Having belatedly caught up with the exclusive news that Northern Rock’s financing is perched on an off-shore charitable trust, the Guardian on Wednesday went one step further, revealing that this charitable trust malarkey is pretty popular amongst British banks in general – and that the charities whose names have been used get little or no reward.

Britain’s high street banks have raised billions of pounds in funds through complex financial deals that use supposedly charitable trusts which are not donating a penny to good causes, the Guardian has learned.

A dozen of the country’s best-known banks and financial institutions have raised funds on the back of £234bn-worth of home loans over the past seven years, using trusts which have charitable status but rarely give anything to charity…

Of the 12 institutions investigated by the Guardian, all admitted that their current series of “charitable” trusts had given nothing to charity. Abbey said it had donated £30,000 from earlier wound-up trusts. Abbey currently raises funds on the back of home loans worth £40bn. Bradford & Bingley said it had given an unspecified amount to an unnamed charity from an earlier wound-up structure…
But hang on! The Guardian itself is owned by a…er…charitable trust – the Scott Trust. As the website of the newspaper’s parent, Guardian Media Group, proudly explains:

The Trust was created in 1936 to safeguard the journalistic freedom and liberal values of the Guardian. Its core purpose is to preserve the financial and editorial independence of the Guardian in perpetuity, while its subsidiary aims are to champion its principles and to promote freedom of the press in the UK and abroad.

So Guardian Media Group does not seek profit for the financial benefit of an owner or shareholders — it seeks profit to sustain journalism that is free from commercial or political interference, and to uphold a set of values laid down by CP Scott, the great Manchester Guardian editor (pictured above left). Simply, it exists to create public value, not private gain.

Which is great. Except that if you ask an expert in trust law how the modern, widely-used system of off-shore trusts developed they will tell you that it is was all derived from the model set up by the Scott family.

That’s right. CP Scott (or at least his son, John) is the father of modern tax avoidance.

This entry was posted by Paul Murphy on Wednesday, December 5th, 2007 at 12:57 and is filed under Capital markets. Tagged with guardian media, northern rock. Edit this entry.