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Olympics Disaster: The G4S Security Scandal and Corporate Sponsors’ £600 Million Tax Avoidance


July 16, 2012 - As the cracks in the Tory-led coalition government grow more and more obvious, the biggest question may be whether it is incompetence or corruption that will depose the clowns who have been pretending to run the country for the last two years. In terms of the Olympics, which, two months ago, I described as a militarised, corporate, jingoistic disgrace, the incompetence particularly involves security and travel, and in terms of corruption, it involves the tax haven created for the duration of the Games, as reported last week...

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Olympics Disaster: The G4S Security Scandal and Corporate Sponsors’ £600 Million Tax Avoidance

Andy Worthington

July 16, 2012

As the cracks in the Tory-led coalition government grow more and more obvious, the biggest question may be whether it is incompetence or corruption that will depose the clowns who have been pretending to run the country for the last two years. In terms of the Olympics, which, two months ago, I described as a militarised, corporate, jingoistic disgrace, the incompetence particularly involves security and travel, and in terms of corruption, it involves the tax haven created for the duration of the Games, as reported last week.

On the security front, it was revealed that G4S, the biggest employer listed on the London Stock Exchange, with more than 650,000 staff worldwide, had spectacularly failed to fulfil its £284 million Olympics contract, in which it was supposed to provide 13,700 personnel for the Games. Just two months ago, it was reported that G4S had had 100,000 applications for 10,000 job vacancies, the inference being that all was proceeding smoothly.

That, however, was spectacularly untrue, as became apparent on Thursday, with just two weeks to go before the Games begin, when it was revealed that the government was arranging for 3,500 military personnel to be provided to make up for G4S’s inability to meet its commitment.

As the Guardian noted, "The news was met with disbelief. Diana Johnson, the shadow home office minister, tweeted: 'This is the same G4S who aspire to win policing services through privatisation. Not reassuring.’"

Not reassuring indeed, and in the wake of the news Surrey police announced that they were withdrawing from plans to engage in the part-privatisation of their services, in a deal with West Midlands police, which I wrote about here and signed a letter about here. As the Guardian explained, Surrey police announced that they were suspending their "involvement in the £1.5bn joint 'business partnership programme’ with the West Midlands police after a discussion in which the failure of G4S to deliver on Olympics security was cited as a factor."

For G4S, the fallout from the scandal may be hugely damaging, possibly toppling CEO Nick Buckles — whose salary last year was £830,000 — and costing the firm up to £50 million. For the credibility of the government, however, it was not the only damaging revelation last week. At Heathrow, the government has persistently demonstrated its inability to find sufficient additional workers to prevent damaging queues at immigration, despite there being 2,650,000 unemployed people in the UK.

The problem began last November, when Brodie Clark, the head of the UK Border Force, was sacked by Theresa May after responding to savage austerity cuts by introducing "looser checks on lower-risk passengers in order to focus on those perceived to be a potential threat," as the guardian explained. The plan "relied on good intelligence and the discretion of experienced border guards," and, according to experts, was both safe and cost-efficient, but Clark was sacrificed after the tabloid picked up on the changes and started fearmongering.

As a result, "today every passenger is checked when they enter the UK," and with 20 percent cuts to staff and a 10 percent increase in passenger numbers, the result has been chaos, with lengthy queues that have been reported for months, and that are doing serious damage to Britain’s reputation as a decent country to visit.

On Sunday, the Observer reported that, because the government failed to respond adequately to the staffing problems when they were first discovered, "inexperienced new recruits, deployed to shorten queues after complaints over lengthy waiting times, are repeatedly 'missing’ passengers of interest who should be referred to counterterrorism officers when they reach passport control." The sources who spoke to the Observer said that a handful of people on a government watch list "had been waved through by staff" since the start of July.

While the G4S scandal has exposed why an obsession with privatisation is such a bad idea, and the Heathrow staffing scandal has demonstrated, yet again, the problems with the government’s savage austerity programme, the tax avoidance scandal is an example of the inability of governments — whether Labour-led or a Frankenstein-like Tory/Lib Dem hybrid — to say no to corporations, or, of course, bankers, when it comes to tax avoidance.

In a report published by Ethical Consumer, it was revealed that the Olympic Games’ corporate partners and service providers are exempted from UK corporation tax and UK income tax during the Games, and that, as a result, even though they are expected to bring in £2.7bn in revenues, they will avoid paying over £600m in tax. The Worldwide Olympic Partners are Coca-Cola, Acer, Atos, Dow, GE, McDonalds, Omega, Panasonic, P&G, Samsung and Visa, and the London 2012 Olympic Partners are Adidas, BMW, BP, British Airways, BT, EDF and Lloyds TSB.

As the Ethical Consumer article also noted, the legislation "also exempts all foreign nationals working on the games in the UK from paying income tax on any earnings. Thousands will be exempt from taxation from competitors to media workers (including journalists, technicians and producers) to representatives of official Games bodies and technical officials (including judges, referees and classifiers) along with the athletes themselves."

The article also explained that LOCOG itself, "chaired by Paul Deighton, a former Chief Executive of Goldman Sachs during the period the bank were using offshore schemes to pay executive bonuses," is "also exempt from taxation," and is "using much-criticised employee benefit trusts, often registered in Jersey or Guernsey, to pay organisers’ bonuses once the Games are over. The article added, "With the additional sums that LOCOG could have been liable for, the total figure lost approaches £700 million."

As UK Uncut described it, "The Olympic site has become the world’s newest temporary tax haven. Instead of funding our vital public services, or refunding the British public for paying for the Olympics, billions of pounds of profits made by multinational companies with monopoly rights to exploit the Games will flow directly into the pockets of shareholders and CEOs."

Responding to the report, Green MP Caroline Lucas said, "LOCOG [the London Organising Committee of the Olympic and Paralympic Games] and the Olympics team have a serious case to answer in allowing the Park to become a temporary tax haven and so does the Government which has managed to find around £11 billion to fund the Games while at the same time imposing severe economic austerity on normal working people."

In addition, Richard Murphy of the Tax Justice Network said, "We’re giving money away that we need to … preserve essential public services. It’s a scandal that at the same time that David Cameron is criticising Jimmy Carr for using a tax haven, one has been created right in the heart of London."

To take action, please sign the petition initiated by 38 Degrees — demanding that the corporate sponsors give up their Olympic tax breaks and publish full financial details to prove they have done so — which already has over 90,000 signatures.

Next Monday, July 23, you can also attend the Austerity Games on Hackney Marshes, organised by UK Uncut and trade unionists, which are intended to "highlight the plight of young people in the shadow of these expensive and corporate Olympic Games." As UK Uncut’s press release explains, "Take part in the Race to the Bottom, Job Jump, Deficit Discus, Hardship Hurdles and more."

UK Uncut also note:

Whilst the rich get ready for their costly few weeks of fun young people face a future of poverty and inequality with rising fees, the slashing of EMA, soaring rents, slave-labour Workfare schemes and sky-high unemployment. All to pay for a crisis created by the banks and big business. We are told that there isn’t the money to invest in jobs and education yet the bill for the Olympics continues to rise and there is a £750bn cash pile sitting in the banks of big business. They caused this crisis, but they refuse to invest into the futures of the next generation.

We’re getting organised to demand that the fantastic facilities built for the Olympics, instead of being demolished or sold to the private sector, be used to provide genuinely affordable housing and used to benefit local communities.

For further information, see the Facebook page here.

Also on Saturday July 28, as the Games begin, the Counter Olympics Network has organised a demonstration against the Corporate Olympics, in which they state, 'While cutting welfare, privatising the NHS, and bailing out the banks, the government plan to use the Games to trumpet the message that austerity Britain is content and open for business … We reject Cameron and Coe’s corporate Games." The demonstration begins at 12 noon at Mile End Park, and more information is available on the Facebook page here.

Note: As I was preparing to publish this article, another scandal broke, this one involving cleaners for the Olympics, who, unlike the tax-dodging corporate sponsors, are squeezed into portacabins in east London, with 25 people in each cabin. Those seeking jobs — who have been arriving from across Europe — are being made to pay £18 a day — £550 a month — to sleep in the cabins, even after being told that there was no immediate work. Some of the cabins are leaking, and 25 people are made to share each toilet, with 75 sharing each shower. The Daily Mail reported that one 24-year old worker, from Hungary, said conditions were "very bad" inside the camp but there was nowhere else for him to go. "It is like a slum inside," he added, also stating, 'The toilets are dirty and the space is very little."

Andrea Murnoz, a 21-year-old student from Madrid, said, "I couldn’t believe it when I saw the places people were sleeping. I was thinking I would apply for a job, but I have changed my mind. My two friends signed up, but I think they are regretting it. When I first saw the metal gates and the tall tower in the middle, it reminded me of a prison camp. It looks horrible." The Mail also noted that workers had been made to sign "gagging orders preventing them from talking to the Press and have been banned from having family and friends visit 'for security reasons.’"

The Mail also noted that plans for the accommodation were backed by LOCOG and "waved through by the local council, Newham, even though environmental health officers said the toilet and shower facilities were 'unlikely to be adequate,’ while landscape architects said the sleeping arrangements were 'cramped.’" Craig Lovett, of Spotless International Services, which runs the camp, told the Mail, 'This is not a prison. Nobody is forced to stay there. Many of our staff have come from areas where there is extremely high unemployment and are very happy to be working in the Games." A spokesman for LOCOG also stated, "Cleanevent [part of Spotless] have assured us that the accommodation they are providing their workers is of a suitable standard."

Andy Worthington is the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by Macmillan in the US, and available from Amazon — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. To receive new articles in your inbox, please subscribe to my RSS feed — and I can also be found on Facebook, Twitter, Digg, Flickr (my photos) and YouTube. Also see my definitive Guantánamo prisoner list, updated in April 2012, "The Complete Guantánamo Files," a 70-part, million-word series drawing on files released by WikiLeaks in April 2011, and details about the documentary film, "Outside the Law: Stories from Guantánamo" (co-directed by Polly Nash and Andy Worthington, and available on DVD here — or here for the US). Also see my definitive Guantánamo habeas list and the chronological list of all my articles, and please also consider joining the new "Close Guantánamo campaign," and, if you appreciate my work, feel free to make a donation.



:: Article nr. 89627 sent on 17-jul-2012 18:52 ECT

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