Tuesday, 19 October 2010

Deficit Letter: Diageo’s Walsh Revealed

One of the signatories to Lord Wolfson’s letter is Tory-supporting Paul Walsh, Chief Executive of Diageo  - the drinks company with Johnnie Walker, Gordons, Smirnoff, Bells and Guinness in its stable.

By all accounts Walsh has had a successful 10 years in charge but should we listen to his advice on handling the deficit?

I’ll let you decide.

Walsh has presided over the closure of the Diageo bottling plant in Kilmarnock – the home of Johnnie Walker – with the loss of 900 jobs.  That 400 new jobs are being created in Fife doesn’t counter-balance the massive impact in Ayrshire.

Plant closures like this are, unfortunately, common across the UK but Walsh goes way beyond this.

Should we listen to him?

But there’s more ….

Diageo has reduced its UK corporation tax bill by an estimated £100 million pounds per year by ….. legal means.

The Guardian of Feb 2009 states:

… it is possible to unearth some of the facts in the obscure filings of a network of Dutch subsidiaries created in the last few years. Diageo has managed to use these Dutch structures to transfer billions of pounds worth of its businesses out of the UK, on paper at any rate.

The legal ownership of many famous trademarks has been transferred, including Johnnie Walker scotch, J & B Rare, and Gilbey's gin - brands worth hundreds of millions of pounds.

Along with the brands has gone the ownership of the entire whisky businesses, leaving Scotland's distilleries as hollowed-out sub-contractors.

We have traced Johnnie Walker and J& B operations vested in a Dutch central entity, Diageo Brands BV in Amsterdam. There is no sign in the accounts that Diageo paid UK capital gains tax on the profits when the Dutch entity purchased these hugely valuable operations.

Revenue sources say that the Netherlands will normally give tax relief to a subsidiary for the full value of all the business it has brought into the country. So, according to the records, the Johnnie Walker profits stacked up in the Netherlands following the move, virtually tax-free. But British tax authorities have lost a major source of revenue.”

£100 million pounds in lost revenue!

It’s legal, of course, but ….. it stinks.

Should we listen to Walsh?

But he’s not finished yet.

In February 2010 Diageo (or rather Walsh) said, according to the Guardian:

“Diageo, the world's biggest spirits group and owner of drinks brands such as Guinness and Smirnoff, has stepped up the pressure on government to cut personal and corporate taxes by warning that the company may leave Britain for a more business-friendly environment.”

I earn £3.6million pounds but tax me too harshly and I’ll take my ball away to Switzerland  or some such place.

Poor wee lamb!  £3.6 million not enough?   I want more!

Who does Walsh think he is?  When he puts up two fingers to HMRC and to the government he’s putting up two fingers to all of us.  The arrogant so-and-so.

And we should listen to him and his cronies?

 

Cut now!  Cut hard!  There is no alternative!   Many will suffer hardship but that doesn’t matter to you.  No compassion.  Just as long as your tax bill isn’t increased.

You and your kind make me sick!

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