Yes, The Guardian Did Libel Tesco\’s

Or at least, they now admit that they did. Worth reading this in full.

The Guardian yesterday made a formal offer of amends to the supermarket chain Tesco over reports which had claimed that the company had set up an elaborate complex of offshore companies to avoid paying up to £1bn of corporation tax on a series of property deals. But the newspaper made it clear that it would strenuously defend a malicious falsehood claim by the company.

The libel admission, which follows a correction and an apology published in the edition of May 3, came in defence papers filed to the high court in response to an action started by Tesco last month.

So they really did cock it up entirely. No, there were no corporation tax issues, there wasn\’t £1 billion at stake, the "6 month investigation" was seemingly run by rank amateurs who simply did not understand the world in which they were operating.

The defence says Tesco continues to avoid stamp duty land tax (SDLT) – a 4% mandatory levy on property deals, usually paid by the buyer but in common practice split between seller and purchaser.

The defence papers claim that Tesco\’s "ethical stance" in terms of tax avoidance "is in fact … a sham".

They add: "The defence that such avoidance is not uncommon is bankrupt ethically, and the more so for a company that claims the reputation and corporate standards set out in [its legal action]."

The newspaper also accused Tesco of a "false smear" for accusing the Guardian of hypocrisy. The retailer had claimed that the paper\’s parent company, GMG, had used an SDLT-avoidance scheme while suggesting that its own arrangements only amounted to "savings".

"The hypocrisy is entirely that of Tesco," say the defence papers. "This smear on the Guardian was false and must have known to be false by Tesco."

But from what we know GMG did indeed set up exactly the same sort of SDLT avoidance scheme (please note that this is legal) to do with their part takeover of EMAP. So calling this a false smear seems a little odd. A smear, yes, but not false. As to the ethics, well, it\’s very difficult to point the finger while doing the same oneself. We usually refer to that as hypocrisy.

But the papers say Tesco ignored several important questions posed before publication – including direct questions about SDLT. They add that the company\’s failure to deal openly with its SDLT avoidance contributed to the Guardian journalists\’ belief that corporation tax avoidance was behind the artificial structures set up by Tesco.

"Tesco is not and was not open and frank about its position on tax avoidance, and indeed cyncially seeks and has actively sought to conceal it in its public statements."

Umm, that\’s more a comment on the financial literacy (or not) of those you sent off to look at the schemes rather than anything Tesco did, isn\’t it?

But let us look at this matter of ethics for a moment. Let us take the point of view that The Guardian is putting forward, essentially the Richard Murphy line. Tax avoidance, (as they describe it) the artifical manouevering to reduce your tax bill, is unethical to the point that it should be made illegal. Certainly it is not something which an ethical company should do itself and it is right to call out and shame those who do it.

I\’ve not misrepresented their views there I think, have I?

So let us look at the Scott Trust, the owners of Guardian Media Group and thus of The Guardian itself.

The Trust was established in 1936 by John Scott, owner of the Manchester Guardian (as it then was) and the Manchester Evening News. After the deaths in quick succession of his father C. P. Scott and brother Edward, and consequent death duties, John Scott wished to prevent future death duties forcing the closure or sale of the newspapers, and to protect the liberal editorial line of the Guardian from interference by future proprietors.

The Trust was dissolved and reformed in 1948, as it was thought that the Trust, under the terms of the original Trust Deed, had become liable to tax due to changes in the law. At this time John Scott also gave up his exclusive right to appoint trustees; the trustees would henceforth appoint new members themselves. Five months after the signing of the new Trust Deed, John Scott died. After three years of legal argument, the Inland Revenue gave up its claim for death duty.

The entire organisation was set up to avoid (legally, of course) taxation due under the law of the land at the time.

The current chair of the Trust is Liz Forgan, a former Director of Programmes at Channel 4 and Managing Director of BBC Radio. She was appointed in November 2003 to fill the vacancy left by the death of Hugo Young. Other trustees include the current Guardian editor Alan Rusbridger, Larry Elliott, Will Hutton, Anne Lapping, Paul Myners, Geraldine Proudler, Sir Derek Higgs, and one member of the Scott family.

Forgan is the sixth chair of the trust; her predecessors were John Scott (193648), A. P. Wadsworth (1948-56), Richard Scott (1956-84), Alistair Hetherington (1984-89), and Hugo Young (19902003).

And it looks very much like one effect of it was to perpetuate the familial influence upon the organisation.

Now I have no problems with people legally structuring their affairs so as to reduce their tax bill. It\’s one of those things that court rulings have insisted is a natural right.

But apparently The Guardian does have problems with such, thinking that those who indulge in such practices should be named and shamed.

Very well, if that is their position then perhaps they\’d like to cough up 60 years of inheritance tax before they line up their next target?

Or are we to conclude that hypocrisy is thy name, O Guardian?


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