Without prejudice, etc.
RE: Erroneous advice from Freshfields.
While action in the high court has limited distribution of the leaked SCM documentation, it remains the case that anyone with an interest in the detail – competitors, HMRC, journalists – will continue to have access to the information. (Internet? Doh!)
More importantly, the decision to pursue a legal remedy has drawn the bank into an ongoing PR battle that will end only with the curtailment of SCM’s tax avoidance activities, or the removal of all executive members of the board, or both, in our view. (See umpteen cases passim.)
The central flaw in Freshfields’ thinking is this: the law firm have assumed that Guardian Newspapers Limited is a commercial entity, subject to commercial pressures and therefore likely to make decisions on a commercial basis.
This is wholly mis-guided. The internal legal department at the Guardian (12 strong?) is in fact part of the marketing department. Public clashes with institutions or individuals that are deemed to have acted against the public interest are assumed to bolster the Guardian’s position and standing as a guardian (lower case, sic) of society. As such, this continues the editorial traditions set out by the newspaper’s famous editor, CP Scott.
In all living things there must be a certain unity, a principle of vitality and growth. It is so with a newspaper, and the more complete and clear this unity the more vigorous and fruitful the growth. I ask myself what the paper stood for when first I knew it, what it has stood for since and stands for now. A newspaper has two sides to it. It is a business, like any other, and has to pay in the material sense in order to live. But it is much more than a business; it is an institution; it reflects and it influences the life of a whole community; it may affect even wider destinies. It is, in its way, an instrument of government. It plays on the minds and consciences of men. It may educate, stimulate, assist, or it may do the opposite. It has, therefore, a moral as well as a material existence, and its character and influence are in the main determined by the balance of these two forces. It may make profit or power its first object, or it may conceive itself as fulfilling a higher and more exacting function.
Guardian Newspapers does not employ the usual financial metrics when planning its business or assessing its performance.
Returns on capital employed? Internal rates of return? Forget it. All business and editorial decisions are based on protecting the newspaper’s future in the very long-term. Think in terms of a 20-30 year time horizon.
While Guardian Newspapers declares itself to be “profit seeking” it is in no way profit driven. (For a graphic illustration of this visit Guardian Media Group – pre-tax loss for continuing businesses of £24.6m in 2008; chief executive’s pay package up 23 per cent to £827,000.)
On this basis, the costs of fighting a high court action against Barclays, although substantial, do not matter. In fact, it is considered a great investment that builds the value and sustainability of the business over the long term.
You, the Barclays board, are bankers and tax dodgers, not media warriors. The Guardian savours battles like these, while to you they are a painful distraction and damaging to your already tarnished public reputation.
________
The above advice is offered on a pro bono publico basis. However, FT Alphaville boasts special experience in this matter and is happy to replace Freshfield as primary adviser if and when the board so decides.
Yours etc,
Related links:
New whistleblower claims over £1bn Barclays tax deals – The Guardian
Gag confirms banks’ contempt for us all – letter to the Guardian
Barclays tax documents:’ These are the most important insight yet into elaborate tax avoidance schemes’ – David Leigh audio