CGD

On the subject of Alex Cobham

Alex Cobham, the chief executive of the Tax Justice Network, pointed out that under the Companies Act it was an offence for a person “knowingly or recklessly to make a statement that is misleading, false or deceptive in a material particular”, with potential penalties including imprisonment.

He said: “Mis-registering companies with sometimes very substantial assets or transactions as ‘dormant’ would certainly appear to be material. For an outside observer, it is difficult to see how this error could have been made for multiple companies and over the course of so many years, in a way that was neither knowing nor reckless – so an explanation from Mr Drax is badly needed.”

The explanation being that they were unlimited companies which don’t need to file accounts except when they’re subsidiaries of a limited company in which they do. Once drawn to attention the accounts were filed within a week or two. No doubt very naughty.

Also, yes, pretentious git.

And we need to recall the story about Zambia and copper. Alex Cobham, when working at CGD, released a report insisting that Glencore was ripping off Zambia over copper prices. He’d done this by comparing the customs price of copper leaving Zambia in tens of thousands of tonnes lots, by railroad, with the price of copper in 10 and 20 kg lots leaving Switzerland by courier. His result was that Glencore was ripping off Zambia to the tune of multiples of GDP or some such.

The problem with this being that customs prices are, by definition, inclusive of transport costs. So, a $3 kg of copper (about right, right order of magnitude at least) leaving Zambia might have 14 cents of transport costs (again, about right, $5,000 per 40 foot container from anywhere to everywhere for 36 tonnes) and a $3 kg of copper leaving Switzerland might have $10 (a DHL package of 10 kg of copper at $100 say) of transport costs.

On that and that alone was his accusation of massive fraud based. Of course, this was not due to malevolence nor the desire to construct some fatuous claim, it was just massive, gross, ignorance.

I think we should, every time we see Alex Cobham pronouncing upon this or that remind ourselves – and others – of that CGD report. Seems only fair. Especially here – people can get into the most lovely fuss over financial numbers, can’t they?