Nov 08 2011

The City of London Corporation’s gilded consensus: new questions

Posted by: Nick Shaxson in: Thoughts

Update: the links on the Masters’ pages (see below) are now working again. This enabled me to drag out another interesting detail, from the one that I read.

I recently had a bit of a gentlemanly run-in with Bill Dodwell, a widely quoted Deloitte accountant who had been quoted in the Financial Times as disagreeing with a report I wrote about the UK-Swiss tax deal (basically, I challenged him to stand up some of his comments about my report, which he has manifestly failed to do.)

Now I notice that Dodwell is listed in the 2011/2012 for the Worshipful Company of Tax Advisers (WCOTA), a livery company of the City of London Corporation, this unique body in British politics which is partly a local authority, partly a lobbying organisation for financial freedom and liberalisation, and partly an institutionalised grand Old Boys’ network. The City livery companies originated perhaps 1,000 years ago as fraternal guilds (trade and craft associations) and they continue to flourish in the City of London, despite their decline elsewhere. WCOTA is the second newest of them, launched as the City’s 107th Livery Company in 2005 (the newest is the Worshipful Company of Security Professionals, from 2008). Dodwell is listed as part of WCOTA’s Membership Committee and as part of its influential Lord Mayor’s briefing group.

In this Lord Mayor’s briefing group I also find these individuals:

  • Paul V Morton, formerly Head of Tax, Oil Products at Shell International Petroleum Company Limited, now Head of Group Tax at Reed Elsevier.
  • Stephen D G Coleclough,
 Chairman and board member of the Conféderation Fiscale Européene Fiscal Committee, a body representing more than 180,000 European tax advisers
  • Lakshmi Narain, described as Chairman of the Property Taxes Sub-committee of The Chartered Institute of Taxation (CIOT) and an Editorial Board member of The Tax Journal
  • William JD Dodwell, the influential head of Deloitte’s Tax Policy group.
  • Lorraine Parkin, national head of indirect tax at Grant Thornton
  • Peter Mason member of the Blue Book Working Party of the British Bankers’ Association and member of the VAT Sub-Committee of the Chartered Institute of Taxation, former head of VAT at Abbey National
  • Philip Baker, QC. A member of several committees of the Chartered Institute Of Taxation and of the International Tax Sub-Committee of the Law Society;  member of the UK Committee of the International Fiscal Association.
  • Jeremy P Mindell, Senior Reward and Tax Manager at Henderson Global Investors
  • Aileen S Barry, Director of National Tax Investigations at DLA Piper UK LLP
  • Patrick Stevens, tax partner, Ernst & Young, also on the Council of the Chartered Institute of Taxation

(A proviso: the WCOTA doesn’t list their affiliation; I assume I’ve identified them correctly. I’m pretty sure these are correct.)

So what exactly is this Lord Mayor’s briefing group, and what does it do? Well, WCOTA says:

‘The Company provides regular briefings to the Lord Mayor and his staff on tax matters. During his year in office, the Lord Mayor travels extensively, with the status of a minister, meeting ministers and officials of overseas governments and overseas business people. Those visits are aimed at facilitating international trade and promoting the UK’s financial services industry. The Company’s contribution is to help him understand the related tax issues and to lobby for improvements.

In the field of tax, that is an impressive bunch of people. Note here that I’ve only picked ten names out of the more than 70 listed on this particular page (I counted 90 but there is some double-counting; this is a blog and a careful exact count would be too laborious for me right now.) A couple of others I selected from the list at random appeared to be more junior than these, though for time reasons I only took a random sample of two.

Now what does it mean to be in the WCOTA? Look at this page, entitled Becoming a Freeman and Liveryman of the Company.

“The individual applicant must also be eligible, and prepared, to swear the Oath of allegiance to the Crown and the Lord Mayor in order to become a Freeman of the City of London. Non-British tax advisers who have sufficient interest in the City of London are eligible, but will not be required to swear the Oath of allegiance to the Crown.” (presumably, then, that means they swear allegiance to the Lord Mayor alone)

Next, there’s this:

“Applicants should also recognise that membership of a livery company should normally be regarded from the outset as a lifelong commitment.”

And on its home page we have the Company’s primary aims as:

  1. to enhance the standing of the profession of tax adviser in the City of London,
  2. to support the Lord Mayor and the City of London Corporation,
  3. to support and fund charitable and benevolent causes, and
  4. to promote fellowship among tax advisers.

Number 2 interests me most here, of course. In summary, here we have – as the commentator on my recent blog noted – a group of people right at the top of their profession who are pledged to swear an oath of allegiance to the Lord Mayor, the head of the City of London Corporation. And it’s an oath for life.

And the Lord Mayor’s role, in turn, is officially:

to support the City of London as one of the world’s leading international finance centres (and) expound the values of liberalisation.

Then there’s this press release:

“The City of London Corporation is committed to maintaining and enhancing the status of the wealth and tax-generating business of the City as the world’s leading international financial and business centre through its policies and services. Examples are the extensive overseas business missions headed by the Lord Mayor on behalf of UK-based financial services and the wide-ranging economic development, research and regeneration effort the City of London Corporation undertakes across London. It also runs the City Office in Brussels on behalf of the City and City Representations in Beijing, Shenzhen and Shanghai – and a City Office in Mumbai.”

Please forgive me if I find all this ever so slightly sinister. You may feel that this is all somehow a good thing. I think that at the end of the day it boils down to the question of whether you think that the financial services sector has grown too powerful and hard to reform, or whether you think that Britain needs just more and more finance: the more the merrier. If you take the latter view, you may perhaps find all this stuff benign.

I don’t.

And in terms of public perceptions, and the question of whether or not this really is sinister, the WCOTA’s description of its after-dinner ritual doesn’t exactly seem designed to assuage public perceptions:

“When your neighbour turns to you with the Cup you rise, bow to each other, lift the cover with your right hand (the dagger hand) and hold it aloft with a flourish. Your neighbour dinks and wipes the rim with the napkin; you replace the cover, bow again and take the Cup.

You turn to your second neighbour who rises, bows and lifts the cover. You bow, drink and wipe the rim: the second neighbour replaces the cover, you again bow and pass the Cup to the second neighbour. You then turn back to back to protect the drinker, allowing your first neighbour, who has been protecting your back, to sit. You sit when your second neighbour has finished.”

My earlier commentator, a self-confessed former Freemason, noted the similarities between some of the rituals and what he experienced. And that word ‘Worshipful’ in their title hints at something similar. (To their credit, at least the WCOTA makes these details from its rituals public. I’d like to know more about WCOTA. In an earlier version of the blog the links on the Masters’ Reports page was dead, but now they are reinstated. I note, in one Masters talk, this:

The tax briefings provided by Assistant Paul Morton and his team before the Lord Mayor’s overseas visits attract wide praise. The Financial Services Group of livery companies is becoming increasingly influential and is actively supporting the Lord Mayor’s initiative ‘Restoring Trust in the City.’

Restoring trust in the City – that will fit nicely with the assertion of Bob Diamond of Barclays that the time for remorse is over. Again, is this a proper role for a body that is ought to be just a local authority?

Just ceremonial?

Doubtless the people involved would (and will) say that these are ‘purely ceremonial’ roles and that this is all just a bit of harmless fun.

They would say that – but they would be wrong. Any anthropologist will tell you that ceremony and ritual are not just bits of fun, wherever in the world they are carried out. These things bind people into communities, shape consensus, and create boundaries for people not to cross. They also create power. Take a look now at this document from Columbia University, In Defense of Privilege (full document here, slow download) looking at how the City of London Corporation has used its ceremonial functions in powerful ways:

“The City’s traditional civic elites, threatened by the emergence of electoral democracy on the national level and the rising tide of municipal socialism and democratic reformers at the local level, consciously and continually employed ceremony and ritual (as well as new, or ‘invented’ traditions) for defensive political purposes. As a City Corporation Handbook of Ceremonials observed, public ceremonies “are not idle forms or shows put on merely for entertainment. They embody and make visible rights and privileges.“(3) The authors might have added that ceremonies make such “rights and privileges” more acceptable, too.

Whereas the English monarchy had opted to trade power for pomp, so to speak, the City of London chose to employ pomp in the defense of power. We shall see that this was instrumental in ensuring the survival of the City’s independence to this day.”

This stuff is real. And it is highly effective: all the more so for being so invisible and hard to pin down. Who would swear an oath of allegiance, for life, then not feel something stopping them from transgressing that oath?  Here is a general flavour of what the power of consensus feels like (p231):

“Tension gets me around my neck. At times, in meetings and round-table discussions with the Finance and Economics Committee and other government committees, there were moments when I was literally choking with anger. It took real strength to stand up and say, ‘I’m sorry, I don’t agree with this.’ I felt like the little boy farting in church. I felt so lonely during those committee meetings; nobody ever supported me . . . Dissenting in committee means saying, ‘I’m not interested in my career here.’ I was cutting my own throat.

And, in a similar vein, this (p269):

When the lord mayor returned from a visit to [the very dirty tax haven of] Cyprus, Taylor opposed the vote of congratulations. He was the only member in living memory to do so. ‘I said, “I am not persuaded that this is in the interests of the citizens of London. This system is causing chaos in the world,”’ said Taylor. ‘Somehow the oxygen went out of the room. People were sucking in air through their teeth. It reminded me that I had joined a club, not a political body.’ He was taken aside and told he was being discourteous. ‘They said, “This is not what we do in the City.” I felt I was doing something naughty and shameful. But I felt compelled to do it. This was a consensus that needed to be interrupted.’

If anybody thinks this stuff is just ‘ceremonial’, then either they don’t know what they are talking about, or they don’t want people to notice what is going on. The problem we face is this: how can a newspaper fashion a story about something so nebulous? This is massively important – but very hard indeed to get this brought to public attention.

More questions

The questions keep coming. In this post I have written about just one of over 100 livery companies. Take a look at the 380-member Mercers’ company, officially the City’s premier livery company:

“The Mercers’ Company is fortunate to have accumulated over the centuries a large property portfolio, located mainly in the City of London, and in Covent Garden in the West End of London. Income derived from the Company’s investments, particularly from property, funds the Company’s other activities.”

The Royal Exchange is a Mercers property, shared with the City Corporation. I believe that these assets are not counted as the three billion pounds in assets that the Corporation told me it owned. I have just asked them. Also, I can’t find a membership list for the Mercers; I’ve asked them.

Winston Churchill was a Mercer. How might this have affected government policy? Frankly, I have no idea. And then there’s this:

“The Company is also patron of a number of benefices in the Church of England (i.e. it has the right to appoint the vicar or rector of a parish) and maintains closes links with its affiliated units in the United Kingdom’s Armed Services.”.

More questions. Take even a cursory look around the livery companies, and odd connections pop up like mushrooms under the stairs. See, for example, these 2010 minutes from the UK Treasury Committee, which I found on a cursory web search. It’s about Mark Garnier, a regular Treasury Committee member.

Miscellaneous
Member of the Worshipful Company of Coachmakers and Coach Harness Makers of London, sitting as chairman of the Investment Committee and attending quarterly meetings. Paid a nominal sum of 10 pence on attendance.

This particular Worshipful Livery Company not only ‘meets its obligations to the City of London’ through the usual charity work, but also through

“the promotion of excellence in the development of the trade within the modern aerospace, automotive and rail industries.”

What is that all about? More questions. Is this just a ‘ceremonial’ relationship? Does the City consensus influence these meetings, via Mark Garnier’s connections? I honestly don’t know. One might ask similar questions of Penny Hamilton, chair of the WCOTA membership committee, who serves on the Consultative Committee of the Review of HMRC [UK Revenue and Customs’] Powers, Deterrents and Safeguards and Tax Appeals Stakeholders Group. I could doubtless find dozens of these kinds of things if I looked around.

It must surely be hard for the individuals concerned to admit to themselves, let alone for anyone to quantify, the extent of this influence, this silent propagation of a pomp-and-claret-fueled gilded consensus for free finance into their work environments.

The questions keep coming. Just what is the relationship between the City of London Corporation and the Bank of England, which lies at its geographical heart? I am troubled to see this, in today’s Financial Times:

The Treasury committee recently asked the court for its minutes during the financial crisis, which it was unwilling to disclose. In his refusal, the court’s chairman absurdly appeared to believe that the Bank’s obligations to parliament were no greater than those to the general public under the Freedom of Information Act.

There are lots of conspiracy theories about the Bank of England out there on the internet, which are doubtless mostly rubbish. But with this level of  geographical and philosophical proximity between the Bank and the Corporation, how could there not be a web of intimate links? I wasn’t able to dig anything very useful up for Treasure Islands, but perhaps someone might.

More questions. What of the connections between the City Corporation and the world of offshore tax havens? In a recent post for the Reclaim the City site, part of the Occupy movement, I noted that the City of London financial services industry has huge connections to the offshore world of tax havens – tax havens are arguably the City’s most important underpinnings – but I also noted that this relationship is predominantly with “the City” in terms of the financial services industry, rather than with the City of London Corporation itself. Nevertheless, the City Corporation is certainly alive to tax havens: as former Lord Mayor Nick Anstee said recently:

“Jersey and the City both understand the critical importance of establishing a strong dialogue and making the case for our financial services industry. We . . . must continue to put forward a united voice when responding to proposals from government and regulators – hard, fast and early.

That is why I hope both jurisdictions will continue to work closely with TheCityUK, which is playing a vital role in co- ordinating the promotion of financial services internationally”

This, in turn, raises a new question: what is TheCityUK about? This is how it describes itself:

TheCityUK champions the international competitiveness of the financial services industry. Created in 2010, we support the whole of the sector, promoting UK financial services at home and overseas and playing an active role in the regulatory and trade policy debate.”

That weasel word ‘competitiveness’ again (read deregulated, light-touch, and low-tax.)  Next, who exactly is TheCityUK?

“Our board, chaired by Stuart Popham, Vice Chairman EMEA Banking, Citi, is responsible for developing our strategy and delivery. Sir Win Bischoff, Chairman of Lloyds Banking Group, oversees our Advisory Council. The President of the Advisory Council is the Lord Mayor.

Oh, and as well as all of this, then there is this kind of thing to dig further into: the City Corporation’s role as a conflicted property developer beyond the City Fringe. Where is that one going?

Questions, questions. How about this one:

“Although the City of London Corporation provides local government services for the City, the financial and commercial heart of Britain, its responsibilities also extend far beyond the City boundaries and include management of the Barbican Centre, Central Criminal Court at the Old Bailey, Epping Forest, Hampstead Heath, three wholesale food markets, as well as acting as the London Port Health Authority – and running the Animal Reception Centre at Heathrow.”

far does ‘management of the Central Criminal Court at the Old Bailey’ extend? Does this close relationship provide the City with any kind of unusual window into, or influence over, court proceedings, or the way court proceedings are organised? I honestly don’t know how this might work.

And what did Stuart Fraser of the City of London Corporation mean when he responded ‘probably’ to a question about whether he was the most effective lobbyist in Britain?

Where does all this stop? I could keep going here, but I have run out of time.

To doubters, all this may seem like the basis of some kind conspiracy theory. I am sure that fear of looking like a conspiracy theorist has deterred journalists in the past. But here I am merely asking questions here. Follow all the links I provide – you can check that I’m not making any of this up – and make up your own mind.

If you think that the City of London is too powerful, I think you will conclude that this is all very troubling. If you think, though, that the City should just keep on getting bigger and more powerful, then you might think this is a big fuss about nothing.

I feel that in Treasure Islands I have merely scratched the surface of this peculiar, unique and ancient creature. I’m glad to see that others are starting to dig too. It’s about time.

All in all, this is an institution that needs to be dragged, kicking and screaming, into the light of day. And then, I should add as a not quite so casual aside, abolished; perhaps with the City of London becoming just another London local authority, or merged into another.  After all, why should finance get this special and peculiar platform to enhance its power?

It has caused quite enough havoc as it is.

10 comments so far

vajramrita 11th November, 2011 9.07 am

re: The Bank of England

I was just wondering if you’d found this freedom of information request concerning the Bank of England Nominees Ltd:

http://www.whatdotheyknow.com/request/bank_of_england_nominees_ltd

and the official response here:

http://www.whatdotheyknow.com/request/28738/response/74019/attach/2/D.pdf

This seems to suggest that it is unlikely that proof of ownership of the BOE by the City of London is going to become available under the present legislation.

Nick Shaxson 11th November, 2011 9.56 am

Thanks. I am sure that the BoE is not “owned” by the City of London Corporation. The BoE is at the heart of the City of London, and they attend a lot of the same dinners and all that, which is important, but still.

Seth Mowshowitz 11th November, 2011 9.16 am

Just when I thought I had at least a vague overview of all the skeletons in the closet of institutional corruption, along comes this stuff. Creepy.

The question is how do we accelerate the process of dragging this deeply entrenched institution – as you rightly say – kicking and screaming into the light of day? It isn’t going to be pretty – particularly if they wield as much influence as seems apparent within the MET (to quell popular uprising) and given their centuries long success in remaining relatively concealed.

vajramrita 11th November, 2011 10.06 am

I’m not sure we can say one way or the other whether the City of London Corporation is a Nominee of the BOE or not. I doubt it is too, in an institutional sense, although it would surprise me if key individuals connected to it were not.

The kind of key individual that may be connected directly to the BOE could be those with aristocratic or other hereditary titles. Have you bumped into any online information pertaining to aristocratic titles that fall within the bounds of the City of London Corporation?

George C 11th November, 2011 6.29 pm

Have just tried the links to WCOTA Masters’ reports and they all work for me. They also have a twice yearly newsletter (under News on their website) which you can read as a PDF, which is very informative about their work (primarily charitable activity).

Nick Shaxson 11th November, 2011 7.35 am

Ah, the links are working now, great, thanks. Will read with interest, and put an update on the post.

[…] looking at the City of London’s 108 Livery Companies (if you haven’t yet and have time, read my earlier post before reading this). The Tax Journal’s opening paragraph starts: Leading tax advisers have […]

Robin Gitte 11th November, 2011 4.36 pm

Nice work, Nick. Must be like trying to swim through treacle. Respect.

piman 11th November, 2011 5.50 pm

Occupy London score an internet success against City Of London Corporation. Search traffic increased by five!
More here: http://wp.me/p1Znbh-f

[…] Tax Advisers is not encouraging. Nick Shaxson investigated them and their loyalty to graduation of free marketplace economics here. It’s a relationship that sits uncomfortably with my perspective of Labour, though let’s […]

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