Wednesday, 21 October 2020

John Christensen's Interview: Corporates remain too big to fail, too big to jail


Taxation is one of the most powerful means of corporate regulation. By the end of the year, the European Commission is expected to announce a new initiative that is set to transform the business taxation for the 21st century. 

By the end of the year, the European Commission is expected to announce a new initiative that is set to transform business taxation for the 21st century. Earlier this year, the EU executive announced a series of measures aimed at curbing corruption by fighting tax evasion and tax avoidance, promoting good governance in the EU and beyond, as well as revising the “Automatic Exchange of Information” directive. 

Brussels Morning talked with John Christensen, director of the Tax Justice Network, who in 1996  blew the whistle on a fraud involving a criminal currency trader and the local subsidiary of Switzerland’s largest bank — Union Bank of Switzerland. In 2017, Christensen, co-produced the documentary “The Spider’s Web: Britain’s Second Empire”, in which he exposed in detail how the super-rich exploit the flawed tax system to escape taxes and hide their wealth, thus contributing to widening the gap of extreme inequalities in the world. 

John Christensen, Tax Justice Network Director 

Brussels Morning (BM): Could you tell us what is the professional trajectory one needs to follow to become a champion of equitable taxation ?

John Christensen (JC): I originally trained as a forensic investigator and my ambition was to make documentary movies.   In 1978 I started to investigate how financial market liberalisation was profoundly reshaping the global political economy, and because I grew up in the British tax haven of Jersey I was intrigued by the role that tax havens play in globalised markets. I could see that tax havens enable big companies and very rich people not only to avoid paying tax, but also empowered these people and companies to use their enormous political leverage to secure tax breaks, or deregulation, or some kind of subsidy. 

Back in 1978 this subject was completely unresearched and you couldn’t even study it because there wasn’t a university anywhere in the world offering a course focusing on tax havens. It was as if tax havens didn’t exist. So I decided to head off and investigate by myself, completely alone. I finished my training in forensics investigation, studied for a degree in applied economics — looking at world trade and investment theory — and then I did a master’s degree in law and economics. After doing all that I went offshore. I returned home to Jersey and took a job with Deloittes in their offshore company and trust administration division. That’s the coal face where I learned how offshore works in practice. 

After a couple of years with Deloittes, I was recruited to head the government economic service in Jersey, which I did for over a decade.  By the time I left Jersey in 1998 I’d gained a lot of professional experience of working inside a tax haven, in both the private and public sectors. 

BM: What led you to found the Tax Justice Network?

JC:  What I learned in Jersey was that the rapid spread of tax haven activity had undermined any possibility for globalization to improve the lives of the majority of people, especially in the global South.  Worse, they had become a major threat to social stability and democracy. I discussed this with activists and anti-poverty NGOs from all over the world, and in November 2002 we agreed to launch a global network to tackle tax havens.  That’s how the Tax Justice Network came into existence.  In 2003, I was appointed as its first executive director.

BM: What have been the main cases the Tax Justice Network has brought before the European Commission?

JC: Initially we focused on transparency measures. A lot of corrupt practices — including tax evasion and tax avoidance — are protected by the absence of accounting and legal transparency. So our focus was on a new International Financial Reporting Standard for all multinational companies to require them to publish accounting information at country level, known as country by country reporting (CBCR).  CBCR reveals the ways in which big companies avoid taxes. We were successful; country by country reporting is now a global standard. 

To begin with, there was a lot of resistance to CBCR, particularly from large companies and accounting firms, who claimed it would be too expensive for them to produce the information.  Being trained professionals we were in a position to challenge them, arguing that because this information is material to understanding risks at country level, all boards of directors should have access to this information, and the information should also be available to other stakeholders, including employees, investors, and the communities in which they operate. 

BM: What were the Tax Justice Network major achievements?

JC: Apart from the important corporate transparency demands, we also won the argument for adopting ”Automatic Information Exchange” between tax authorities as a new global standard. Tax havens had successfully blocked this approach for many years, and I was constantly told by politicians “you will never achieve that”, and “it will not happen in your lifetime”. But automatic information exchange is now the global standard, and we can claim credit for that. 

We can also claim credit for pushing for a global standard for making information about company ownership publicly available. A lot of corrupt practices are hidden behind offshore shell companies, making it hard for investigators to find out who really owns these companies. In most cases the people who are listed are not the true beneficial owners. We’ve made the case, working with anti-corruption organisations around the world, for that information to be made publicly available. The EU has accepted our arguments and implemented public registers.  So we’ve made some progress towards tackling tax havens, but there’s still a long way to go.

EU’s tax structure: a political failure



BM: What are the major reforms the EU should incorporate into its tax system?

JC:  We must recognise that tax regimes in the EU are increasingly regressive, contributing to levels of wealth and income inequality so extreme that they threaten social and political stability.  I identify two areas of tax policy where the EU has significantly failed to take sufficient action: the first involves the race-to-the-bottom on corporate tax rates, which is disastrous.  The EU should have agreed a common tax base and a minimum tax rate of around 25 percent decades ago.  These are important steps towards abandoning the failed arm’s length method for taxing multinational companies and adopting unitary taxation. 

The EU has for a long time taken a permissive attitude towards tax competition. When talking to experts, it seems to be broadly accepted that tax competition is anti-democratic and economically harmful because the beneficiaries of tax competition are almost always multinational companies and the losers are almost always local companies. The EU’s thinking here is profoundly mistaken, and the EU needs urgently to reverse out of the race-to-the-bottom and push in the direction of enhanced cooperation to block tax havens from undermining the tax sovereignty of other countries.  If the EU wants to improve the lives of its citizens, a race-to-the-top on better regulation and more progressive taxation would be far more worthwhile than the foolishness of a race-to-the-bottom.

The second crucial step which the EU needs to take follows on from the need to tackle tax havens. Recently, the European Commission removed the Cayman Islands from the list of non-cooperative jurisdictions. How did that happen?  The Cayman Islands rank third, behind the BVI and Bermuda, on the Corporate Tax Haven Index, yet the EU drops it from its own blacklist.  Worse, the EU blacklist doesn’t include Ireland, or Luxembourg, or the Netherlands, all of which are prominent tax havens, so we still cannot take seriously the Commission’s promises to tackle this issue.  And this failure contributes in a big way to undermining public confidence in the EU itself.  The Corporate Tax Haven Index and the Financial Secrecy Index, both published by the Tax Justice Network, provide objective and independent rankings of the world’s leading tax havens and secrecy jurisdictions; the EU should abandon its politically compromised blacklisting process and substitute these indices.

BM: There is a feeling that there is a huge discrepancy between income tax and corporate taxation. Why can’t we make companies pay their fair social share?

JC: It seems to me that for decades, countries in the EU, and others, have been basing their tax policies around supporting the big multinational companies to gain market positions around the world, and they have been doing this by giving preferential tax treatment to multinationals compared to small and medium enterprises. And this is not always obvious because often it is a case of being lenient towards offshore tax avoidance.  But tax avoidance isn’t a legitimate activity in any circumstances, and this leniency creates a harmful market distortion: It’s essentially an indirect subsidy to big companies which allows them to operate as economic free riders. 

I think this is based on the politically mistaken idea that we need to support “our “multinational companies. In the long run, this leniency towards tax avoidance strengthens monopolies and weakens small companies, innovators and job creation. 

BM: Multinationals like Apple and Microsoft can use the extra cash that they don’t pay in taxes (and their competition does!) to aggressively market their products and buy out smaller firms that do.  Do you feel that ‘tax competitiveness’ can be regulated in the Single Market given the reliance of a number of member states on the model? 

JC: The EU needs to totally rethink its competition policy.  I favour applying higher tax rates to excess profits generated by monopolies, but I think the EU needs to go much further in shaping its competition policy, accepting that many companies are given monopoly rights through their intellectual property rights that can go on for decades. That is fundamentally anti-market and anti-competition. And to make matters worse, current tax rules allow these companies to park their intellectual property rights in offshore subsidiaries registered in the Cayman Islands, Bermuda, or other tax havens, and to shift their profits there to avoid taxes.  Anyone looking for the systemic roots of inequality should start by looking at how tax havens have disastrously distorted market economies.  

BM: Income tax in Europe is 51% in some countries. How do you see a tax system based on consumption and not on income as a means to reform capitalism? 

JC: Faced with capital mobility and massive lobbying from powerful corporations, political leaders feel themselves incapable of defending domestic tax sovereignty and resisting race-to-the-bottom pressures.  In response, they have shifted tax charges away from capital by largely abolishing wealth taxes and lowering corporate income tax (CIT) rates, while at the same time increasing value added and similar consumption taxes, and cutting back heavily on welfare provisions.

The decades-long trend away from direct taxation of wealth and income must be reversed. The COVID-19 pandemic makes it imperative that the EU reduces reliance on regressive indirect taxes like VAT, and makes much greater use of wealth taxes and excess profits taxes on the monopoly rents being generated by some companies.

BM: LuxLeaks, Panama Papers, Paradise Papers, FinCEN, and with whistle-blowers like Rudolf Elmer, Hervé Falciani coming forward… It’s official that chronic excess of debt is a consequence of central banks’ reckless modus operandi, perhaps based on orthodox neoliberal practices. Yet, debt is now regarded as something normal. Is there a sense of apathy? 

JC: I’m more optimistic than the question suggests. It’s not a question of people feeling powerless. We can see this in the US elections, where there is an astonishing level of political activism, whether coming from the right wing supporting Trump, or the centre-left supporting Biden. The Brexit divisions in the UK also revealed a huge level of public participation from across a wide spectrum of society.  There is a degree of political activism now that I haven’t seen in my lifetime and that shows how passionately engaged people truly are. I think the same applies in most European countries. What I think is missing is a coherent sense coming from progressives that another world is possible.  

Since the banking crisis of 2008, people have begun to lose confidence in any idea that returning to what was previously regarded as “normal”, amounts to a good idea. The public wants a radical departure from neoliberalism, preferably in the direction of a Green New Deal, to tackle both the climate crisis and the inequality crisis.  And the COVID-19 crisis has shown that states will necessarily be key players in shaping and financing the enormous investments required to make a transition away from a fossil fuel-based economy to a genuinely sustainable, renewables-based economy.  This will require a massive change of behaviour on the parts of central banks, which haven’t exactly covered themselves in glory, either in terms of preventing waves of banking crises, or in recognising the enormous existential risks posed by the climate crisis.

BM: The general sentiment of the public towards any kind of banking activity is one of great distrust…

JC: And rightly so.  Banks played a key part in the 2008 financial crisis. They were bailed out by states, and then went back to business-as-usual.  Ten years later we have record levels of corporate debt, record levels of household debt, record highs on stock markets, and record property prices.  Clearly something is not right; the global economy is even more fragile than it was before the financial crisis. 

BM: The TV documentary you co-produced in 2017 — “The Spider’s Web: Britain’s Second Empire” — is a comprehensive eye-opener about the global-scale of the tax evasion issue How is it that the City of London manages to avoid the scrutiny of political scientists and economists? 

JC: This reflects the way in which neoliberalism penetrated the state and most of the institutions of modern democracy, including media concentration in the hands of unaccountable billionaires, and the massive funds flowing into bogus think tanks, which then publish bogus research to distort political arguments. I think something similar has happened to academia. Too many academics say they can’t secure research funding to do this kind of critical analysis or critical accounting, and not surprisingly they’re concerned about the consequences of exposing the corruption that lies at the heart of offshore finance.

From my own experience, going back to when I blew the whistle on corrupt politicians and regulators in Jersey, once you stick your neck out, you can expect to be personally attacked.  Former friends and allies will fall back into the shadows because they’re frightened of losing their jobs. The police and judiciary will do nothing, and you run the risk of ending your career. It takes tremendous personal courage to engage in the kind of in-depth investigation of what is truly happening behind the surface of the City of London and other offshore financial centres.  In most cases, we would know nothing about the corrupt practices were it not for the heroic whistleblowers behind the LuxLeaks, the Panama Papers, the Paradise Papers, and the recent Jersey offshore scandal.

BM: There was an understanding that a common OECD framework (on domestic tax Base Erosion and Profit Shifting – BEPS) would allow cooperation between developed economies on limiting tax avoidance. How is that working?

JC: When the OECD first announced the BEPS programme many years ago, I asked them whether this would open the door to a comprehensive shift away from the arm’s length method, which is flawed beyond repair, towards unitary taxation.  But the OECD seemed determined to retain the arm’s length method, and the result is even greater complexity, even more possibility for lengthy and expensive disputes and arbitration processes, but still no clarity on how to tax multinational companies in this age of the digital economy.

The fact that they weren’t prepared to abandon the previous flawed system is not because of a political failure — quite the opposite. The previous system suits powerful interests — the big companies and big countries, like the US and the UK, and several other major EU countries. They’re perfectly happy to continue with this system because the losers are the poorer countries, which are not allowed to play a role in the decision-making processes. This isn’t an economic issue. This is all about the politics of corporate power.

I think this is a huge challenge facing humanity, ranking alongside climate crisis.  We’ve seen the rise of extremely powerful corporations, which are highly aggressive in shaping policies, particularly around regulation and taxation, to suit their interests.  And the BEPS process demonstrates the extent to which corporate power is able to resist change that would benefit the vast majority of people on this planet.

BM: The European Commission pledged to do more about tax evasion, but it seems like the system has a solid structure in place to protect those who commit the fraud and punish those who come forward to expose it.  Is there any way change can be achieved by political means?

JC: Yes, I’m reasonably optimistic because we have a lot of support coming from the European Parliament to strengthen whistleblower protection, which is an important step forward. 

We need to recognize that whistleblower protection is expensive. At high-level, particularly in financial services, a whistleblower is likely to suffer enormous financial damage as a result of whistleblowing. I would like to see in the EU, the development of a system of payments to support whistleblowers and, at the very least, to not allow financial penalties to discourage whistleblowing. And the payment should not come from general taxation. It should come from a levy imposed on the financial services sector and administered by an independent body.

Without whistleblowers, we would have made almost no progress during the last 30 years. We have seen how whistleblowers have been attacked — Antoine Deltour, Hervé Falciani and my own experience in Jersey. The attacks have been ferocious. The attackers have never been penalised for their bullying behaviour, which is, in many cases, criminal. 

BM: Do you think EU Commissioner for Competition Margethe Vestager is doing a good job?

JC: Initially, I was encouraged by her appointment, but less so now. She hasn’t significantly changed EU competition policy, which seems to start from a confused position of thinking that in order to support European companies to compete on the world stage we must allow them to monopolise domestic markets.  So, in one sector after another, we’ve seen mergers and acquisitions which have concentrated corporate power, and we’ve seen a steady modification of intellectual property rights which also concentrate corporate power, and we’ve seen the relentless rise of corporations both too big to fail and too big to jail.  And the competition authorities appear powerless to take effective action to protect public interest.

BM: How will the Tax Justice Network respond to such persistent challenges?

JC: Well, our work on investigating tax havens and identifying the areas where they fail to meet standards on transparency and regulatory compliance goes on, and we will continue to explore ways in which tax havens harm human rights, democracy and international security.  We have some new initiatives underway, including the imminent launch of a new anti-monopoly network to fight back against excessive corporate power. We’re optimistic that this will become as large and influential as the Tax Justice Network.

Tuesday, 20 October 2020

European Commission announces 2021 work programme


The Commission’s 2021 work programme, presented by EU Commissioner Maros Sefcovic today, largely takes into account the corona recession that has hit hard the global economy. Sefcovic said that EU action and coordination were required in order to avoid turning an “economic crisis into a social crisis”. 

“The European Commission (EC) will continue its efforts to secure a future vaccine for Europeans and to help our economies recover, through the green and digital transition,” said Commission’s president Ursula von der Leyen.

Under its communication, the EC stated that “we have the investment to match the vision and the ambition” focussing on the NextGenerationEU recovery instrument along with a reinforced EU budget for 2021-2027. “Our economies need continued policy support and a delicate balance will need to be struck between providing financial support and ensuring fiscal sustainability,” it further reads the EC’s announcement.

 “In 2021, we plan to table 86 major initiatives, in 44 packages, defining for the entire decade,” shared Sefcovic on social media.

Carbon border adjustment and sustainable transport

The 2030 Agenda and its Sustainable Development Goals as well as the Paris Agreement will stand as the guiding tools of the EC action. On this note, some of the new steps announced by the EU executive include a proposal on a carbon border adjustment mechanism to help motivate foreign producers and EU importers in order to reduce their carbon emissions as well as a series of measures on smart and sustainable transport, including a revision of the regulation on the trans-European transport network and of the directive on intelligent transport systems.

Circular economy

The Commission proposed to continue the implementation of the circular economy action plan, looking at eco-design and sustainable products, in particular circular electronics, including improving the collection, reuse and repair of mobile phones, laptops and other devices. The EU executive also set the intention of following up the EU biodiversity strategy for 2030 and the farm to fork strategy. 

Digital transition

As for the digital transition, a roadmap will be tabled with clearly defined goals for 2030, such as for connectivity, skills and digital public services. With regards to Artificial Intelligence, the Commission will develop legislation covering its safety, liability, fundamental rights and data aspects. A new European digital identity is also on the EC’s agenda “to make it easier to do tasks and access services online across Europe”.

Taxation and Capital Markets

Moving towards taxation issues, the EU executive said it will continue working for an international agreement for a fair tax system that provides long-term sustainable revenues. In case this attempt fails, the Commission will propose a digital levy in the first half of next year. A revision of competition rules is also on the EU’s agenda in order to ensure they are fit for the changing market environment, including the accelerating digitalisation of the economy.

The Commission is also eager to make progress on the Capital Markets Union and the Banking Union. For this matter, the EC proposed to revise the framework for handling EU bank failures, take measures to boost cross-border investment in the EU and step up the fight against money laundering. This will come together with legislation on sustainable corporate governance in view of fostering long-term sustainable and responsible corporate behaviour. The notorious green bonds were also introduced to push for sustainable financing. 

Social measures

The European Pillar of Social Rights will be the compass of Europe’s recovery when it comes to social matters. This includes a new European child guarantee aimed at reducing child poverty and inequalities, by ensuring access to health and education for all children.

Also, a new communication will be tabled for a revamped EU’s humanitarian aid, which will focus on new ways of working with EU’s partners and other donors.

A new biomedical agency

The Commission is also set to update the new industrial strategy for Europe to take into account the impacts of the corona recession. Also, a new pharmaceutical strategy will look at the security of Europe’s supply chain and ensure citizens can rely on high quality medicines.

A revamped Schengen

Additionally, they will propose to establish a new agency for biomedical advanced research and development and a new strategy for the future of Schengen and stronger Schengen rules.

The new pact on migration and asylum will also be subject of assessment. In this context, the Commission will propose a number of measures on legal migration, which is set to include a “talent and skills” package.


Wednesday, 7 October 2020

Fair taxation: Member States update EU list of non-cooperative tax jurisdictions


EU Member States added two countries – Barbados and Anguilla – to the EU list of non-cooperative tax jurisdictions. Both jurisdictions were added to the list due to tax transparency concerns. At the same time, the EU has now completely delisted the Cayman Islands and Oman, since they have now delivered on their pending commitments to remove a harmful tax regime and increase tax transparency respectively. Today’s update keeps the number of constituents of the EU list at 12: 

American Samoa

Anguilla

Barbados

Fiji

Guam

Palau

Panama

Samoa

Seychelles

Trinidad and Tobago

Vanuatu 

US Virgin Islands

Under the EU listing process, jurisdictions are assessed against three main criteria – tax transparency, fair taxation and real economic activity. Those that fall short on any of these criteria are asked for a commitment to address the deficiencies within a set deadline, and run the risk of being added to the list of non-cooperative jurisdictions if these commitments are not met. That said, because of the coronavirus pandemic, Member States again decided to grant certain extensions to some countries on the current ‘grey list’ to fulfil the commitments they have taken. 

This is the first update of the list since the Commission announced plans in July to review the geographic scope and criteria of the listing process, and to evaluate the defensive measures currently being applied by the EU and individual Member States against listed countries and territories. 

Tuesday, 6 October 2020

EU’s plastic strategy at risk, warn EU Auditors

Article published in Brussels Morning


Today, the European Court of Auditors (ECA) published a review claiming “there is a significant risk that the EU will not meet its plastic packaging recycling targets for 2025 and 2030.” At stake is the EU Action to tackle plastic packaging waste under the European Green Deal (EGD). In the EU, more than 60% of plastic waste still comes from packaging, but only 40% of that packaging is recycled. 

Describing the new recycling targets for plastic packaging as “a daunting challenge”, Samo Jereb, the Member of the ECA responsible for the review, pointed out how the EU must reverse the current practice “whereby we incinerate more than we recycle.” He noted pointedly that by “resuscitating single-use habits amid sanitary concerns, the COVID pandemic shows that plastics will continue to be a mainstay of our economies, but also an ever-growing environmental threat.”

The European Commission (EC) adopted its plastics strategy in 2018, updating the 1994 Packaging and Packaging Waste Directive and doubling the current recycling target to 50% by 2025 and to 55% by 2030.

However, according to the ECA, nearly a third of the Union’s reported plastic packaging recycling rate is achieved through reliance on shipments to non-EU countries for recycling. As of January 2021, under the soon to be enforced Basel Convention, most plastic waste shipments will be banned. This, combined with the lack of capacity to treat plastic waste within the EU, constitutes another risk to achieving the new targets.

Commission’s delicate ambitions

On 11 March, the European Commission (EC) published its “New Circular Economy Action Plan” listing some 50 actions to combat the ever-growing plastic waste being generated by humans. One of the most positive actions is the pledge to develop new measures on making products more sustainable. To achieve this, on 15 September, the EC launched the “Sustainable products initiative” which aims at revising the Eco design directive. 

The objective is to not only to design a good strategy but also how to operationalize it effectively from a financial and infrastructural perspective. Frans Timmermans, the EU Commissioner in charge of the Green Deal, will elaborate on this at the Budapest Climate Summit when he talks about how the Commission intends to deliver on its green goals.  Soon, the EU executive is expected to launch a renewed sustainable finance strategy, a crucial initiative that will outline how to underwrite the sustainable transition.

In 2018, the EC put forward “A European Strategy for plastics in the circular economy — Local and regional dimension” in line with the UN’s 2030 Sustainable Development Goals. Shortly afterwards, In December 2018, the Commission created the Circular Plastics Alliance to help plastics value chains boost the EU market for recycled plastics to 10 million tonnes by 2025. 

In 2015, Jean-Claude Junker’s Commission delivered the circular economy action plan, which outlined the bloc’s first ecological objectives. These covered the cycle from production and consumption, to waste management and the market for secondary raw materials. The EU’s circular economy gained momentum with the signing of the Paris Agreement in 2016. 

Rethink Plastic Alliance calls for more

However, despite all the green initiatives and its green ambitions, NGOs ask for more from the EU exectutive. 

The Rethink Plastic Alliance welcomed the Commission’s plans to curb plastic pollution but it showed reservations, in particular with regards as to how the Commission intends to set a policy framework for bio-based and biodegradable plastics. “These plastics, which are too often pushed as a solution, are mostly applied as single-use materials with similar environmental impacts to conventional plastics, especially in the ocean,” they warned.

The Alliance accused the Commission of confounding consumers by referring to a “direct substitution of conventional plastics with bio-based and biodegradable plastics” claiming that it will “amount to greenwashing.” The plastics network called on the EC to develop EU legislative measures to address pollution from all primary microplastics.

EU’s watchdog remains sceptical 

The EU’s watchdog Corporate Europe Observatory (CEO) has raised questions regarding the overall “official version” of the EGD. “The fingerprints of industry, and in particular the fossil fuel industry, can be seen all over the EGD,” the CEO reports in a research paper.

“In spite of all its rhetoric, the EGD does not seek to transform, but rather to accommodate, the status quo. It does not rethink the economic system that is the root cause of the climate, ecological, and financial crises. It continues to promote economic growth while seeking to manage the environmental and social impact,” the CEO analysis declared.

The EU watchdog body noted that the EGD is the number one most lobbied-on topic in Brussels, pointing out how, in the first 100 days after the Green Deal was announced on 11 December 2019, key members of the Commission in charge of the deal met with business interest representatives 151 times, roughly 11 meetings a week. “They only met 29 times with public interest representatives, which is about two meetings a week,” CEO commented.

“The fossil fuel industry wants the EGD to focus on ‘solutions’ that allow them to keep their business model, based on the extraction and production of fossil fuels, or at least to control the energy transition as much as they can, making sure they can keep profiting from it.”

However, the update of the EC’s legal framework for plastic recycling in 2018 does reflect the EU’s increased ambitions and it could help boost plastics recycling capacity. The scale of the challenge facing Member States should not be underestimated. EU auditors strongly call on concerted action to get the EU on a good track within the coming five-to-ten years.

Friday, 2 October 2020

Commission urged to look into Amazon’s alleged spying on workers

Article published in Brussels Morning


The European Commission has received an appeal from trade unions to investigate Amazon’s efforts to spy on employees, the Guardian reported yesterday. The complaint was sent to Commissioners Nicolas Schmit and Thierry Breton, in charge of jobs and social rights and the internal market, respectively. 

At stake are claims, initially reported by Vice in early September, that Amazon has been engaged in surveillance activities that amount to spying on its workers’ private and public social media groups in an effort to prevent them from banding together against the online giant. The joint request from the trade unions cites Amazon’s alleged attempt to spy on workers as “potentially illegal”. 

“Amazon’s plans to ramp up surveillance of workers across Europe and globally are yet another reminder that EU institutions should closely investigate Amazon’s business and workplace practices throughout the continent, as we suspect them to be in breach of European labour, data and privacy laws that our citizens expect to enjoy,” the letter to the Commission stated, according to the Guardian report.

In the UK alone, the company’s total permanent workforce numbers more than 40,000 employees, according to Amazon’s website. In Germany, the total number of permanent employees exceeded 18,000 in 2018. In June this year, the German trade union Verdi urged Amazon workers to engage in a 48 hours strike to “step up the pace” of wage negotiations.

Amazon, a tale of servitude

The online giant retailer has often been on the spotlight accused of deplorable company policies. Several Amazon employees have come forward with complaints about the lack of basic benefits and protections, including sick leave. Adding to its poor corporate reputation, a recent investigative report from the Centre for Investigative Reporting concluded that Amazon employees suffer more work-related injuries than the industry average. 

In the early onset of the Coronavirus pandemic, Amazon employees in the US protested about the scarcity of hand sanitizer, gloves and masks at warehouses. Numbers of workers took to the streets to protest for better conditions. As a result, some were fired, it being claimed that disrespected “social distancing guidelines”. 

In March, Amazon CEO Jeff Bezos announced a USD25 million relief fund for workers who contracted COVID-19 during the pandemic. A week later, the company also announced it was donating USD1 million to four foundations in the larger Washington DC area to help pandemic relief efforts. On 2 April, Bezos pledged to give USD100 million to Feeding America, a non-profit organisation which runs food banks across the United States.

Bezos’ cash cow

The company has registering record profits amidst the pandemic. Between April and May 2020, Amazon recorded nearly USD89 billion in sales and USD5 billion in profits, according to Vox. Charitable  or philanthropic disbursements by Bezos back in March and April represent a pittance compared to what he has made since the pandemic began. His net worth is currently estimated at USD175.3 billion, roughly Euros 150 billion. 

“The company should spend its record-breaking profits not on sleek public relations campaigns but on workers’ benefits,” wrote Maha Hilal for Al Jazeera. In April, Hilal reported, Amazon executives had sought to prevent unionisation, a recurring feature in the Bezos business model.

The EC Commission is already conducting anti-trust investigations into Amazon’s role as an online platform. The question now is will the EU executive intensify pressure on the world’s reportedly richest man?

Wednesday, 16 September 2020

Von der Leyen delivers first State of the European Union


Today, the Commission’s president Ursula von der Leyen addressed her first “State of the European Union” (SOTEU) speech before the European Parliament. The annual discourse, which started early in the morning, focused inevitably on the COVID-19 crisis and its impact in Europe. On top of a rather unpredictable health crisis and an imminent Brexit, Europe is now dealing with violence on its neighbourhood and recurring migrant crisis insists on showing Europe’s fragilities.

“Next week, we will put forward the New Pact on Migration. We'll take a human and humane approach. Saving lives at sea is not optional and those countries who fulfill their legal and moral duties or are more exposed than others, must be able to rely on the solidarity of our whole EU,” said von der Leyen.

Before the impossibility of ignoring the pandemic that has affected worldwide economies, societies and ways of living, von der Leyen’s introductory notes focused on the challenges that COVID-19 have brought to Europe and how to get out of this health crisis with greater resilience. “We need to built a stronger European health Union,” delivered the president during the speech on Wednesday. Von der Leyen announced the upcoming empowerment of the European Medicines Agency and the ECDC, as well as a discussion regarding health competences. A Global Health summit was announced for the next year, in Italy.

Overall, a more resilient Europe means stronger economies and welfare systems ready to respond to people’s needs. Von der Leyen tried to reassure roughly 440 million citizens that instruments such as the Multiannual Financial Framework will boost the continent’s shape and help member states to get back on the recovery track.

Despite the significance of each of the Commission’s endeavours, the European Green Deal has attracted particular attention as it is poised to revamp the entire economy and finance in Europe. In fact, the EU is striving to be the first climate-neutral continent in the world and it hopes to inspire other nations to follow the lead.

The digital upgrade in Europe is another top priority. In late July, the EU’s Innovation and Research Commissioner Mariya Gabriel informed that developing digital competencies throughout the EU as well as encouraging gender equality in the bloc’s digital economy are two key areas that the Commission will seek to promote as part of the upcoming revamped Digital Education Action Plan.

Essentially, overall recovery will need strong policy direction, as well as investment. This prediction was outlined in greater detail in the Communication on Europe’s Recovery Plan. It was further reflected with new proposals mentioned in the Commission’s Letter of Intent to the European Parliament and Council on the occasion of the SOTEU. Finally, these will feature as part of a well-developed Commission Work Programme for 2021, to be adopted in October 2020. 

The SOTEU was first introduced ten years ago, after the Lisbon Treaty entered into force. Since then, it became a famous yearly ceremony, connecting the work developed by the EU and its citizens. 

Monday, 14 September 2020

EU's Anti-Fraud Office delivers 2019 report


The European Anti-Fraud Office (OLAF) released yesterday ”The OLAF report 2019”, summarizing the main achievements on their efforts to tackle fraud, corruption and mismanagement within the Union. According to the 60-page document, in 2019 alone, OLAF has recommended the recovery of €485 million to the EU budget. 

Some of the most striking trends revealed by OLAF investigations during the course of 2019 include collusion and manipulation of procurement, cross-border schemes that make detection more difficult, frequent targeting of projects in third countries, continued targeting of research funding and finally, smuggling and counterfeiting involving complex cross-border networks.

“We stand ready to deploy our arsenal of tools to ensure that not a cent of the EU budget is lost to fraud, that EU businesses do not suffer unfair competition from cheap substandard imports that do not pay taxes and that EU citizens are safe from dangerous products, including those that they increasingly buy online,” stated OLAF’s Director-General Ville Itälä.

As stated in their annual report, in 2019, OLAF concluded 181 investigations issuing a total of 254 recommendations to the relevant national and EU authorities. The EU’s Anti-Fraud bureau opened 223 new investigations, following 1174 preliminary analyses carried out by OLAF experts. In addition to investigation and coordination efforts, OLAF planned or provided support to 13 joint customs operations which led to significant progress in its bids to fight the illegal trade in tobacco products by helping national authorities seize more than 251.4 million cigarettes.

EU's watchdogs call for more transparency

Nevertheless, major issues remain to be addressed. Back in June, the EU watchdog Corporate Europe Observatory (CEO) and Global Health Advocates (GHA), delivered two reports condemning the way the EU is funding scientific research. The first report is called “More private than public: the ways Big Pharma dominates the Innovative Medicines Initiative”, and the second, “Research & Destroy: the factories of the industrial bioeconomy threaten the climate and biodiversity”.

According to these reports developed by Martin Pigeon (CEO) and Marine Ejuryan (GHA), industrial lobbies have managed to control the use of at least 3.6 billion of euro in European public research funds in the guise of innovation.

According to the authors, the reports reveal that “these lobby groups have prevented partnerships from meaningfully investing into research projects that address societal challenges such as epidemic preparedness or to invest in viable climate solutions; the EU research funds were mostly used to fund their own commercially profitable research projects instead.”