Saturday, June 26, 2004

Name of the game

J M Keynes long ago captured the essence of capitalism quite beautifully. The game, he said, requires that governments, through their monopoly, should print endless streams of bank notes. They should use some of them to pay wage labourers to stuff them into bottles and bury them deeply in remote, hard to access sites then sell the rights to dig up the bottles to the highest bidder. The auction should be the only relationship between the parties. As self-regulating and simple a system as one could imagine.

The actuality is quite different though Keynes’s metaphor still stands. Well, kind of, because the roles have been reversed. Now global giant conglomerates generate endless streams of money and financial services experts auction their ability to hide it for them as far away from government as they can. A simple system inverted entirely by attenuation and complexity (and greed of course). Small wonder City regulators can only look on helplessly (they don’t even bother to wring their hands these days). All, though, may not be lost.

Eliot Spitzer, New York State DA, who famously made Merrill Lynch pay (a little) for their share-boosting scams in the dotcom bubble, may have set a precedent, as a report in issue 1109 of Private Eye reveals: ‘In a case currently before the courts in the US, tax avoidance specialists, KPMG, refused to disclose the names of purchasers of a complex scheme called “contested liability acceleration scheme”. This scam “saved” rich taxpayers $1.7bn (and brought in a handy $20m in fees for KPMG). The judges decided that KPMG had had taken steps “designed to hide its tax shelter activities” and ordered the firm to disclose the names of its lucky clients that bought into the scheme. The list of the “named and shamed” consists of 29 of the richest corporations in the world. Headed by (the purpose of the Eye's story) AstraZeneca plc.’

Now, just remind me, precisely what’s the POSIWID of naming and shaming?

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