Tesco Sues The Guardian

Those stories over how Tesco\’s was going to save a billion in tax….we all found out they were nonsense pretty quickly, didn\’t we? It appears that The Guardian might have a few problems over it:

Tesco is to take legal action against the Guardian newspaper and its editor Alan Rusbridger after a series of articles that claimed it avoided paying £1bn in tax by using an offshore structure for property joint ventures.

In a High Court writ the retailer seeks special damages for "libel and malicious falsehood", citing complaints from customers.

Lucy Neville-Rolfe, Tesco\’s executive director of corporate and legal affairs, said: "It is very regrettable that we have had to take this step. We had hoped that the Guardian would be able to accept it had made a mistake and apologise for what it had written, but this has not happened.

"We support free and open debate about the role and conduct of business so long as that debate is based on fact," she added.

In a stock exchange announcement, Tesco said it expects to achieve savings of £23m in stamp duty related taxes on the transactions completed to date.

"The maximum additional savings in stamp duty related taxes that might be achieved from using these structures could be another £30m-£40m, depending on market conditions," claimed Tesco.

The retailer added that it was not uncommon to use offshore companies for joint ventures with third parties, claiming that the Guardian Media Group used a similar structure when it acquired Emap alongside private equity company Apax.

The legal action may put Carolyn McCall, chief executive of Guardian Media Group, in a difficult position. Ms McCall joined the Tesco board as a non-executive director in 2005.

How gorgeously, wondrously, amusing.

I wonder what the reaction is going to be? Given the incredible quality of the original reporting The G doesn\’t have a factual leg to stand on. But libel and malicious falsehood against a company might be a difficult thing to prove.

So, what indeed are they going to do? Apologise or fight the case?

Here\’s The G\’s version.

However, the Guardian said last night that Tesco\’s actions amounted to bullying and were clearly designed to silence public debate on the important issue of taxation.

"This looks like a deliberate tactic by Britain\’s largest retailer to shut down perfectly legitimate inquiries into their methods of tax avoidance. At the same time that two Tesco directors are reported to have lobbied the government in private on matters of taxation, the company is now seeking to chill public debate on the same issues," it said in a statement.

"The articles were in the context of a series of articles on taxation issues in a globalised world. They clearly raised serious matters of public interest in relation to tax avoidance and tax management. We have never claimed Tesco behaved illegally. These are matters of considerable political importance at present, debated by all parties.

"Guardian journalists put a series of questions to Tesco over a period of nearly four months. At no point during the pre-publication correspondence would Tesco even admit the offshore structures, still less give the explanation they advanced post-publication. We offered meetings to discuss the allegations; this offer was rejected. We included Tesco\’s explanation in the articles and have subsequently offered the company the opportunity of a full and prominent right of reply.

"Instead of frankly explaining their position and/or engaging in a public dialogue Tesco has taken the extraordinary step of suing for libel in a clear attempt to close down the debate and discourage others from looking too closely.

"It\’s hard to think of another large public company which would resort to such bullying tactics."

"Bullying"? Methinks the value of the damages (assuming Tesco\’s win of course) have just ticked up.

12 thoughts on “Tesco Sues The Guardian”

  1. “But libel and malicious falsehood against a company might be a difficult thing to prove.”

    Normally, yes, but come on! We’re talking the Guardian here. New Labour at prayer, with all the spite that brings.

  2. If Tesco were to set up a ‘Fighting Fund’ to pursue their legal action against the G, then the prospect of seeing the G on its knees would tempt many of us to contribute.

  3. When the Tories regain power and hold the purse strings on public sector job advertising the G will be in deep doo-doo.

  4. “…the Guardian said last night that Tesco’s actions amounted to bullying and were clearly designed to silence public debate on the important issue of taxation.”

    No, they are just designed to ensure that newspapers actually have some factual basis to their ‘news’. You’d think the standards agency would be on their back too…

  5. So Tesco is ‘avoiding tax’, albeit only to the tune of £30m and nothing like The Groan described. So what happened to arguments I read here and elsewhere that Tesco couldn’t actually be getting out of paying taxes by doing what it was doing, because when profits are repatriated to the parent company, then they get taxed (or however the argument went – I can’t recall). Was that because we were never discussing stamp duty?

  6. I think McDonalds came a cropper when they launched a libel action like this … I reckon McTesco may live to regret picking this particular fight …

  7. “Was that because we were never discussing stamp duty?”

    Yes. It’s true that Tesco has managed to avoid paying stamp duty on the land transaction, which will directly increase its profits, and only 30% of that increase will be re-taxed. The “all will be retaxed anyway” bit only applies to corporation tax.

  8. Thanks John.

    I’d love to see The Guardian get its comeuppance for what, I think, comes down to factually inaccurate and genuinely harmful – to Tesco – reporting. Sadly, should Tesco be victorious, it will be universally interpreted as the bullying corporation shutting down dissenting voices etc. and only serve to strengthen the Guardianista world view.

  9. Kit // Apr 5, 2008 at 12:46 pm

    When the Tories regain power and hold the purse strings on public sector job advertising the G will be in deep doo-doo.

    Kit hits the nail on the head. If only the Conservatives would privatise the BBC and start a free paper and website for advertising public sector employment – that would be a couple of boils quickly lanced.

  10. When the Tories regain power and hold the purse strings on public sector job advertising the G will be in deep doo-doo.

    No, because the Tories – despite occasional appearances to the contrary – are not completely insane. Therefore, they will continue to advertise for public sector jobs in the local press (which brings in most of GMG’s revenues) and in newspapers that tend to be read by people likely to apply for public sector jobs (e.g. the Guardian education supplement for teachers).

    “start a free paper and website for advertising public sector employment”

    …would be a breathtakingly stupid idea. See here.

  11. Kit – “When the Tories regain power and hold the purse strings on public sector job advertising the G will be in deep doo-doo”

    Hmm, interesting. So how do you account for the Grauniad surviving from 1979 to 1997 exactly?

Leave a Reply

Your email address will not be published. Required fields are marked *