Google: It ain't over until the last whistleblower gives that final 'toot'

May 20, 2013

Last week the Public Accounts Committee (PAC) of the British parliament publicly mauled Matt Brittin, Google’s, head honcho of the Cookie Monster's operations in northern Europe, over what was described the company's use of "smoke and mirrors to avoid paying tax."

Now a former Google executive employee has come forward to claim that the company operates a complex, "massive and immoral" tax avoidance regime that has "cheated" the country out of millions upon millions of pounds of tax revenues over the past 10 years.

The executive, Barry Jones, worked for Google between 2002 and 2006. he claims that he holds a massive amount of evidence proving that Google instituted a byzantine system that took profits generated in the UK, diverted them to Ireland and then on to a tax haven in Bermuda.

Mr. Jones says that the PAC was right in alleging that Google "sales staff" (for such was their designation) negotiated and signed binding contracts with UK advertisers and other clients, but adds, (and this is new), that the money from these deals was actually paid into a British bank account. However, the agreements were actually "technically "booked" as "closed" through Dublin in Ireland where corporation tax, at 12.5 per cent is substantially lower than the 23 per cent levied in the UK.

Matt Brittin first appeared before the PAC in November 2012 when he stated, unequivocally, that Google does not make sales in Britain and that "No-one in the UK is selling".

He was recalled to appear again before the PAC last week and, in light of the emergence of a new swathe of documents (including "sales' personnel pay slips showing bonus payments for sales made) and was accused of misleading the British Parliament in his earlier testimony.

Put under severe pressure, Mr. Brittin waffled and prevaricated but eventually admitted that MPs, the man and woman in the street, advertisers and even some of the staff that Google employs in the UK solely to deal with sales to British advertisers might "get the impression" that they do negotiate and close deals within the UK itself.

In an interview with the Sunday Times newspaper, the whistleblower Barry Jones said that Google "uses a concocted scheme to avoid tax. It's a smokescreen to distort where the substance of its economic activity is really taking place." He added that he was actually at meetings were sales in London where Google staff concluded lucrative deals with the likes of eBay and the bank, Lloyds TSB.

In a statement to the Sunday Times regarding the interview with Barry Jones, Google wrote, "It is difficult to respond fully to documents we have not seen. These questions relate to Google's business in the UK going back a decade of more," and adds "None of the allegations put to us change the fact that Google pays the corporate tax due on its UK activities and complies fully with UK law.'

Last year Google paid just £7.3 million in corporation tax on a UK turnover in excess of £3 billion.

This very morning, Google's billionaire executive chairman, Eric Schmidt, is supposed to be meeting the British Prime Minister, David Cameron, in his role as one of the creme de la creme of international businessmen who are part the prime-minister's Business Advisory Group. His job? Well, like it says on the tin and in the spin, it is to proffer "business advice".

However, it remains to be seen if that much-vaunted meeting will not now take place or whether Eric will give that particular photo opportunity the swerve. The press will be there and he might have had to answer a couple of tough questions without the security blanket of a phalanx of PR agents, spin doctors and other acolytes around him to massage his every utterance. Perish the thought.

Schmidt has already pulled-out of a BBC interview he was due to give on the "Hard Talk" programme. He was to be on the show to puff-up the monumental magnum opus "The New Digital Age", that he has co-authored with Jared Cohen. However, The Chairman has thought better this encounter in light of last week's and this weekend's developments. Again, he might have had to face some hard talk and harder questions. But now he won't. No official reason has ben given for Mr. Schmidt'd decision to withdraw from the programme so we can all speculate away to our heart's content, can't we?

Those of us who have not had an irony bypass will have a guffaw at the line in "The New Digital Age" in which Mr. Schmidt states that "connectivity encourages and enables altruistic behavior.” Working examples of this from Google re Google would be more than welcome.

Eric Schmidt is in the UK most of this week at an annual Google "Big Tent" beanfeast held in rural Hertfordshire and is also scheduled to descend on the Hay-on-Wye Book Festival to promote his magnificent octopus. No-one would be surprised if he doesn't rock up there either. After all, he doesn't need the money and, presumably, won't be too put out if only a handful of his book sells if he isn't there to promote it. Don't know about Jared Cohen though.

Amazingly David Cameron has taken time off from his perpetual navel gazing about the EU for long enough to look up and see that all is not well with some of the global multinationals and their attitudes to the payment/non-payment of taxation.

The Prime Minister, a great friend to big business, recently told the President of the European Council, Herman van Rompuy, that "the loss of revenue resulting from tax evasion and aggressive avoidance is staggering" and now he is calling for “strong international standards to make sure that global companies pay the tax they owe.” And yes, he is talking about you, Google, and you, Amazon, and you Starbucks and all the rest.

The subject will be high on the agenda at next month's G8 summit that will be held in Northern Ireland. We await the fall out from Fermanagh.

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