1285

MORE is emerging on Britain’s dealings with Bahrain, where martial law has recently been declared. Security forces from the UK have already “intervened” in the sheikhdom: not on the side of pro-democracy protesters who are being shot at, but by helping train a police force whose officers have been doing the shooting.

The last British police adviser was withdrawn from the island kingdom less than two weeks ago. This was not in protest at the regime’s brutal tactics but because of fears for the officer’s safety, said the UK’s National Police Improvement Agency (NPIA), the Home Office quango which sends UK officers to Bahrain.

The NPIA’s full-time advisers have offered “assistance in the modernisation of the Bahrain police force”, and training in “community policing”, simulation of operations like “riots, armed sieges, etc” and “counter terrorism”.

Leading the (baton) charge
The NPIA told the Eye it had two advisers in Bahrain this year. One was called back to Britain in mid-March; the other was already on leave outside Bahrain and will not return.

In fact the NPIA has sent a variety of helpers to the kingdom. Last October trainers from the NPIA’s “International Commanders’ Programme” were there to “construct a leadership programme”; and in 2009 two media specialists were sent to “train members of a royal family, plus a judge, three lieutenant colonels and senior officials from various ministries… how to handle the media in a crisis”. No doubt that crisis management training has been invaluable in recent weeks.

SALES may be tumbling but Times editor James Harding has other ways to keep Rupert Murdoch happy. No sooner had the BBC’s Panorama produced more evidence that the News of the Screws hired private detectives to hack mobile phones than the Times accused the Beeb of the same crime.

The Panorama of 14 March alleged that, among others, Jonathan Rees had been hired by the Screws for illegal snooping. When questioned about this in the documentary, Rees, who had just been acquitted of the murder of a former business partner, retorted that he had done similar jobs for the BBC.

Gratuitous Beeb-bashing
The following day’s Times gave Rees’s allegation a good airing, despite the fact that he is a convicted criminal – jailed for five years for conspiring to pervert the course of justice – and that he had produced no evidence for it. There was more the next day when the Times claimed that “the BBC faced calls from MPs last night to disclose how much public money it spent on hiring private detectives to work on its current affairs programmes”.

The newspaper’s sudden interest in this issue can in no way be related to the fact that the Dirty Digger – always up for some gratuitous Beeb-bashing – happened to be in London that week. Nor could it have anything to do with this being the first part of News International’s latest counter-strategy: that if it chucks enough filth at other media organisations (see Eye 1282 for a similar smear operation against the Evening Standard), the Screws’ mud-spattered face won’t be quite so conspicuous.

News in briefs
The second part – to ignore any more damning allegations against the company – was in evidence the following week. When acting deputy commissioner of Scotland Yard John Yates appeared before MPs last Thursday, he grudgingly conceded that News International chief executive Rebekah Wade committed “possible offences” when she previously let slip to MPs that as editor of the Sun she had paid police officers for information. The committee was also told by Labour MP Tom Watson of grounds for believing that the families of murder victims Holly Chapman and Milly Dowler had been targeted by private eyes working for the Screws.

And how did the Times report this development? With two sentences in its News in Brief column, noting that Yates had denied misleading parliament about phone-hacking and “stood by his earlier evidence that there were ‘very few victims’ under the narrow definition provided by the Crown Prosecution Service”. The paper of record, indeed!

TAX boss Dave Hartnett came out fighting when parliament’s Treasury select committee questioned him on his sweetheart tax deal with Vodafone (Eyes passim ad nauseam). Alas, all that the permanent secretary for tax at HM Revenue & Customs managed to achieve, however, was to knock himself out.

He began with a bizarre dismissal of the Eye’s “absurd” £6bn estimate of HMRC’s concession over the company’s Luxembourg tax avoidance scheme, explaining how it had been calculated. This was odd as HMRC had never asked the Eye about the calculation and had refused all attempts by the Eye to explain why it disagreed with the figure. But Mystic Dave confidently listed a string of errors – entirely of his own invention.

A penny for his thoughts
Hartnett’s creativity caught up with him, however, when he claimed that, despite letting Vodafone off with a £1.25bn bill when the company itself had set aside £2.1bn, “we didn’t collect a penny less from Vodafone than we thought we could”. Tory MP Jesse Norman pounced on the fact that Hartnett had already admitted the sum was the product of a “negotiation” that had clearly involved a concession.

And what a hefty one it was. Vodafone’s £2.1bn estimate of its bill was in fact made as early as March 2006, more than four years before the July 2010 settlement. Between those dates, billions of pounds more profits were diverted offshore and interest continued to rack up on the old liabilities.

HMRC, almost certainly unlawfully, also promised not to touch the scheme in future and other unrelated tax disputes were dropped as part of the deal. Hence the Eye’s £6bn estimate, backed up by details in the Luxembourg company’s accounts and sources within HMRC.

With at least several billions of pounds in tax at stake covering a decade of tax avoidance, HMRC’s lawyers and specialists were confident of victory, yet Hartnett told the committee: “There were plenty of tax QCs in the UK lined up telling us and the media that we weren’t going to get a penny through litigation.” Strangely, HMRC could not unearth a single such comment to the media.

Backroom farce
In fact by the middle of last year, most tax lawyers understood that Vodafone was on shaky ground with its argument that UK laws designed to ensnare the scheme breached European law. Britain’s court of appeal ruled in 2009 that the laws were compatible with EU law, while the European court had judged that “artificial” arrangements could be taxed.

And companies don’t come much more artificial than Vodafone’s Luxembourg brass plate operation, betrayed by its annual staff costs of €50,000 until well into 2008. This was not enough for even one Luxembourgeois and his chien to run a company – plus its Swiss branch – that held up to €150bn in financial assets and subsidiary companies including the German engineering giant at the heart of the scheme, Mannesman. Few doubt the courts would have found this “artificial”, as even Vodafone appeared to acknowledge by belatedly deploying a handful more beancounters to the firm.

Intimate exchanges
But none of this was understood by those doing the dodgy deal. Hartnett admitted that the case had been “escalated” away from inspectors who were specialists in the subject to a director and her deputy. When their discussions “stalled”, Hartnett – whose comments to the committee betrayed his own limited grasp of the relevant tax laws – stepped in personally and “negotiated a settlement with the chief financial officer of Vodafone”, aka Andy Halford. Coincidentally, of all Britain’s thousands of tax advisers, the company brought in Deloitte’s David Cruickshank, who just happened to have a long track record of doing cosy deals with Hartnett.

Sadly, Hartnett consulted nobody who understood the law properly, including the relevant lawyers, on the chances of legal success and thus what a suitable “deal” might be. Vodafone got what it wanted (including time to pay on a chunk of the bill, despite sitting on its own multi-billion pound cash pile) and the taxpayer was short-changed by a few billion. “Absurd” indeed.