Originally posted by BolshieBastard
View Post
CONTINUED
The International Consortium of Investigative Journalists this week laid bare thousands of secret HSBC files, showing how the bank's Swiss operation helped the rich and powerful hide billions in assets
Indeed, some 27 times he dined at the tables — and at the expense of — the 'big four' accounting firms, the very ones which supposedly do battle with HMRC over the tax affairs of the corporate behemoths they represent.
What is particularly interesting is that in 2013 it emerged that Hartnett, after leaving the Revenue, had been appointed to a lucrative new position with Deloitte — the auditors for Vodafone — who had negotiated massively discounted tax settlements with none other than David Hartnett.
He also accepted hospitality from Vodafone's financial advisers — yes, Deloitte — only weeks before he personally agreed the deal that allowed the firm to avoid billions in tax liabilities.
To add to the intrigue, Vodafone's agreement came after negotiations between Hartnett and John Connors, the phone company's head of tax. Until 2007, Mr Connors was a senior official at HMRC . . . where he worked closely with Hartnett.
The public would know nothing about these scandalous sweetheart deals were it not for the courage of Osita Mba, a barrister in Hartnett's department, who paid a terrible price for alerting MPs to the secret deals being struck by his boss.
Mr Mba, with a master's degree from Oxford University, worked in the personal tax litigation team that dealt with Goldman Sachs, the U.S. investment bank, which was being pursued by HMRC for tax owed over more than five years. Furious about his department's pursuit of minor offenders, with demands for immediate payment of small sums owed on pain of penalties ranging from fines to imprisonment, Mr Mba was aghast to discover multi-billion-pound business giants were allowed to avoid fortunes in unpaid tax.
Using the Public Interest Disclosure Act, he wrote to the National Audit Office (NAO) and two parliamentary committees in confidence in 2011, saying that Hartnett had spared Goldman Sachs from paying at least £10 million in interest on tax arrears.
He revealed that the bank's settlement had been agreed with a handshake by Hartnett, the permanent secretary for tax at HMRC. Mr Mba believed the deal could be illegal, and vowed to reveal all to MPs under legislation designed to protect whistleblowers.
Retribution was swift and brutal. Astonishingly, the tax office used anti-terror legislation under the Regulation of Investigatory Powers Act (known as RIPA) against Mr Mba. These laws give the authorities sweeping powers that allow them to access phone and email records. Mr Mba was suspended. His locker and desk were searched. His internet searches, emails and telephone calls were all checked. His wife's phone was also monitored.
In 2011, one 'internal criminal investigator' emailed colleagues saying the Revenue had begun 'a review of the suspect's [Mba's] H drive [the hard drive used within HMRC] and email traffic and internet usage', but inquiries had revealed nothing.
He then proposed a 'further interrogation of computer material' and an 'itemised billing check', and wrote that 'consultations with the CPS [Crown Prosecution Service] can proceed'.
MPs were shocked to learn that officials at HMRC sanctioned the use of the RIPA anti-terrorism powers. And there is no doubt Mr Mba paid a terrible price for his actions, which were so clearly in the public interest.
He was hounded out of his job, and his marriage collapsed under the strain.
Margaret Hodge, chair of the powerful Public Accounts Committee, had strong words for the current chief executive of HMRC, Lin Homer, when she questioned her over the matter.
'It just shocked me to my bones, really, to see these very extreme powers being used to try to hound this poor man. There is no other word for it: you hounded him, to the extent that you have broken him.'
Mrs Hodge went so far as to say: 'The Department [HMRC] has broken him and it is awful. I feel personally responsible, because I think we exposed him to a lot of this in using the evidence that he provided to us.'
Now trying to rebuild his life, having finally reached an out-of-court settlement with HMRC to leave the civil service, Mr Mba was not surprised this week to see David Hartnett at the centre of the scandal over HSBC's Swiss bank.
'Hopefully, a thorough investigation of what went on in HMRC under Mr Hartnett's watch will finally take place,' he told me.
Hartnett, meanwhile, has prospered. He stepped down as permanent secretary for tax in 2012, leaving with a year's salary of £165,000 (plus £48,000 for unclaimed holidays), and a pension pot worth £1.7 million, providing an annual income of £80,000.
As well as his jobs with HSBC and Deloitte, he has also worked for the Washington-based International Monetary Fund as a consultant, providing tax advice to the Thai, Russian, Kenyan and Greek governments.
Richard Murphy, an economist and accountant who runs Tax Research UK and studies tax avoidance by multi-nationals, says: 'Dave Hartnett was at one time the taxman's taxman — really tough on tax avoiders. I got to know him quite well, and dined with him at The Cinnamon Club. He could be charismatic and at the same time arrogant. He was very much the main man and the boss.
'But he became far too cosy with the big accounting firms from 2008 onwards. He could see they were all making more money than him.
'He became too friendly with the business community. It was inappropriate. He spent far too much time in The Cinnamon Club — that seemed to change his attitude to business. It was probably quite convenient for him when he had to retire from HMRC and could go into business for himself.'
Convenient, at the time, perhaps. But with the gathering storm surrounding HSBC, the sybaritic Mr Hartnett would seem to have many disturbing questions to answer over the bank scandal — not least why he did so little to act on allegations against HSBC, and was then allowed to work for it.
The International Consortium of Investigative Journalists this week laid bare thousands of secret HSBC files, showing how the bank's Swiss operation helped the rich and powerful hide billions in assets
Indeed, some 27 times he dined at the tables — and at the expense of — the 'big four' accounting firms, the very ones which supposedly do battle with HMRC over the tax affairs of the corporate behemoths they represent.
What is particularly interesting is that in 2013 it emerged that Hartnett, after leaving the Revenue, had been appointed to a lucrative new position with Deloitte — the auditors for Vodafone — who had negotiated massively discounted tax settlements with none other than David Hartnett.
He also accepted hospitality from Vodafone's financial advisers — yes, Deloitte — only weeks before he personally agreed the deal that allowed the firm to avoid billions in tax liabilities.
To add to the intrigue, Vodafone's agreement came after negotiations between Hartnett and John Connors, the phone company's head of tax. Until 2007, Mr Connors was a senior official at HMRC . . . where he worked closely with Hartnett.
The public would know nothing about these scandalous sweetheart deals were it not for the courage of Osita Mba, a barrister in Hartnett's department, who paid a terrible price for alerting MPs to the secret deals being struck by his boss.
Mr Mba, with a master's degree from Oxford University, worked in the personal tax litigation team that dealt with Goldman Sachs, the U.S. investment bank, which was being pursued by HMRC for tax owed over more than five years. Furious about his department's pursuit of minor offenders, with demands for immediate payment of small sums owed on pain of penalties ranging from fines to imprisonment, Mr Mba was aghast to discover multi-billion-pound business giants were allowed to avoid fortunes in unpaid tax.
Using the Public Interest Disclosure Act, he wrote to the National Audit Office (NAO) and two parliamentary committees in confidence in 2011, saying that Hartnett had spared Goldman Sachs from paying at least £10 million in interest on tax arrears.
He revealed that the bank's settlement had been agreed with a handshake by Hartnett, the permanent secretary for tax at HMRC. Mr Mba believed the deal could be illegal, and vowed to reveal all to MPs under legislation designed to protect whistleblowers.
Retribution was swift and brutal. Astonishingly, the tax office used anti-terror legislation under the Regulation of Investigatory Powers Act (known as RIPA) against Mr Mba. These laws give the authorities sweeping powers that allow them to access phone and email records. Mr Mba was suspended. His locker and desk were searched. His internet searches, emails and telephone calls were all checked. His wife's phone was also monitored.
In 2011, one 'internal criminal investigator' emailed colleagues saying the Revenue had begun 'a review of the suspect's [Mba's] H drive [the hard drive used within HMRC] and email traffic and internet usage', but inquiries had revealed nothing.
He then proposed a 'further interrogation of computer material' and an 'itemised billing check', and wrote that 'consultations with the CPS [Crown Prosecution Service] can proceed'.
MPs were shocked to learn that officials at HMRC sanctioned the use of the RIPA anti-terrorism powers. And there is no doubt Mr Mba paid a terrible price for his actions, which were so clearly in the public interest.
He was hounded out of his job, and his marriage collapsed under the strain.
Margaret Hodge, chair of the powerful Public Accounts Committee, had strong words for the current chief executive of HMRC, Lin Homer, when she questioned her over the matter.
'It just shocked me to my bones, really, to see these very extreme powers being used to try to hound this poor man. There is no other word for it: you hounded him, to the extent that you have broken him.'
Mrs Hodge went so far as to say: 'The Department [HMRC] has broken him and it is awful. I feel personally responsible, because I think we exposed him to a lot of this in using the evidence that he provided to us.'
Now trying to rebuild his life, having finally reached an out-of-court settlement with HMRC to leave the civil service, Mr Mba was not surprised this week to see David Hartnett at the centre of the scandal over HSBC's Swiss bank.
'Hopefully, a thorough investigation of what went on in HMRC under Mr Hartnett's watch will finally take place,' he told me.
Hartnett, meanwhile, has prospered. He stepped down as permanent secretary for tax in 2012, leaving with a year's salary of £165,000 (plus £48,000 for unclaimed holidays), and a pension pot worth £1.7 million, providing an annual income of £80,000.
As well as his jobs with HSBC and Deloitte, he has also worked for the Washington-based International Monetary Fund as a consultant, providing tax advice to the Thai, Russian, Kenyan and Greek governments.
Richard Murphy, an economist and accountant who runs Tax Research UK and studies tax avoidance by multi-nationals, says: 'Dave Hartnett was at one time the taxman's taxman — really tough on tax avoiders. I got to know him quite well, and dined with him at The Cinnamon Club. He could be charismatic and at the same time arrogant. He was very much the main man and the boss.
'But he became far too cosy with the big accounting firms from 2008 onwards. He could see they were all making more money than him.
'He became too friendly with the business community. It was inappropriate. He spent far too much time in The Cinnamon Club — that seemed to change his attitude to business. It was probably quite convenient for him when he had to retire from HMRC and could go into business for himself.'
Convenient, at the time, perhaps. But with the gathering storm surrounding HSBC, the sybaritic Mr Hartnett would seem to have many disturbing questions to answer over the bank scandal — not least why he did so little to act on allegations against HSBC, and was then allowed to work for it.
Comment