Facebook Under Scrutiny for Paying £4.1 Million U.K. Tax in 2015

Facebook

Leading social networking site Facebook reported a sharp increase in the tax in paid to the U.K. government last year, but it is being criticized for paying very low amount in comparison to turnover.

The popular social network came under intense criticism when it reported paying just £4,327 in corporation tax in 2014. The public outcry generated then made the American company to decide it would improve on how much it pays. It appears to have kept to that promise, but many campaigners are still not satisfied.

Accounts posted by Facebook on Companies House on Sunday showed it paid £4.1 million in UK tax in 2015, which was a very significant improvement over the amount it paid in the year before. However, it also received £11.3 million ($14 million) in tax credit which it can use to offset tax payments at a later date.

The tax credit, which has angered many critics, is the result of tax rules associated to a Facebook employee bonus program.

The social networking site’s activity in the U.K. revolves principally around marketing, sales support and engineering. Its turnover in the country doubled in 2015 to £210.7 million, up from £104.9 a year earlier. However, loss after tax stood at £41.1 million for the year, compared to the £28.4 million loss recorded in 2014.

In 2015, Facebook provided jobs for 682 individuals in U.K., according to the BBC, up from 362 in the year before. It is now believed to have over 1,000 full-time equivalent staff.

The company paid tax on a taxable profit of around £20 million for the year to Dec. 31 at the normal corporation tax rate. Its accounting practices have not been found to have flouted any law in the U.K., but some campaigners still believe that it needed to be made to pay more in taxes.

“Facebook UK’s accounts show specific issues, but point also to the real problem: that major multinational companies appear to be able to pick and choose, unlike the rest of us, where and how much tax they will pay,” campaigner Tax Justice Network said in a statement.

Several multinational technology companies have come under increasing pressure in the U.K. for doing so much business and paying very little amount into the national treasury. British Prime Minister Theresa May last week issued a warning to businesses that are in the habit of paying little amount in taxes. She said such would not be permitted anymore and that action would soon be taken against the businesses involved.

The amount Facebook pays in taxes in UK looks to improve in the future, though. The company revealed earlier in the year that it would stop booking advertising sales by its team in the U.K. in Ireland and start doing that in Britain. This move, which came into effect in April, is expected to significantly boost this year’s revenues, which will be reported in 2017.

Facebook is not the only American technology company that has come under scrutiny on tax matters. Earlier in the year, Google agreed to pay £130 million in back taxes to the U.K. government. The European Commission in August also ordered Apple to pay Ireland €13 billion ($14.5 billion) in back taxes.

Facebook recorded nearly $18 billion in global revenues last year for $3.7 billion in profits.

Denied Appeal: Native Tribe to Continue Fighting Dakota Access Pipeline

standing-rock-sioux-tribe

The Standing Rock Sioux Tribe has vowed to continue in its battle against the construction of the Dakota Access Pipeline despite a court’s decision to turn down its appeal against the project.

The Court of Appeals for the District of Columbia Circuit on Sunday night rejected the appeal of the Native American tribe to block the construction of an oil pipeline which it said would cross its water source and destroy some of its culturally important sites. In a two-page ruling, the three-judge panel declared that the tribe’s attempt to stop the project had been not made in line with the legal standards required to force such a decision.

The judges, however, expressed some level of compassion for the tribe in their verdict.

“Although the tribe has not met the narrow and stringent standard governing this extraordinary form of relief, we recognize that Section 106 of the National Historic Preservation Act was intended to mediate the disparate perspectives involved in a case such as this one,” the ruling read.

In spite of its ruling, the court stated that the U.S. Army Corps of Engineers has the final say on the pipeline project.

The Dakota Access Pipeline is a $3.7 billion project for the construction of oil pipeline that would extend some 1,172 miles. The pipeline, which would pass a half mile within the Standing Rock Sioux Tribe’s reservation, is planned to transport 470,000 barrels of light crude oil per day across four states. It would run from North Dakota to Illinois.

Construction of the pipeline has generated significant controversy in recent months. Thousands of people have joined over 300 federally-known American Indian tribes in recent month at Cannon Ball, N.D. in protest against the project.

Tribal Chairman Dave Archambault II has described the appeals court ruling as disappointing. He however noted that the court statement that its ruling was “not the final word” is an encouraging sign that it does not agree with continuation of the project.

The tribal chief told NBCNews that the fight against the pipeline construction would continue.

For now, the ruling appears to have cleared the road for the Dallas-based Energy Transfer Partners to proceed with the project. Protests and a temporary injunction given in August had forced the pipeline construction to be suspended.

The tribe appealed against the Dakota Access Pipeline based on the provisions of the National Historic Preservation Act. It argued that places of cultural and religious importance would be negatively impacted by the project. There was also concern over threat to the people’s water source as a result of possible spill from the pipeline.

The Army Corps of Engineers has jurisdiction over the area of land in contention. It was sued by the tribe for insufficient consultation, as stipulated under the National Historic Preservation Act, before granting approval to Energy Transfer Partners in July.

The Corps of Engineers, the Department of Justice and the Interior Department had reportedly indicated in September that no construction work would be allowed on federal land around the Missouri River, which is the main water source for the tribe. The prohibition would remain until extensive reviews of environmental decisions have been done.

ConocoPhillips Sues Venezuela-owned PDVSA Over “Fraudulent” Bond Swap

conocophillips

ConocoPhillips’ subsidiaries have filed a lawsuit against Venezuela’s state oil company PDVSA on allegations of fraudulent operations, according to Reuters.

In a filing in a Delaware court on Thursday, ConocoPhillips said certain steps being taken by PDSVA are all part of a grand scheme to prevent it from receiving compensation in a row over the nationalization of its holdings in Venezuela by the country’s government in 2007. It cited a recent bond swap that requires using the state-owned oil company’s U.S. subsidiary Citgo Holding Inc as collateral.

Among the many operations mentioned as part of PDSVA’s ploy to circumvent paying compensation is the attempt by it to sell Citgo in 2014.

“The purpose behind each of these transfers is the same: to remove assets from the United States to Venezuela and/or to encumber assets in the United States,” the filing read, “with the intent to hinder, delay or defraud PDVSA’s and Venezuela’s arbitration award creditors, including ConocoPhillips.”

For almost 10 years, ConocoPhillips has been involved in a case against Venezuela before the World Bank tribunal known as the International Centre for Settlement of Investment Disputes (ICSID). The U.S. company is seeking billion-dollar compensation for the takeover of its assets in Venezuela by the country’s late socialist president Hugo Chavez.

The tribunal ruled in a partial decision in 2013 that the nationalization of the ConocoPhillips assets was illegal.

In a statement released on Friday, PDVSA said the lawsuit brought against it by ConocoPhillips lacks legal basis. The Venezuelan oil company claimed its bond swap was perfectly in line with the law, accusing the American oil producer of manipulated claims.

Numerous arbitration cases have been filed against the Caracas-based oil company by small and large companies in North America. Venezuela has been making effort to safeguard its assets from being impounded in any of these arbitration cases, according to ConocoPhillips.

Several weeks may be needed before a decision can be reached by the court in the latest lawsuit.

Meanwhile, PDVSA bonds experienced a sharp drop in value on Friday after it extended the deadline for its debt swap. Investors are concerned that failure by the company to prolong short-term debt maturities would eventually result in restructuring, according to Business Insider.

The decision by PDVSA on Thursday to postpone the early tender deadline for its debt swap to October 12 is considered a sign that investor response to the offer has not been impressive. The news of the ConocoPhillips lawsuit has further dented investor’s confidence.

PDVSA’s offer targets bonds maturing in 2017 and valued at $7.1 billion. The Venezuelan oil company had improved the deal last month with additional 2020 bonds which are backed with Citgo shares in swap for bonds maturing in 2017.

Venezuela has acquired a reputation of giving little information out to investors. The head of its monetary authorities, Nelson Merentes, was in attendance at an investor event put together by Deutsche Bank on Friday. But investors in attendance at the even did not succeed in extract significant information from the central bank chief.

Despite Record Popularity Reining in Payday Loans will Hurt Most Vulnerable

Black people

This past spring, the Consumer Financial Protection Bureau (CFPB) unveiled its much-anticipated proposal that would impose new federal rules and regulations for the payday loan industry. This regulatory framework at the federal level is meant to complement state and local laws.

Officials at the federal consumer watchdog agency say that payday loans need to be reined in because they are harming and impacting the most vulnerable consumers with endless debt traps.

Despite the concerns that the likes of CFPB director Richard Cordray and Massachusetts Democratic Senator Elizabeth Warren may have about the impecunious, a new report has found that payday loans are more popular than ever. In fact, the number of consumers taking out a payday loans has surged 30 percent. This means that 24 million Americans will borrow some type of payday loan this year.

At the same time, millions of Americans will be negatively affected by the new CFPB regulations. And the two demographics that will be mostly hurt are blacks and women, says the Competitive Enterprise Institute (CEI), which published a detailed report pertaining to payday loans in the United States.

According to the CEI, many consumers lack a rainy day or emergency fund. And when an unforeseen event unfolds, like a broken down car or a badly damaged refrigerator, then they will not have the funds.

Simply put: payday loan lenders are the last resort for a large number of borrowers and without them thousands could fall into dire straits.

“Federal regulators want more restrictions on payday loans, but that will hurt people who urgently need a short term loan but lack rainy-day savings or credit cards,” said Harry B. Miller, author of the CEI report, in an interview with the Daily Caller.

The CFPB has regularly defended its plan by arguing that it prevents consumers from overusing payday loans. The new rules, says the CFPB, are meant to limit rollovers and those who have multiple payday loans at the same time. This has been one of the biggest concerns for the CFPB and others, such as consumer advocacy groups, local and state governments and non-profit organizations.

The news outlet responded to this scenario by referring to the free market and a voluntary exchange:

“The net-effect of barring consumers from interacting with payday lenders more than a few times, is that it interferes with free market interaction between a buy and a seller. If an American family needs an emergency roof replacement, or a child breaks a leg, or the lights are shut off, they should be able to enter into an agreement with an accredited lending institution willing to take on the risk.”

Despite this line of reasoning, opponents purport that payday loans come with high interest rates, early repayment fees and other surreptitious charges that resort individuals entering into an endless debt cycle. This is the reason why so many North American and European jurisdictions are either placing limits on payday loans or are prohibiting them altogether, even if it means the rent isn’t paid or the lights are shut off.

It is expected that U.S. President Barack Obama will approve of the CFPB’s regulatory framework, though opposition from a number of Congressmen is growing, who say it should be delayed by two years.

Hillary Clinton Plans to Go After Wells Fargo

Hillary Clinton

As earlier expected, Democratic candidate for next month’s presidential election in the United States, Hillary Clinton, has hit out at Wells Fargo over an ongoing scandal at the bank, promising action against it for “egregious corporate behavior.”

Clinton made this disclosure while speaking at an event in Toledo, Ohio on Monday. She expressed shock that a bank of Wells Fargo’s status could be found committing fraud against millions of its unsuspecting customers.

The bank has come under intense scrutiny and criticism after regulators accused its employees few weeks ago of opening accounts without permission or knowledge of its customers. As many as two million accounts were believed to have been opened in this manner over a period of about five years, starting from 2011.

Addressing the crowd in an area that has seen many manufacturing jobs lost in recent years, the Democratic presidential candidate said she would like to get a message across to all companies scamming their customers, exploiting employees or ripping off tax payers that they would be held accountable for their actions.

“To understand why this is so important, consider the recent examples we’ve seen of egregious corporate behavior,” Clinton said, in reference to Wells Fargo.

She said she found it greatly shocking that years after “a cowboy culture on Wall Street” led to a financial crisis powerful bankers are still “playing fast and loose” with the law.

Wells Fargo Chief Executive John Stumpf has been seriously criticized for the scandal by both Democrats and Republicans in House and Senate hearings. He has, however, maintained occasionally that the blame for the unauthorized openings of accounts should be on the bank’s employees who failed to “do the right thing” and were dismissed as a result.

Clinton disagreed with Stumpf’s claim saying the Wells Fargo employees were bullied into committing the fraud against the bank’s customers.

The bank employees were opening and funding unauthorized accounts so as to meet sales targets and be rewarded under the institution’s “incentive-compensation program,” according to the Los Angeles City Attorney. The Consumer Financial Protection Bureau also stated that the sales goals were imposed on staff by the bank, which sought to distinguish itself as a cross-selling leader in the market.

The Democratic presidential candidate promised to work with customers to get around mandatory arbitration clauses inserted in their account agreements. These clauses make it practically impossible for customers to take legal action against Wells Fargo if they feel cheated. The only resort would be to a private, closed-door arbitration process. Many customers are trapped by these clauses because not everyone has the time to through the fine print before opening an account.

Clinton plans to request the Congress to grant certain agencies, including the Department of Labor and Federal Trade Commission, power to prevent forced arbitration clauses from being inserted in agreements.

A $190 million settlement was reached between Wells Fargo and regulators in September. The bank’s customers, however, were not able to sue the institution in court because of the agreements they had with it which make that impossible.

Clinton’s campaign revealed a plan that would help consumers file lawsuits against companies instead of settling for private arbitrations.

Hammond Promises to Shield UK Economy During Brexit as Pound Dives

Brexit

Britain’s Finance Minister Philip Hammond has pledged to ensure the country’s economy does not suffer amid Brexit negotiations, even as the pound sterling slipped to its lowest level against the U.S. dollar in three decades.

The recent disclosure by Prime Minister Theresa May that she would push for Britain to exit the European Union by the end of March has caused a stir among traders. More worrying for many people is the considerable emphasis she placed on the restriction of movement across the borders, which experts believe would further worsen trading relationship with the EU. May’s speech on Sunday practically did little to win over already-worried investors.

Addressing his ruling Conservative Party on Monday, Hammond however tried to reassure businesses and consumers that necessary steps would be taken to protect them from what could come after the Brexit. He said voters did not chose to become “poorer or less secure” when they chose to exit the EU in the June referendum.

“Throughout the negotiating process, we are ready to take whatever steps are necessary to protect this economy from turbulence,” Hammond told the Conservative Party’s annual conference in Birmingham.

The decision by Britons to vote for an exit from the EU in the June 23 referendum came as a surprise to many business executives and investors. It led to the largest ever one-day slump in the value of the sterling against the dollar.

The currency, which recently recorded its longest streak of quarterly losses since 1984, lost more ground on the dollar following Sunday speech by the UK prime minister. Sterling skidded to its lowest level against the dollar in over 30 years on Tuesday, as investors fear the economy may be heading for hard times after the Brexit.

In addition, the UK currency has fared poorly against the euro, hitting a three-year low against the Euro area currency.

Hammond said businesses, investors and consumers should expect experience a somewhat rollercoaster experience while the negotiations are ongoing. He disclosed his expectation of fluctuation in confidence until when a final, suitable agreement is reached. Necessary support will be provided to British businesses when the negotiation process is over to enable them adjust to being outside the regional body, the finance minister pledged.

May does not want to be drawn into the talk of a hard Brexit, dismissing the possibility in its entirety. However, experts believe choosing to exit the single market for greater control over immigration points at nothing other than turbulent times in the economy.

The slump in sterling value has been driven by this concern of a hard Brexit, which will almost certainly harm the country’s trading position. It could discourage investment coming into the economy from overseas. Many investors are drawn to the economy mainly by the UK’s preferential access to the European common market.

Hammond has reiterated his intention to push back the achievement of his predecessor George Osborne’s target of a budget surplus by 2020. He prefers budget consolidation plans to be balanced with investment in infrastructure.

The finance minister was one of those that pushed for the Britain to remain in the EU prior to the referendum.