Wild West Property Trading

Vickie Cooper, The Open University

UK Property Registered Offshore

Over the last 18 months, Private Eye and, more recently, the Panama Papers published by the ICIJ, have exposed the scale of property owned by people using the offshore trading route. In the midst of this growing public concern, the Conservative government vowed to turn a ‘torchlight’ on corruption and provide greater transparency in land and housing ownership in the UK.

There is nothing illegal about purchasing UK property using ‘shell companies’ registered offshore: tax havens have provided legal facilities for tax evasion since they were formed. International criminals benefit immensely from the offshore trading route where arms smugglers, dictators, corrupt government officials and oligarchs, are all now lawful and respectable owners of UK property – while falling under the radar of public scrutiny.

So lucrative is the UK property market
to the anonymously wealthy, Global Witness estimate that £122 billion
worth of property is now registered offshore. According to The Guardian, 2,800 properties in London are registered under Panama firm, Mossack Fonseca. Shrouded in the complex web of offshore trading, it is difficult to say what portion of this property has been bought using illegal money. The Metropolitan Police estimate that £180 million worth of UK property is used for money laundering, but it too concedes that this is ‘just the tip of the iceberg’.

Despite a growing public awareness and increasing politicisation of offshore wealth, rarely do we see the pervasive effects of offshore property trading coming home, and how it directly impacts on people and communities.

Trading Sweets Way Estate: The Story of Privatisation, Global Investment Banking and Offshore Establishment

In 2015, the impact of this pattern of offshore trading became crystal clear to the residents in Sweets Way estate in Barnet, North London who began to fight back against elite financiers that set out to evict them from their estate. This conflict captured a rare moment in which we were able to see how companies registered in offshore tax havens directly impact upon local communities and residents at the bottom of the housing market. Annington Homes, one of the largest private owners of residential properties, owned Sweets Way estate for 15 years. Exactly, how it came to acquire the estate tells us a great deal about the relationship between privatisation, private equity investment and offshore tax havens. Sweets Way was originally owned by the Ministry of Defence (MoD) as part of its Married Quarters Estate. In 1996, as part of the former Conservative government’s privatisation programme, the MoD sold 57,000 properties to the Japanese investment bank Nomura, for £1.7 billion – only £30,000 each. This deal made Nomura the largest owner of residential property in the UK. Annington Homes was set up as the subsidiary company of Nomura. Guy Hands, hailed by Private Equity Magazine as the ‘20th most influential figure’ in the investment world, formed Nomura Principle Finance Group (PFG) as a subgroup of Nomura. Hands then made a string of private equity investments which mainly involved purchasing failing companies and selling them on for profit. This role extended to the purchase of MoD properties and setting up Annington Homes as a subsidiary of Nomura.

While the success of Annington is well publicised, understanding its ownership structure is tricky. In 2002, Nomura PFG split and Terra Firma was set up as the spin- off company under the ownership of Guy Hands.

Hands’ wealth continued to grow as Terra Firma expanded and in 2009 he moved
to Guernsey, an offshore tax haven, to
avoid paying the (then) 50% tax rate on
his sizeable profits. Gradually, Terra Firma purchased back those investments originally brokered under Nomura PFG – including Annington Homes, which Terra Firma purchased from Nomura in 2012, for £3.2bn.

When Terra Firma bought Annington Homes, residents of Sweets Way quickly learned about the plans to evict and demolish 140 homes, to make way for a new development. For the best part of 2015, members of ‘Sweets Ways Resist’ mobilised support against the eviction and demolition, and began exposing the relationship between offshore property trading and the British state.

Adding insult to injury, when Sweets Way residents approached their local authority about their rehousing ‘options’, Barnet council told them that they had to make a formal homeless application – to be eligible for priority rehousing. Like all homeless applicants, residents were forced to accept the first housing offer, otherwise they would be classified as ‘intentionally homeless’. This warped duty of care stripped residents of their freedom to choose and make key decisions about their housing futures, and effectively forced them to move out of the estate, afraid they might miss their one-offer window of opportunity.

As residents moved out, activists ramped up the resistance, occupying empty homes and continuing to rally support for the last remaining tenant, Mostafa Aliverdipour. The resistance ended as High Court enforcement officers, supported by a major police operation, evicted Mostafa and activists from the estate. 15 activists were subsequently charged with obstructing those enforcement officers.

Sweets Way Estate

Sweets Way Estate, London, September 2015. Photograph by Vickie Cooper

What happened on Sweets Way estate demonstrates the direct relationship between offshore property trading and housing poverty, and further exposes the role of the British state as the guarantor of this relationship. Established on the back of a lucrative privatisation programme,Annington Homes has profited from purchasing cheap MoD properties and renting them to low to mid-income families. Now at the peak of the property market,Terra Firma has been granted planning permission – authorised by the former Mayor of London, Boris Johnson– to clear out Sweets Way estate, charge higher rents and sell profitable housing to first-time buyers. Given the harmful impacts that this trading has had on Sweets Way residents, it is hard to believe that, in 2014,Terra Firma won two awards for ‘responsible investment’ from the British Private Equity and Venture Capital Association.

Smoke and Mirrors

Terra Firma is not an unusual case, and
the impact of offshore on UK housing is pervasive. Offshore funds drive up housing prices and have created what looks like a dangerous bubble in London in particular. But no one has felt the impact of this type of transnational trading more than Sweets Way residents, and no individual has benefitted more than Guy Hands. Even the return to the government is minimal. Richard Brooks commenting on the tax status of Annington in The Great Tax Robbery, noted that the ample income that the company receives in rent,‘produces almost nothing in the way
of tax payments’, because it is registered offshore.

While David Cameron claims that he wants to turn a ‘torchlight’ on corruption in the UK property market, George Osborne
is trying to privatise the Land Registry. Now on his second attempt, Osborne revealed plans in the Spending Review and Autumn Statement, to shake up public ownership of the Land Registry and ‘create a new company, to which responsibility for the performance of the service delivery functions would be transferred’. While this move is stirring some serious concern about job losses, it will also create even more opacity in the UK housing market. The privatisation of the Land Registry will effectively restrict public access to important details concerning land ownership – casting yet another veil over wealth, power and corruption. The government’s pledges of transparency appear like smoke and mirrors as they continue to encourage predatory capital – at a dangerous social and economic cost to us all.

This article was originally published on www.taxjustice.net




Just another Scumbag Millionaire? Green, BHS and the State of UK Regulation

Steve Tombs, Prof of Criminology, The Open University

Trotting out the phrase “the unacceptable face of capitalism” as part of a “damning” House of Commons Work and Pensions and Business, Innovation and Skills Committees report on the collapse of BHS may make for good headlines but does nothing in terms of progressing reforms towards any more effective system for controlling the behemoths of corporate capitalism.

While the headline versions of the report make much of Sir Philip Green’s “systematic plunder” of the company, a closer reading reveals a systematically flawed system of regulation, one untouched by the financial crisis of 2007, still under attack as a burden on business, and likely to be further weakened as the realities of Brexit become increasingly apparent.

The report – or at least its popular reception – is a classic instance in individualising corporate offending. Sir Phillip Green, and to a lesser extent Dominic Chappell, are the equivalents of the ‘Scumbag Millionaires’ of the 2007 financial crisis, the headline The Sun ran across its front page cover of Fred Goodwin, Stephen Hester, Andy Hornby and Tom McKillop as they sat before the UK Treasury Select Committee hearings of 2009 into the banking crisis.

Thus a key aspect of the debate surrounding the demise of BHS and its systematic plundering, not least of its pension fund, is whether Green will be stripped of his knighthood, itself intimately linked to whether or not he will fulfil what the report calls his “moral duty” and make a large cash payment to the pension fund. But in this latter call, we see the resort to moral duties as an indictment of the state of law and regulation of corporate activity, both in terms of the corporate person (by definition, an a-moral, legally constructed entity) and its directors, senior managers and shareholders. Indeed, the report is less than sanguine about the abilities of The Pension Regulator to secure restitution for the 22,000 pension holders who have been the victims of what is no more nor less than theft and fraud – an all too typical scenario in deregulated, neo-liberal version of capitalism that has long dominated the UK political consensus.

Sir Phillip Green before the Common Committee, 14 June 2016

Sir Phillip Green before the Common Committee, 14 June 2016

Source, The Huffington Post, http://www.huffingtonpost.co.uk/entry/philip-green-tells-tory-mp-to-stop-looking-at-him-weirdly-in-bizarre-committee-exchange_uk_5761178fe4b03f24e3dadd3d

The whole affair – which the Committee’s report and media response to it seems somehow to represent as aberrant and a-typical (hence the ‘Unacceptable Face of Capitalism’ epithet) – in fact sheds light on other routine ways of doing business in the UK. One of these is the normal practice of squirreling funds offshore into tax havens – something Green achieved through his wife’s ownership of Taveta Ltd – and which the Panama Papers revealed, as if such revelations were necessary, is simply one element of industrial scale personal and corporate tax avoidance. And in this business of ‘aggressive tax planning’ – an anaesthetising term if ever there were one – the UK, and its financial services, those which Cameron and Osborne long sought to protect from over-burdening EU legislation – is a world leader.

This affair also tells us something about the craven attitude of UK media and political elites to leading business figures. Until very recently, Sir Philip Green had been lauded as an archetypal entrepreneur, the turnaround kind, the businessman who could not only speak for the best that is competitive capitalism but in fact was fit to advise Government: this is the same Phillip Green who was called upon by the Coalition Government in 2010 to advise on cost savings at it prepared for its ‘Emergency Budget’. At the time, Minister Francis Maude said of Green that “He’s shown how he can turn around big complex businesses. Government is a huge complex organisation, and while it’s not the same as a business, a lot of the same disciplines are needed.”

This is simply one instance of the craven attitude that successive Governments, since the days of New Labour at least, have portrayed in front of entrepreneurs. Recall it had been Gordon Brown when becoming Prime Minister in 2007 who called for a ‘Government of all the Talents’, and invited a series of unlikely bedfellows (and they were mostly fellows) into a labyrinthine of advisory – non-elected – posts. One notable such appointment was (Lord) Digby-Jones, former head of the employers’ organisation the CBI. On resigning his post as Trade Minister in 2009  Digby-Jones argued that “top businessmen” – and not  “incompetent politicians” – should run major Government departments: “Health, education, business, transport, defence and security are too important to be left any longer to enthusiastic amateurs and their honest and hard-working but risk-averse civil servants.”

Finally, this whole shabby episode reveals much about the systematic and ongoing failings of a patchwork regulatory system. None of the regulators involved – Her Majesty’s Revenue and Customs, the Financial Reporting Council, the Pensions Regulator, the Insolvency Service and the Serious Fraud Office – come out of this tale with their already-hardly-stellar reputations enhanced. And for all the talk of regulatory reform, improved systems of corporate governance, greater transparency for private business – all of which grace the pages of this 60 page report – little is likely to transpire in any of these areas. We’ve been here before, many times, not least in the series of Governmental inquiries which followed the 2007 financial crisis, which in sum resulted to virtually no meaningful regulatory reform. Perhaps the most lauded were the proposals in the Vickers Report, that a ring-fence to be erected between investment and retail banking. Subsequently, even Andrew Tyrie the Conservative Chairman of the Treasury Select Committee, said of the proposed UK fencing that it is “so weak as to be virtually useless” (Armistead, 2013). A handy catch-all verdict on the state of business regulation in the UK.

This is the story of BHS, of 11,000 jobs lost, of 22,000 pension holders impoverished. It’s a story not of rogue, vilified, condemned individuals. It’s the story of an economic system based on structural irresponsibility, a supine political and media elite, and a regulatory system unable to mitigate capitalism’s inherently destructive effects.

 A slightly earlier version of this blog was originally published on 26 July, 2016 at openDemocracy UK, https://www.opendemocracy.net/uk/steve-tombs/unacceptable-face-of-capitalism-what-collapse-of-bhs-shows-us-about-uk-economy

Hillsborough, justice and the state


James Mehigan

Just over three years after the Hillsborough Disaster the reigning champions met in the cup semi-final against a smaller team in a stadium which was disastrously unfit for the crowds expected on the day. The teams on this occasion were the dominant French club of the era,Olympique Marseille, and the smaller Corsican outfit, SC Bastia. In order to try to maximise the profitability of the fixture against the country’s highest profile team, Bastia’s Stade Armand-Cesari de Furiani was expanded using temporary scaffold-like structures. Having qualified for the semi-finals only 13 days earlier the engineers and executives at Bastia had to demolish their North stand and build a 10,000 seat metallic structure in record time. On 5 May 1992, some 10 minutes before kick-off, the temporary stand collapsed killing 18 fans and injuring more than 2,000.

The similarities with Hillsborough are somewhat uncanny. The nation’s dominant team, from a port city past its prime, ignored economically and looked down upon by the rest of the country, playing in a cup semi-final at a stadium poorly engineered and improperly supervised by local government, ends in the death of innocent fans. However, the differences between the two disasters are perhaps more interesting. In particular the states’ different responses to the disasters are illuminating.

After both disasters an inquiry was set up within days. Just over three and a half years after the disaster in Bastia the criminal convictions of nine officials involved in the planning and building of the stadium were confirmed on appeal. Eight received suspended sentences ranging from 10-20 months and fines of between 15,000-30,000 francs (about £1,800-£3,600). One official, engineer Jean-Marie Boimond, received a 24-month sentence and was the only person to spend time in prison as a result of the disaster. Those convicted included engineers, local government officials, the vice-president of SC Bastia as well as senior officials from the Federation francaise de football and the Ligue corse de football.

While the whole investigatory and criminal process in France was done and dusted within 3 and a half years, those who lost loved ones at Hillsborough were not to experience such swift justice or accountability. Certainly the Furiani disaster was smaller, both in the number of people who died and the number of agencies who were involved, but this alone cannot explain the different waiting times. Although it took 27 years for a jury to find that the 96 had been unlawfully killed(that is that they had died due to manslaughter caused by the gross negligence of a known, but not named, individual), the road to accountability remains to be completed. Nobody has been held criminally responsible for Hillsborough, let alone sentenced to time in prison. Decisions about charges arising out of the disaster remain with the Crown Prosecution Service.

Why is it that for basically the same match, in the same era, French families had their cases resolved in 3 and a half years, while those in England waited 27+? There is a simple two-word answer: the police. There is no suggestion that the police were responsible at Furiani, but almost everybody knew they were to blame at Hillsborough, and knew this almost immediately. They knew it themselves and began a horrible smear campaign against the fans. It was a smear campaign to be taken on by the Murdoch press and local Tory MP Sir Ivan Patnick (who, along with the major architect of the cover-up, Sir Norman Bettison, never had his knighthood rescinded).

The mechanics of the smear campaign have been covered in detail elsewhere (notably by the Hillsborough Independent Panel), but at its most basic the police and their allies alleged that Liverpool fans arrived drunk, late and ticketless. This alleged misbehaviour overwhelmed the police, causing the crush outside and inevitably lead to the deaths. The problem for the police was that there was no evidence to support these allegations. There was no moment during the second Inquests when lawyers for the police were able to show alcohol being consumed in any meaningful quantity. The crush outside was building up before 2.45pm and the writing on the back of the match tickets asked supporters to arrive 15 minutes before the 3 pm kick-off. The third limb of the smear campaign, ticketlessness, is of course a complete red herring. Numerous experts have reviewed the footage and concluded that the numbers coming through the gates at Leppings Lane did not exceed the number of fans that could be safely accommodated on the terraces, if the police had spread them appropriately between the different pens. There was no evidence to support any of the aspects of the police smear.

The fact that the smear against the fans lasted for so long is testament to the police’s capacity to ‘prove’ what they want without relying on evidence. There is a scene in Rumpole where the eponymous character says to a judge: ‘My Darling, Old Lordship, anyone can get a conviction on evidence. It takes a legal genius to obtain one without it’. Viewed in these terms the South Yorkshire Police were phenomenally skilled and industrious in ‘prosecuting’ the fans, en masse, of hooliganism. A smear that was not fully overturned until the jury absolved the fans of blame in April 2016.

There is no doubt that there was a problem with football hooliganism in England in the 80s and it was a problem that required a thoughtful policing response. The division of the terraces on Leppings Lane into pens to separate supporters and allow a sterile area between home and away fans was a response to a problem of violence that was common at English football matches. Many techniques in crowd control, surveillance and the invasion of privacy were invented or initially road-tested on football fans. Segregating fans may be unique to football, but CCTV pervades all our lives. Other techniques such as ‘kettling’ and the infiltration of undercover officers have blighted peaceful protest movements consistently since they were introduced to control hooliganism.

These were often blind, poorly thought out, rage-induced responses to the problem of hooliganism. As it is almost universally agreed that hooligans are, or should be, marginalized, it becomes easy to de-humanise them and introduce measures that would otherwise be considered significant restrictions of civil liberties. Even today football fans across the country report unfair treatment at the hands of British police forces. As criminologist PAJ Waddington says of these severe interventions; ‘because those who were affected by these interventions were politically marginalized, the police felt they could do so with impunity’. Once the techniques are normalised on the marginalised, they can be steadily imposed on others within society, notably, as mentioned above, the political protester.

Hillsborough marked a high water mark in the use of the term ‘hooligan’ to justify cruelly mistreating people. There are innumerable examples of the myopia induced by the fight against hooliganism that had a terrible impact on the day. So obsessed were the police with controlling hooliganism that, once the fatal crush had begun, before calling for ambulances, the match commanders called for police dogs. The working assumption at all times was that any disturbance was a matter of public order rather than a matter of public safety. The stadium was built that way, the police planned for the match that way and they policed it that way, even when people were obviously dying in front of them. Fans were treated like cattle, herded into pens and manhandled by police. Through all of it, the police failed to see the humans and the human suffering because of their culturally engrained prejudice that football fans were hooligans.

However detestable football hooligans are, it is a dangerous road to take to allow football fans to be treated as one homogenous block. Indeed it is this type of prejudice against groups of people based on the behaviour of a few of their members that has lead to some terrible injustices and inhumanity throughout the years. In the case of Hillsborough, a widespread dismissal of football fans as hooligans allowed the police to perpetrate a smear campaign against the fans and the people of Liverpool. Having been heavily criticised in the first public inquiry, the police then ran their smear again in the original inquests, accusing fans of drinking and invoking the evils of hooliganism. Through the following years they continued to do so. Lobbying Parliament to that effect and allegedly spying on families as they fought for justice. Even in the Inquests that finished this year the SYP, having apologised for their failings before the Inquests, continued to run a case that blamed fans and exonerated themselves. After the jury returned its conclusions condemning the SYP’s failings, they apologised again. Between the apologies they continued to blame the fans and hide behind the horrors of hooliganism.

Hooliganism is repugnant, but prejudice is even more so. One of the main causal factors for the Hillsborough Disaster was the police’s inability to see that human beings were dying and trying to escape death. Because of their prejudices, the police assumed the fans were trying to cause disorder. As lawyers we have learned many things from the inquests including the importance of the Human Rights Act and proper victim representation. For those involved in the struggle to protect our civil liberties, it is also important to remember that ignoring the prejudice against and repression of marginalized groups, even those as repugnant as ‘hooligans’ (or ‘terrorists’) can lead to dangerous working assumptions with knock on effects.

The jury’s conclusions in April 2016 have put the Hillsborough families in the position they should have been in in 1990. The blame for that delay falls squarely with the police. We now wait for the CPS to decide if they will achieve some level of accountability and reach the point their Corsican counterparts got to in 1995.

James Mehigan is a barrister at Garden Court Chambers and lecturer in criminology at the Open University, he was part of the legal team that represented 77 families at the Hillsborough Inquests.

This article was originally published by ‘The Project, a Socialist Journal’: