Archive for October, 2011
I am reliably informed that an individual who was a member of Tony Blair’s 10 Downing Street staff, and then one of the Tony Blair foundations (I’m not sure which one – the Faith, or the Sports, or just the Tony Blair Associates commercial version?), is now a scriptwriter for Simon Cowell on the American version of the X Factor. John someone, apparently.
By special recommendation from the other author of this blog.
The creation of a database containing all 9 million Israelis’ demographic, family, and medical information plus identifying biometrics has not necessarily developed to their advantage. Bonus points for use of the phrase “Hasidic criminal underworld”. They’ll make you an offer it takes years of painstaking theological scholarship to understand.
Following up on last week’s pull the records post on Foxitty and tasers and stuff, what if “G3” really refers to G3 Good Governance Group? Here’s the data, on LevelBusiness, which is even better than CompaniesintheUK. There are four names involved, two of which – Hugh Petre and Andries Pienaar – quit the board at the end of April 2010. Petre is on LinkedIn. There’s also one Katharine MacGowan, who doesn’t seem to be anywhere on the web. Hmmm.
And one Mungo Soggot. That’s the kind of name that should be easier to track down, and it turns out that he’s a South African journalist who did some pretty impressive work on corruption and also rocks and early 2000s emerging market GSM weirdness before moving to the UK. Depressingly, it sounds like he’s essentially an exile. His dad was Sir David Soggot, a lawyer, judge, and apartheid resister. Here’s Soggot opining on South African politics.
The same people, plus a couple of others, are also directors of RB4R UK Ltd., created 2 years ago, which has never traded, and Risk Analysis UK Ltd, which has been around for 13 years and is very much a thing. It provides “strategic risk advice, investigations, and litigation support”, and intended to move the litigation and investigation business into a separate company in 2011 (presumably RB4R). Its accounts showed a profit of £2.39 million on a turnover of £12.1 million for 2010-2011. It employs 46 staff and spent about £3 million on salaries. It has about £3 million cash on hand, and paid just under a million pounds in tax.
Despite that, its ultimate owner is in the Isle of Man. However, as you can see from the above, it paid about a third of its profits in corporation tax, which is charged at 28%, and therefore isn’t obviously using this to avoid tax. For what it’s worth, the Manx company record is here.
It may be true that some of the people involved are former spooks – certainly the guy who’s a CB and a former Defence civilian with absolutely no other qualities sounds like one. There’s also an old friend of the blog, Alex Yearsley, who worked there after leaving Global Witness! Cryptome quotes a newspaper article that suggests that the people involved are ex-MI5.
The FT Westminster blog asserts that one Chester Crocker is the chairman of “investigations company G3”, but as we have seen, no Crocker is a director of G3, G3 UK, G3i, or G3 Good Governance. Perhaps they mean the IoM holding company.
I don’t know quite what the upshot of all this is, but it does seem that G3 Good Governance is a thing, unlike the other G3, it doesn’t have any obvious conflicts of interest like the tasers, but it does have spooky directors. Oh, and the press have no idea which company they mean.
Thinking about the political castration of Ken Clarke and the fact that not even the Treasury in its most R.G. Hawtrey-esque mood seems to be able to stop the expansion of the prison industry, it struck me that the political class’s attitude towards the public service known as justice is fundamentally different to its attitude to all the others, including defence and policing.
Since the mid-1980s and the rise of the New Public Management – possibly an even more pernicious intellectual phenomenon than New Classical economics – it’s been a universal establishment consensus, shared by all parties, that any public service can be improved by giving bits of it a pseudo-budget to spend in a pseudo-market. Playing at shops is the defining pattern language of post-80s public administration. (This chap wrote at the time that the whole thing was remarkably like the 1960s Kosygin reforms in the Soviet Union, and perhaps we can induce him to post it up on his blog!)
For example, the 1990s Tory government wanted “fundholder” GPs to buy hospital services in an NHS internal market. Now they want to do something similar again, but more, faster, and worse. All sorts of local government services were put through a similar process. Central government agencies were ordered to bill each other for services vital to their operations. The Ministry of Defence was ordered to pay the Treasury 6% a year of the value of all its capital assets, such as the Army’s tank park, reserve stocks of ammunition, uniforms, etc. As a result, the MOD sold as many vehicles as possible and had to buy them back expensively through Urgent Operational Requirements when they had to fight a war. Supposedly, some vehicles were sold off after Kosovo, re-bought for Afghanistan in 2001, sold again, re-bought for Iraq in 2003, sold again, and UORd in a panic in 2006.
(Off topic, if you’re either a reporter hunting a story or a dealer in secondhand military vehicles, watch closely what happens to the fleet acquired under UORs for Afghanistan in the next few months.)
But there is one public service where the internal market is unknown. I refer, of course, to criminal justice. For some reason, it is considered to be normal to let magistrates and judges dispense incarceration, one of the most expensive products of the state, as if it were as free as air. The Ministry of Justice is simply asked to predict-and-provide sufficient prisons, like the Department for Transport used to do with motorways. Like motorways, somehow, however hard the bulldozers and cranes are driven, it never seems to be enough, and the prison system operates in a state of permanent overcrowding. Interestingly, the overcrowding seems to prevent the rehabilitative services from working, thus contributing to the re-offending rate, and ensuring both the expansion of the prison industry and the maintenance of permanent overcrowding.
The new public managers bitch endlessly about “producer interests” – they mean minimum-wage hospital cleaners, but somehow never GPs – but you never hear a peep about our bloated and wasteful criminal justice system. In fact, now that we have private jails, this producer interest is vastly more powerful as it has access to the corporate lobbying system and a profit motive.
Clearly, the problem here is that the gatekeepers to the system – the courts – have no incentive to use taxpayers’ money wisely, as they face neither a budget constraint nor competition. There is a rhyme with the fact that a British Army company commander in Afghanistan has a budget for reconstruction of $4,000 a month, which he must account for meticulously to the Civil Secretariat to the Helmand Task Force, but in each section of ten riflemen under his command, at least one of them can spend $100,000 on destruction at any moment, by firing off a Javelin anti-tank missile, every time he goes outside the wire. As once the thing is fired, he no longer needs to tote the fucker any further, you can see that a lot more is spent on Javelin rounds than reconstruction, and indeed the task force was getting through 254 of them a month at one point.
But it’s not a precise match. The military do, indeed, have to worry about their resources, as do the police. Only the courts can dispense public money without limit.
What if we were to give every magistrates’ court a Single Offender Management Budget, out of which it could buy imprisonment, probation, community service, electronic tagging, etc in an internal market? This would make it obvious to the magistrate how much cheaper non-custodial interventions are than jail. It would force them to resist the temptation to jail everybody out of risk-aversion or political pressure. If a court was to start off the year handing down 16-month sentences for stealing a packet of fags, and end up in queer street by Christmas, well, that will teach them to waste taxpayers’ money.
In fact, we could go further. Foundation courts would be able to borrow, if necessary, to tide themselves over to the end of the year, although of course they would have to make efficiency gains next year to repay it. It would be possible for a foundation court to go bankrupt and close. This, of course, will drive up standards. Perhaps we could even introduce an element of choice, letting defendants choose which jurisdiction they are prosecuted in.
I am, of course, joking. But not entirely.
OK, so the report by Gus O’Donnell into Liam Fox and Adam “I can’t believe he’s not Mike Ledeen” Werritty specified some companies as donors to the various odd parallel structures that supported Fox and Werritty. One of these is given in the report as G3 Ltd. This has been described in the papers as being an “international investigations and security company founded by former MI6 officers”. Sounds kewl, no? In fact, I suspected it might be an international logistics and security company of similar name from this post – didn’t the blog used to be good back then? – but it’s not.
Of course, there’s no mystery about the directors of a British company. You just look’em up on Companies House’s Webcheck service. OpenCorporates and Companies in the UK are also very handy. But if you want the directors of a company, you’ve got to put up with Companies House’s dreadful website and pay them £3 a time. Hey – it’s less than a pint.
So I looked up G3 Ltd. It’s based on a featurelessly dull business park in Daventry. It has one director, Glenn Mark Cameron, born on the 25th of March 1977. He is, as far as I know, no relation. He also had another company, G3i Ltd., based in the same business park. But that isn’t the name we’re looking for. However, G3i Ltd. did describe its business as involving “investigations and security”. Mr. Cameron lives in Daventry – the address is available to anyone who can find £3 and use the website. It seems to be completely unremarkable.
G3 Ltd, though, has a couple of interesting features. One of them is that it was incorporated as recently as the 30th of August. G3i is much older, but was shut down in March. So it was set up in August and immediately started sending money to political causes? Further, it doesn’t seem to have any visible business. (It doesn’t need to file accounts for a long while yet.)
Glenn Cameron has a LinkedIn profile, which mentions G3i but not G3. (He’s also on Twitter.) G3i is no James Bond venture, but apparently a perfectly sensible small-town IT shop, which later diversified. This is where things get interesting. One of the advantages of CompaniesintheUK is that although you can’t query companies for their directors, you can query by director. Glenn Mark Cameron is also a director of a small plastics firm, a pet shop, and two near-identical firms called Pro-Tect Systems and Pro-Tec Security Systems. All of them are located close together in Daventry.
Forget the pet shop. Pro-Tect was around for a while, but Pro-Tect Security Systems was incorporated as recently as April 2011. Which leads us to this December 2010 blog post. Now, let’s hop back to the LinkedIn profile. Cameron claims to be in charge of Tactical Safety Responses Ltd, which owns taser.co.uk and sells tasers to the British military and police forces. Blogger Richard Taylor pointed out that Glenn Cameron is one of its directors, as well as being company secretary of the first Pro-Tect.
Well, why care? The old Pro-Tect was stripped of its authorisation to own tasers, which are legally considered to be weapons for the purposes of the Firearms Act 1968 and need a licence from the Home Office. Instead, TSR Ltd. sprang up and was given the authorisation, despite the same people being behind it. Why did the Home Office take the T-bird away from Pro-Tect? Because they let the Northumbria Police have a new and untried version of the Taser, without the Home Office giving its approval, and they pointed it at one Raoul Moat while he was pointing a gun at his head, and the police pulled the trigger, and the gun went off!
So, Pro-Tect/Pro-Tect Security/Tactical Security Responses seem to be one and the same, and to have hastily swapped company in order to evade the consequences of this regrettable, sticky, and pinkish mess. Right. And their business model is that they have the exclusive right to sell Tasers to the police and the MoD. I wonder what possible interest they might have had in exerting influence on the MoD, and who knows, the Home Office too?
Put like that, it’s a story of fairly petty influence-peddling. However, Gus O’Donnell didn’t get to become Cabinet Secretary and Head of the Home Civil Service, the Pope of Bureaucracy, by making mistakes over detail. It wasn’t G3i or G3(UK) Ltd or Pro-Tect or TSR that appears in the report. It’s G3 Ltd. (Even if the last revision time on the PDF is 1719, or about 26 minutes before the thing was finally handed out.)
Which leaves us with the strong impression that donations were being collected through this channel very recently, since the 30th of August, via a firm that has not apparently traded in any way. You might suspect that it exists just for this purpose. Further, people involved had financial interests in lobbying the government. And somebody in government felt it necessary to push out the message to the press that this story involved mystery spies and people with funny South African names. Why?
For the record, even if it was G3(UK) Ltd. and GOD had made a cock of the job, Andries Pienaar is not a director of that company. And if G3 Ltd is a company in some foreign jurisdiction, well, it’s got no legal business donating money to politicians.
But even Mass Observation conceded the startling contrast between the ‘mechanized barbarity’ of dancehall music and the wordless decorousness of the dancers’ movements. In order to request a dance, a young man would simply touch a potential partner lightly on her elbow, and they would move silently on to the floor. It was quite normal for partners to dance for hours without speaking to each other, before going their separate ways.
Well, a big dance hall implies big sound. That implies either electronic amplification, or before that was invented, a fuck-off big horn section. And either of those will help the dancing while cramping your conversation. (I SAID, HOW ABOUT ANOTHER DRINK!) In fact, the electric guitar was invented in the 1930s as a substitute for quite so many wind players providing the wash.
It’s true, as William Baumol said, that you need as many people to play a concerto as you did in 1900 and the same isn’t true of producing steel, farming, or running a phone exchange or a bank. Interestingly, the electric guitar was originally an attempt to substitute capital for labour in the music industry, with enormous unforeseen consequences.
So yer Djanogly and his legal aid bill and his insurance companies. Something I’d love to know more about is his rather odd statement that his kids had “non-interest bearing non-voting shares” in these companies and that they were “of no value”. This is of course another case of the principle that lawyering a statement is much like doctoring it.
So, I presume that Djanogly (whose name is remarkably hard to type if you’re a pythonista and therefore have the word “django” wired into touchtyping muscle memory) didn’t really intend to leave his kids something of “no value”. Had he wanted to do that, he could just leave them nothing, and save the lawyers’ fees.
Now, the financially interesting thing here is that the securities involved are shares. Most shares are ordinary shares – they convey a share of ownership of the company, which is expressed by the fact they carry votes in the annual general meeting, and they carry the potential right to a share of profits if the directors (who the shareholders elected) so decide. However, they come dead last in terms of the company’s credit and they pay no interest. All your capital is at risk if the company can’t pay its bills, as everyone else gets paid out first. This is the nature of ownership – you have control over whatever it is you own, you can draw on its profits if you want to, but if it goes bust, it’s your funeral.
Non-voting shares are usually preference shares. The difference is that you give up the vote, in exchange for a regular, guaranteed payout of income rather than just a chance of a dividend. Further, the preferred shareholders have to be paid their money before any dividends or anything else are paid to the ordinary shareholders, so there is an additional measure of security. This is why they are “preferred”.
But Djanogly’s statement excludes both preferred and ordinary shares. Note that there is neither a vote, nor any interest. Who would want such a security?
There are reasons. If a company is wound up, its creditors get paid first, with the government at the front of the queue. At the back of the queue are the shareholders, of all kinds. But this is only of interest if the company has creditors – i.e. if it is in debt. If there were no creditors, then its assets would be divvied up by the shareholders in return of their capital. Even if the company, like most companies, has some debt, such a residual claim would be worth having if the company’s assets are worth much more than the debts.
Or the company might buy out the funny shares, or swap them for ordinary or preference shares. Also, you’ll note that the shares are not “interest bearing”, but then shares usually aren’t and this is very important. If the shares aren’t preference shares – i.e. they are not “interest bearing” – it’s entirely up to the directors to decide what to pay out to them and when. They could hold a board meeting tomorrow and pay a huge special dividend in cash, on the special class of shares alone. Or they could wind up the company and divvy-up the pool. In a public company with thousands of shareholders, they might struggle to get away with this, but the Djanogly family controls 100% of the company.
So. The shares are worthless now, but the directors of Djanogly’s firm are in a position to make them very valuable at a time of their choosing. Why would you want this set-up? The short answer is “inheritance tax”.
As is fairly well known, inheritance tax has a time component. If you give away your money, and then die, it counts as an inheritance for tax purposes if you died seven years or less after giving away the money. If you give it all to the kids, you then have to live seven years without your money, and with the risk that you might survive much longer. And even if you commit suicide, you’ve to stick the seven years first. Of course, it is extremely annoying to tax-evaders that you can only control the moment of your death in a negative and unpleasantly dramatic fashion.
So the value of a device that permits you to bequeath something that is worthless until activated by a third party ought to be obvious. Ideally, you’d want something that permitted activation from beyond the grave, like the Soviet nuclear missile command system in Charlie Stross’s The Jennifer Morgue. But that is impossible, and I think that a contract that required your executor to convene the board and pay out the money the day afterwards would break the rules on related-party transactions, although who knows?
Thanks are extended to Jones the tax.