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Company Law Reform Bill [HL]

moved Amendment No. 163:"Page 69, line 23, at end insert ““, and" (   )   the duty to settle all taxation liabilities arising upon the company under the legislation of any country or territory in which the company may operate, having apportioned income in accordance with best accounting practice to that country or territory within which it arose and having on all occasions sought to comply with both the spirit and the letter of the taxation legislation of the country or territory, such duty to extend to all taxes, duties, levies, social security charges and other fees and obligations of all sorts due to national, state, federal and local governments however empowered”” The noble Lord said: This amendment addresses the company and tax law aspects of the huge global phenomenon of transfer pricing, which is designed to minimise taxation in higher-taxation countries and to declare taxation liability, where possible, where taxation is low. The distortions caused to the world economy are now colossal, as innumerable research studies have amply demonstrated. The problem has been with us for at least 30 years. I represented the trade unions as a member of the United Nations Commission on Transnational Corporations at its various sessions in New York and elsewhere in the 1970s. We nearly succeeded in drawing up a world code until it was killed off by an unholy alliance of Moscow and Washington—Moscow because it could not swallow any sort of dog licence to capitalism; and Washington because it could not swallow any sort of public accountability of the same system. Taxation and transfer pricing are issues that the code would have covered and made mandatory, as it would the environment, state aid, labour’s right to organise, and so on, but the question that I would like to debate today—I am sure that it will be an ongoing debate—is how to fit that sort of approach into company law, and indeed into national company law, given that increasingly the world sees the phenomenon of the footloose global corporation. How do we implement a world code to enforce transparent pricing? I hope that this Labour Government, who have done such good work in development, will be able to get a handle on this hugely important phenomenon. It is difficult to see how it will be done, not only because of company law but because of the corporations. For example, a corporation may be incorporated in the Cayman Islands and its AGM may take place somewhere else; that is the pattern of companies that are household names. I am afraid that the Bill is written and is being spoken to as if the rest of the world out there does not exist. I hope that the noble Lord, Lord Freeman, will forgive me for referring to our joint interests in Africa. On the one hand, it is absolutely vital that we get more foreign direct investment into Africa, which has 1 per cent of the world’s FDI but 10 per cent of the world’s population. The noble Lord is an expert in such matters, and we do joint work together, including, at the moment, a committee inquiry. But that runs into the whole question of governance in many countries in Africa and in developing countries more generally. The problem is that companies seem to float between jurisdictions. I stand to be corrected, but I do not believe that anyone, from the OECD downwards, has been able to address what we are actually going to do with any sort of likelihood of a satisfactory outcome—and it is not for want of the words and research reports that have been written about it. By the way, perhaps I should say that I am not castigating British companies or the British Government. After all, we took the lead on such important initiatives as the extractive industries transparency initiative, although even there actual implementation with the companies and with the host governments is very difficult, as I know from personal experience in different developing countries. In conclusion, I want to be positive about this. If I have understood what my noble and learned friend the Attorney-General said and if there is to be a code of practice governing this important part of the Bill, perhaps before the Bill reaches the other place some thought could be given to a slightly more substantive answer to the questions that I am raising. Other noble Lords, through different amendments, have raised those questions. I look forward to my noble and learned friend’s response. I beg to move.