner for sending millions of spam text messages. And of course, in case you’d forgotten the scandal over the self-called ‘masters of the universe’ (that’s the investment bankers to you and me) fixing of the Libor interest-rate is still rumbling on. Investigations into how banks were manipulating the inter-bank lending rate have been on-going on both sides of the Atlantic since 2005. In 2012 Barclays were fined £290m and both their Chief Executive and Chairman resigned. Since then over 20 major banks have been investigated by the Serious Fraud Office and their US counterparts. To date 17 of them, including Deutsche Bank, Lloyds, JP Morgan and UBS have been charged with fraud-related offences paying fines in excess of $3bn to British and American authorities. Just a couple of weeks ago a senior banker pleaded guilty to fraud charges relating to fixing the rate and now faces up to 10 years in prison. More prosecutions are in the pipeline and there’s every chance that further scandal will continue to emerge. Does this all suggest that the tide is turning against the all-powerful multi-national corporations? Is the government beginning to flex its regulatory muscles? The exposure a couple of years ago of the derisory corporation tax paid by companies like Starbucks and Amazon led to public outcry and raised interest in how the global behemoths conduct their affairs. And no one needs to be reminded what, from a couple of years before that, ‘too big to fail’ means. I’d love to say that I think the sterling efforts of campaign groups, investigative journalists, engaged Parliamentarians and consumers making their views known was creating a stronger regulatory climate. I’d love to, but I don’t think I can….not yet. I hope that the encouraging signs of the new Financial Conduct Authority continue. I hope that prosecutions are brought on those who fraudulently manipulate markets and abuse their positions for vast personal gain. And I hope that a government that makes no secret of its distaste for regulation does not interfere. We may not be there yet, but there are some encouraging signs. Courtesy of Toby Blume at random musings from civil society