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Company Law Reform Bill [Lords]

If the hon. Lady does not mind, I will not, because with my back condition, I feel that if I sit down I shall never get up again—and that would be a disservice to the House. Once I am standing up, I would rather stay stood up. Effective regulators such as the SEC can strike and strike hard. The Enron cases came to court within about five months of the company’s collapse. The two men who were mostly involved have now gone on to serve long prison sentences. The same happened in the cases of WorldCom, Tyco and other offenders. However, our country’s machinery of regulation allows cases to drag on for ever. There have been no inquiries into the Accident Group, Equitable Life, Barings, Resort Hotels, Mayflower or Langbar, which is a Yorkshire company. There were no effective inquiries into the Bank of Credit and Commerce International and Maxwell, and the insolvency matters are still proceeding after all this time, so fees continue to be earned for insolvency practices. In fact, because we do not have a machinery of effective independent regulation in this country, scandals emerge only when a company goes belly up and everything emerges. However, inquiries are still not held to show what the root of the problem was and to build up a body of information that will tell us how British companies are following the mistakes and malpractice of American companies. All the procedures that were involved in the failure of Enron—the use of offshore companies, shell companies and off-balance-sheet accounting, which is part of this country’s system of government—are available and sanctioned here. They are used widely by British companies, but we do not know the damaging effects of that because as long as a company does not go bankrupt, we never find out what has been going on. I fear that there has been a change in the climate, in that corporations are no longer entitled to the respect that they once had as national champions, the producers of British products and the employers and trainers of a work force to serve their purposes. That is all failing, and they are becoming money-spinning machines instead. That is happening because of the unchecked and uncontrolled power of chief executives and boards. There is no restraint on their activities and no effective control by shareholders, but how could there be? We have no Sarbanes-Oxley requirement, but that should have been provided for in the Bill. People should have the personal responsibility to pledge their position on the authenticity of the accounts of their company. That should be the responsibility of chief executives and chief financial officers. We have not done anything about it, and we should. As far as I am aware, there has been no inquiry into the subordinates of Enron, Parmalat and all the other companies that have gone bust, including those in this country. The financial interest is increasingly dominant. The means of financial manipulation by uncontrolled chief executives and boards are becoming more and more numerous and more and more common. This is because accountancy houses, especially the big ones, are selling all sorts of services to directors. They are telling them how to hype the share price and how to use various ways of increasing profit. They tell them how to use tax havens, share options, trusts and subsidiaries for their own purposes. The top 100 companies in this country have 15,000 trusts and subsidiaries. The US Treasury and the general administration office have both said that trusts and subsidiaries of that kind, which have multiplied, are the biggest source of criminal activity and tax fraud, because they are a means of hiding profits. That development has gone a long way in this country. Admittedly, the deterioration into financial self-interest and into regarding a company as a money-spinning machine to put into the back pockets of top people has gone further in the United States than here, but here it has gone a lot further than in Germany, where there is still a pride in building up a company, building up its production, serving the customer and making a better product more cheaply. That has led to a real revival of German companies, with which we are competing. Instead of doing all that, our companies bathe in financial froth. There are too many instances of companies, rather like Vodafone, are run by a self-interested clique at the top, who owe a duty of care to no one, neither to stakeholders, employees or shareholders. That is why there are obscene salaries, with the gap widening between salaries at the top and those at the bottom. It is why we get such fat-cat pension schemes showering money on those who have got enough already. At the same time, there are raids on company pension schemes. Companies did that in the 1980s by taking pension holidays. In fact, they took £19 billion from company pension schemes by giving themselves pension contribution holidays. The moneys went directly into profits and into the pockets of the top board. There are also share options, and manipulation of moneys overseas—all being carried on at a time when companies are trying to increase their profits by downsizing, by transferring production overseas and by squeezing the salaries and conditions of their employees. It is an indecent spectacle. It is even more indecent that a Labour Government—I shall try to echo Neil Kinnock’s intonation of that phrase, ““a Labour Government””—are not doing anything much about it in this Bill, which is our first opportunity to do so since 1997. It is odd that the DTI seems to have consulted so little with the Treasury. Here we have the Chancellor of the Exchequer waging a campaign against tax evasion and the use of tax havens to launder profits so as not to pay tax in this country. Companies are using more and more such devices to avoid their obligations to this country, where their profits were generated. We have only to look at how slowly the Government’s revenue from corporation tax is rising compared with their revenue from income tax. One is rising rapidly, but the other very slowly. Why? Because so much money is being laundered overseas so that tax is not paid in this country. We have only to look at News Corporation and how little corporation tax it pays in this country. Why do not we do something about that, given the enormous profits that the company generates here? People are being cheated. The Chancellor’s aspirations are good, and we need to help him. The Sunday Times estimated recently that we are losing tax revenues of between £97 million and £150 million a year, and that the loss is increasing exponentially. The Bill does little to help the Chancellor control that, determined as he is. I suggest that we should have a requirement, as proposed by Lord Lea in the other place, to publish the names, locations, profits and tax liabilities of all the trusts and subsidiaries run by a company. Why should that not be part of the information provided to shareholders and hence to the public? The head of the inland revenue service in the United States has expressed his desire for such a framework of legislation, as has Henderson Global—a big investor—which says that such legislation would make it much easier to understand the affairs of a company. Why should it not be provided? Why should companies not publish their tax—