Exaro News Archive

John McDonnell to accuse oil giants of North Sea tax avoidance

George Osborne faces Labour challenge over Treasury’s revenue loss from lucrative fields

By David Hencke and Mike Yuille | 9 May 2016

“The remaining profits are transferred by tax-free dividends until they reach Chevron subsidiaries in Delaware” – ITF report

Chancellor George Osborne is to be challenged by his opposite number over claims of tax avoidance on oil companies’ revenues from North Sea fields.

Labour’s John McDonnell, shadow chancellor, is to demand an explanation from Osborne after a report by the International Transport Workers’ Federation (ITF) claimed that major oil companies appeared to have avoided tax on huge revenues from the North Sea.

The report by the global body that represents around 700 unions names three big oil companies, which have faced similar accusations in the Australian Parliament.

McDonnell told Exaro: “Working with our Australian colleagues, we have been able to expose yet another massive tax-avoidance device that many will consider scandalous, especially at a time oil workers have been losing their jobs.

“In the light of these revelations, I am demanding that George Osborne takes action immediately to end this abuse and confront this forcibly head on.”

Concern about the use of offshore havens to minimise tax payments were heightened last month with the huge leak of material from the Panama-based law firm, Mossack Fonseca. The International Consortium of Investigative Journalists is tonight due to release a database of more than 200,000 offshore entities that are part of the “Panama papers”.

The ITF report accuses Chevron, the US-based oil giant, of using a complex corporate structure with a series of offshore entities – including Bermuda and the US state of Delaware – for “aggressive tax minimisation”.

It says: “In 2014, when oil prices were still high, Chevron produced an estimated £1 billion of North Sea oil and gas. According to other recent investigations, no corporate tax was paid in the UK in 2014 by Shell or BP’s four main British subsidiaries.

“Chevron’s 2014 UK filings show tax charges for previous years and tax credits for the current year, but do not reveal what taxes may have been paid, if any, in the UK.”

It continues: “While lacking in transparency and raising many questions, the 2014 filings of Chevron subsidiaries connected to North Sea oil production provide a snapshot of how complex corporate structures, weaving in and out of tax havens, may be used to avoid tax obligations in the UK.”

“After tax payments are paid – or not – on oil and gas production in the UK, the remaining profits are transferred by tax-free dividends until they reach Chevron subsidiaries in Delaware with no public reporting of accounts.”

According to Chevron’s figures, it produced an average of 32,000 barrels of oil and 88 million cubic feet of natural gas every day in 2014 from the North Sea. Chevron North Sea paid £168.5 million in tax in 2014, although accounts show that this was deferred from previous years.

A Chevron spokeswoman said: “Chevron complies with all tax laws and regulations wherever it operates, including any required disclosures.”

The ITF claims come after the Federal Court in Sydney, Australia ruled last October that Chevron used a shell company in Delaware to escape potentially US$258 million in taxes.

Chevron was able to eliminate Australian taxes on US$1.7 billion of profit earned there thanks to inter-company transactions within the group, according to the ruling.

The court ordered it to pay more than US$300 million in back taxes, interest and penalties.

The oil giant insists that the transactions were legal and that it had paid all required taxes. It says that it is appealing the decision.

An inquiry by the Australian Senate is investigating “tax avoidance and aggressive minimisation by corporations registered in Australia and multi-national corporations operating in Australia”. It summoned executives from Chevron – and seven other energy giants, including Shell and BP – to explain their use of tax havens around the world.

Senior Chevron executives told the inquiry in November last year that the profit to which the Federal court’s ruling referred was still subject to federal tax in the US.

A spokesman for Shell said that it paid £1.3 billion in UK taxes between 2011 and 2013.

And a BP spokeswoman said that his company had paid £1.8 billion in UK taxes over the past six years.

But they both had not paid UK tax recently because of the fall in the oil price and huge investment in new projects.

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Online Media Awards shortlists Exaro for best breaking story

Exaro is nominated for revealing details of Smith review into Sir Jimmy Savile and BBC

By Exaro Team | 5 May 2016

“The Drum Online Media Awards identify the cleverest, boldest and most original purveyors of news and views from around the world” – Online Media Awards

Exaro has been nominated for ‘breaking news story of the year’ in this year’s Online Media Awards for revealing the findings of the Smith review.

We have been shortlisted in the awards for online journalism, covering the year to March 2016, for revealing details of the leaked report of the review into sexual abuse by the late BBC star, Sir Jimmy Savile, at the broadcaster.

The story set the news agenda as the rest of the media, including the BBC itself, followed the devastating disclosures from the report by Exaro.

The leaked report revealed how Dame Janet Smith, the retired judge who led the review, condemned BBC culture over Savile’s paedophile activities at the Corporation. She slated the BBC for a “very deferential culture”, its “untouchable” stars and “above the law” managers.

In a series of articles, Exaro revealed how BBC employees were too afraid to report Savile to managers, and how BBC people feared blowing the whistle even more now.

We also exposed a BBC culture where celebrities were treated with “kid gloves” while managers drank heavily, and how the Smith review warned that “a predatory child abuser could be lurking undiscovered in the BBC even today.

The series of 22 stories published on the same day revealed how more than 100 BBC employees told Smith that they heard about Savile’s predatory sexual conduct, and how the review raised evidence of sexual abuse at Top of the Pops that went far wider than Savile.

In addition, Exaro published more than 37,500 words of extracts from Smith’s entire report.

Four Exaro journalists (and one lawyer) worked on the expose:  David HenckeAlex Varley-WinterTim Woodand Mark Watts.

The other nominations for ‘breaking news story of the year’ are BBC News, Bloomberg, Buzzfeed, ITV News, RTE News, New York Times and the Scottish Sun.

The organisers said: “The Drum Online Media Awards identify the cleverest, boldest and most original purveyors of news and views from around the world.”

We were nominated in the Online Media Awards last year – again, for ‘breaking story of the year’ as well as ‘best campaigning or investigative journalism’ and ‘online editor of the year’.

Exaro has managed to keep setting the news agenda despite having only an average of five full-time equivalent journalists: a small team that has a massive impact.

Since its launch four-and-a-half years ago, Exaro has repeatedly been shortlisted for its investigative journalism and agenda-setting stories in the industry’s most significant awards. Its first big scoop on how Ed Lester, then chief executive of the Student Loans Company, worked off payroll won David Hencke ‘political journalist of the year’ in 2012.

The winners of this year’s top honours at the Online Media Awards will be announced on June 7.

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Councils’ poor spending data waste ‘tens of millions of pounds’

Transparency International prepares report to warn of corruption risk at local authorities

By Tim Wood | 29 April 2016

“Savings of tens of millions of pounds could be made across councils if transparency guidelines were met” – Ian Makgill, chief executive, Spend Network

Local councils are to be slammed for wasting “tens of millions of pounds” because of the poor quality of spending data published by them.

Transparency International UK (TI-UK), the anti-corruption organisation, is preparing to publish a damning report that will highlight the failings by local authorities in how they publish spending data.

A leaked draft of the report seen by Exaro says: “Local government in England is increasingly becoming a significant corruption risk.

“Over the past decade, the UK government has been keen to devolve powers and service provision downwards to authorities. However, the control and oversight mechanisms to ensure that these new powers and resources are used appropriately have been weakened.”

The report, close to being ready for publication, is entitled, ‘Absent oversight: where are all the armchair auditors?’

Ian Makgill, chief executive of Spend Network, which provides subscription services to detailed analysis of expenditure by local authorities and other public bodies, said that the failure to meet the same standards in the presentation of the data makes it far less useful.

He said that standardised data would show up, for example, why one local authority is paying far more than another for the same service. “Savings of tens of millions of pounds could be made across councils if transparency guidelines were met. Provisions for data standardisation were passed into law in 2015. I have not yet seen one single local authority adhere to them in completeness.”

Exaro revealed five years ago how up to £2 billion of spending by local authorities would become exempt from audit. It was a result of the government’s move to scrap the Audit Commission.

Instead, local authorities would be compelled to publish data on their spending, to enable greater public scrutiny, including by “an army of armchair auditors”.

But, the report by Transparency International will point out, local authorities are not making the data available properly. It identifies problems with the supply of the information, its accuracy and accessibility as well as technical problems that are obstructing the full use of it.

“The result of this is that despite being a key part of the UK government’s transparency drive, this data has not yet introduced substantive transparency for local authorities’ finances,” the draft report says.

It adds: “Local authority spending transparency is not as good as it is intended to be, which inhibits citizens’ ability to hold councils to account.”

Data specialists tell the authors of the report that such information can help flag spending irregularities. They point to examples where potential savings of “tens of millions of pounds” were identified, according to the draft report.

Proper availability of spending data would also help identify some of the £147 million a year that the government estimates to be wasted by local authorities in England on mistakenly paying the same invoices twice.

The report by Transparency International will also highlight the potential conflict of interests, as raised by Exaro back in 2011, in the hiring by local authorities of private companies to carry out audits.

Derek Elliott, former head of governance and counter-fraud at the Audit Commission, is cited in the report as saying that standing up against a council in his experience “can be a very frightening thing.” He says that councils very often “turn on you”.

He says that private auditors “may be too worried about having their contract renewed to raise issues flagged by citizens.”

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Revealed: huge probe into ‘cover-ups’ over VIP paedophiles

‘Operation Winter Key’ brings together claims of old police cases dropped ‘corruptly’

By Tim Wood | 21 April 2016

Revealed: huge probe into ‘cover-ups’ over VIP paedophilesDetectives have combined a series of investigations into alleged cover-ups of child sex abuse by VIPs into one umbrella operation.

Exaro can reveal that allegations about how Scotland Yard “corruptly” dropped old cases on claims against celebrities such as Sir Jimmy Savile, the paedophile and BBC star, politicians and other prominent people are being investigated under ‘Operation Winter Key’.

Sources familiar with the operation say that it covers all claims of “impropriety” by officers of the Metropolitan Police Service over complaints of sexual abuse up to 2012.

One source told Exaro: “It is being treated very seriously.”

Detectives from the Met’s directorate of professional standards (PSD) are working on the expanding operation, which is being overseen by the Independent Police Complaints Commission (IPCC).

As Exaro revealed in January, the IPCC is directly investigating similar allegations against a senior Met detective in more recent years.

A source close to the operation said: “The reason for the cut-off at 2012 is that it would be unethical for PSD officers to look at other officers still in the Met. It is too sensitive for everyone at the moment for these issues to be left unresolved.”

A second source said: “Every day, people are reporting abuse that happened to them in the past and saying that they told the police at the time, or their social worker, nurse, or teacher. Things were very different back in the day. It is not perfect now. But the Met is trying to deal with this.”

“People are coming forward to say that they told the police about this, but they did nothing about it, or the officers dealing with it were suddenly told to stop investigating this.”

Operation Winter Key is investigating whether, as some former officers allege, orders to close cases prematurely came from senior management. It is taking evidence from several current and former officers.

One element of the operation is investigating complaints that police failed to treat allegations specifically against Savile properly.

The second source added: “Forces all round the country are carrying out similar investigations, seeing whether there is any evidence of misconduct at a much higher level.”

When the Met last month announced the closure of ‘Operation Midland’, the investigation into allegations of child sex abuse and the murder of three boys by members of the Westminster paedophile network, it said that the PSD was continuing to look into historical allegations from former officers about concerns over sexual abuse that involved “political figures” and were not properly examined. The IPCC was managing 32 such investigations.

A spokesman for the Met said that all its investigations into allegations of child sex abuse by prominent people, liaising with the overarching inquiry into child sex abuse, as well as “impropriety by officers”, have been brought together under Operation Winter Key. It has a 90-strong team.

The investigations into shelved operations were launched after Exaro revealed in December 2014 how several former police officers admitted in a private online forum that paedophile cases by Scotland Yard were closed down as they started to expose VIPs.

Exaro published incendiary posts from the closed online forum for serving and former officers.

A week later, Exaro revealed that former police officers who made the revealing postings had decided to submit a dossier of statements to the Met’s commissioner, Sir Bernard Hogan-Howe.

And there were yet more revealing posts, including recollections of one surveillance operation on paedophiles that was shelved after it tracked police officers, lawyers and even a magistrate.

Three months later, the IPCC announced an initial wave of investigations into “allegations of corruption in the Metropolitan Police Service in relation to child sex offences dating from the 1970’s to the 2000’s.”

The IPCC said in a statement that all the cases concerned allegations of “suppressing evidence, hindering or halting investigations, and covering up the offences because of the involvement of MPs and police officers.”

It also announced a similar investigation in relation to Greater Manchester Police and the late Sir Cyril Smith, the former Liberal MP who died in 2010.

And last September, the IPCC announced a further tranche of similar investigations. The police appealed for anyone with any relevant information about such historical cases to come forward.

Related Stories : Child sex abuse, ‘Fernbridge’ and ‘Fairbank’: Exaro story thread

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Royal Bank of Scotland faces call to compensate GRG victims

FCA report on RBS scandal set to recommend scheme for fleeced ‘distressed’ businesses

By Mike Yuille | 19 April 2016

Royal Bank of Scotland faces call to compensate GRG victims

“A compensation scheme will be a quicker and easier remedy than litigation” – Jonathan Hawker, RBS/GRG Business Action Group spokesman

Bosses at the Royal Bank of Scotland face pressure to set up a compensation scheme after its restructuring unit fleeced assets from “distressed” businesses.

Exaro understands that a long-awaited report on the scandal – commissioned by the Financial Conduct Authority (FCA), the City regulator – is set to recommend a compensation scheme. The report was sent to state-controlled RBS last Wednesday for any final comments before it is published.

Troubled RBS, which only last week was in the news over plans to slash hundreds of jobs and cut its branch network, is expected to object strongly to the recommendation.

But Jonathan Hawker, spokesman for a group of more than 400 business owners who claim that RBS wrongly stripped them of their assets, is hopeful that the FCA report will force the bank to pay compensation. “Our members have been waiting for a long time, and we are set up for litigation. If it can be avoided, that is better for all concerned,” he said.

The group’s members owned businesses that borrowed money from RBS, which referred them to its Global Restructuring Group (GRG) – dubbed the “vampire bankers” – when it was sharply reducing its loan book in the wake of the credit crunch and government bail-out in 2008.

The UK government bought a majority stake in RBS in 2008, with its holding rising to 84.4 per cent.

A report in 2013 by Lawrence Tomlinson, then an advisor to the Department for Business, Innovation and Skills, found that RBS “artificially” distressed viable small- and medium-sized enterprises, putting them through an insolvency process that led to “biased outcomes to the detriment of the business owner”.

Hawker told Exaro: “A lot of these people are bankrupt, living with relatives, and in a fairly bad way. So a compensation scheme will be a quicker and easier remedy than litigation.”

The 408 business owners, members of the RBS/GRG Business Action Group, are preparing to sue the bank in the High Court for a total of more than £800 million.

Hawker said that 275 of the group’s members are ready for trial already, with claims ranging from less than £1 million to more than £50 million, and an average of £2 million per case – £550 million in total.

So, he said, RBS would have to commit hundreds of millions of pounds for any compensation scheme over the GRG scandal.

Other groups of business owners are also preparing to sue RBS over its now-defunct GRG, including R G Litigation. Launched only last month, it says that damages claims could run to billions of pounds.

In January 2014, the FCA commissioned Promontory Financial Group, a consultancy company that specialises in regulatory compliance, and Mazars, an accountancy firm, to carry out an “independent review” of RBS’s treatment of business customers in financial difficulty and allegations in the Tomlinson report of poor practice.

The FCA report was due to be published by the end of 2015, but missed the target.

In an update last week, the FCA confirmed that it had received the draft report. It added: “RBS will be given the opportunity to review the report.”

But the FCA is still unable to say when the report will be published.

The timing could be awkward for RBS. The bank is due to hold its annual general meeting on May 4, and may have to prepare hurriedly a public statement on any compensation proposal in the FCA’s final report.

An RBS spokesman would only say: “We will have to wait until the FCA’s findings come out.” He refused to say whether RBS had received the draft.

Tomlinson’s report said that he found “heavy handed, profiteering and abhorrent behaviour” by some banks towards businesses.

But RBS commissioned a law firm to carry out a review, which found no evidence of Tomlinson’s allegation of systematic defrauding of business customers.

RBS recorded in its accounts for 2015 provisions of £2.9 billion for “regulatory and legal actions”, and this did not even include the GRG issue.

After taking initial steps towards privatising RBS, the government delayed plans to sell its stake. However, the government has sold some shares since last August to reduce its holding to 72.9 per cent.

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MPs to grill foreign minister over use of UK weapons in Yemen

Tobias Ellwood faces tough questions in investigation into arms exports to Saudi Arabia

By Frederika Whitehead | 15 April 2016

MPs to grill foreign minister over use of UK weapons in Yemen
Bombing campaign: Saudi air strike in Sana’a, Yemen

MPs to grill foreign minister over use of UK weapons in YemenForeign minister Tobias Ellwood is to be grilled in a parliamentary inquiry into whether UK arms have been used in the war in Yemen.

MPs on the House of Commons committee on arms export controls will quiz Ellwood, the minister with responsibility for the Middle East, about the UK’s sale of weapons to Saudi Arabia.

They will question the minister about whether Saudi Arabia, a key ally of the UK in the Middle East, has used British weapons in its military action in support of Yemen’s president, Abd-Rabbu Mansour Hadi, who fled the country last year after Iran-backed rebels took control of the capital, Sana’a. Ellwood is pictured to the right with Abdulaziz bin Abdullah, the Saudi prince and vice-foreign minister in 2014.

A spokesman for the Foreign Office confirmed to Exaro that Ellwood is due to appear before the committee on a date to be agreed.

Ellwood said in Parliament in July last year, and again in November: “We have received repeated assurances from the Saudi Arabian-led coalition that they are complying with international humanitarian law, and we continue to engage with them on those assurances.”

Tom Brake, MP and foreign affairs spokesman for the Liberal Democrats, said: “Minister Ellwood and the government must now focus on investigating whether UK arms are, or have been, used indiscriminately by the Saudis in Yemen, and not on promoting weapons’ sales.”

Amnesty International, Oxfam and Saferworld commissioned Philippe Sands, a barrister, to provide a formal opinion on the legality of arms exports to Saudi Arabia. He told the committee on arms export controls in an evidence session on Wednesday that continuing such sales breaks international agreements on arms control because of what he says is evidence of their use in Yemen.

He also said: “You cannot just rely on reassurances of others, and you cannot just say that it is for others to form a view on this, not governments.”

Paul Everitt, chief executive of ADS, the trade body for the UK defence and aerospace industry, told the committee on Wednesday: “The UK export licensing regime is widely regarded as one of the most robust and transparent that operates around the world.”

A Saudi-led coalition of nine Arab countries began air strikes in Yemen in March last year in an offensive against the Houthi rebels. But it is accused of targeting civilians.

A report by the United Nations in January said that Saudi forces were carrying out “widespread and systematic” attacks on civilian targets. The UN report outlined 119 Saudi-led strikes that were in breach of international humanitarian law. It also said that Houthi forces were using landmines and other indiscriminate weapons in illegal attacks.

The report led Jeremy Corbyn, opposition leader, to challenge David Cameron at prime minister’s questions in January over the role of UK weapons sold to Saudi Arabia. Cameron said that the UK had “the strictest rules for arms exports of almost any country anywhere in the world”.

The UK government denies that Saudi Arabia has been targeting civilians in Yemen.

The UN estimates that, one year into the conflict, 6,400 people have been killed – half of them civilians – and another 30,000 injured. One person in 10 has been “displaced” by the war.

Several non-government organisations, including Human Rights Watch, Amnesty International, Oxfam and Campaign Against the Arms Trade have called for a suspension of weapons sales to Saudi Arabia, pending an investigation into whether and how they are being used in Yemen.

There is growing concern in Parliament about the war in Yemen, and the possible role of UK arms. At least 27 MPs and 7 Lords have put down more than 100 parliamentary questions about the issue.

In February, MEPs voted in favour – by 359 to 212 – of an arms embargo across the European Union to Saudi Arabia. The vote is not legally binding, but MEPs hoped that it would pressure EU member states to call a halt to such exports.

The committee on arms export controls is holding an inquiry to investigate whether any UK arms exported to Saudi Arabia have been used in Yemen. MPs are asking whether Saudi Arabia has infringed any restrictions imposed on any UK licences for such exports. They will also examine how UK arms sales to the Gulf region are helping UK interests there.

Meanwhile, a ceasefire began in Yemen on Sunday ahead of peace talks among Yemeni groups due to start on Monday, brokered by the UN.

Related Stories : Bribery claims, ‘Sangcom’ and ‘Al Yamamah’: Exaro story thread

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BHP faces new criticism over probe into mine disaster in Brazil

Anglo-Australian company uses its corporate advisors for ‘independent’ investigation

By David Pallister and Mike Yuille | 10 April 2016

BHP faces new criticism over probe into mine disaster in Brazil
Deadly: mud wave leaves devastation after Samarco mine’s disaster

“Perception will be shaped by the quality of the report when it is published” – BHP spokesman on “independent” investigation

Anglo-Australian mining giant BHP Billiton faces fresh criticism for its part in Brazil’s worst environmental disaster by commissioning an investigation that “cannot be considered independent”.

BHP and its Brazilian partner, Vale, ordered an American law firm to conduct the “independent” investigation into why a dam burst at their Samarco iron-ore mine last November, sending a huge wave of mud and waste-water through villages and killing 19 people.

But Exaro can reveal that the law firm, Cleary Gottlieb Steen & Hamilton, has close commercial links to BHP and Vale by acting as corporate advisors to each on big financial deals.

Ricardo Baitelo, leader of the climate and energy team at Greenpeace Brazil, raised doubts about the impartiality of the investigation. He told Exaro: “Greenpeace Brazil is critical of the choice of Cleary Gottlieb to co-ordinate investigations regarding the Samarco/BHP accident.

“Since the law firm has worked in several initiatives with BHP in the past – both in corporate and litigation matters – the investigation cannot be considered independent.”

The choice of the law firm for the investigation threatens to add to BHP’s and Vale’s problems over the catastrophe at Samarco’s open-caste mine in the south-eastern state of Minas Gerais. The death toll included 14 workers at the mine.

The collapse of a dam filled with mine-waste – and partial breach of a second with waste-water – sent 32 million cubic metres of mud and slurry downstream into many villages, town and cities.

The deadly wave of waste then surged into the Rio Doce (‘Sweet River’), destroying flora and fauna for some 500 miles.

The sludge reached the Atlantic Ocean 17 days later, devastating beaches and killing sea life.

The country’s president, Dilma Rousseff, dubbed it Brazil’s “worst environmental disaster”, comparing it to BP’s oil spill in the Gulf of Mexico in 2010.

Brazilian police in February formally accused Samarco’s chief executive, Ricardo Vescovi, and five other mine employees of “qualified homicide”, the equivalent of involuntary manslaughter in the UK. A police report alleged that Samarco disregarded safety regulations by overloading the dam of mine waste.

Samarco has rejected the accusations as “misguided”.

BHP, which is listed on stock exchanges in London and Australia, and owns Samarco joint-equally with Vale, said in a statement at the time that these “serious allegations” would “need to be fully considered.”

It continued: “Following the accident, BHP Billiton and Vale commissioned an independent external investigation into the accident. This investigation involves a panel of pre-eminent geotechnical experts supported by international law firm Cleary Gottlieb.

“Until it is completed, we will not speculate about the cause, or causes, or talk about what may or may not have contributed to the failure of the dam.”

However, BHP did not comment on the fact that Cleary Gottlieb, which is based in New York, had worked as corporate advisors to it and its partner, Vale.

In 2010, the law firm advised BHP in its unsuccessful, hostile $40 billion bid for Potash Corporation, the fertilizer manufacturer of Canada.

It advised BHP in its 2013 sale of the Pinto Valley copper mine in Arizona for $650 million.

And it acted for BHP in last year’s demerger of “non-core assets” to a new metals and mining company, South32.

It also represented Vale in 2006 in one of the “deals of the quarter century” when it bought Canada’s Inco, the nickel producer, for $19 billion.

One of the five lawyers chosen to organise the investigation, Francisco Cestero, based in Sao Paulo, assisted Vale in its $12 billion equity offering and listing in Paris in 2008.

Another, Jeffrey Lewis, in New York, advised Vale on its $3.8 billion purchase in 2010 of the fertilizer-nutrients operations in Brazil of US-based Bunge.

Asked about the apparent lack of impartiality, a BHP spokesman told Exaro: “Perception will be shaped by the quality of the report when it is published.”

Vale said simply: “Vale declines comment.”

Cleary Gottlieb did not respond to repeated requests for comment, and neither did Cestero nor Lewis.

Meanwhile, Samarco and its joint owners last month agreed with Brazilian authorities to pay up to $2.3 billion over six years for clean-up work and compensation for environmental damage and to help the several hundred families who have been displaced.

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Theresa May urged to up scrutiny of wealthy foreign investors

‘Panama papers’ reveal UK role in global corruption – Transparency International report

By Mike Yuille | 7 April 2016

Theresa May urged to up scrutiny of wealthy foreign investors

“The Panama papers have confirmed that the UK is a prime location for corrupt individuals who are looking to hide their illicit wealth.” – Rachel Davies, Transparency International

Home secretary Theresa May is being urged to introduce “full transparency” over rich foreigners who are fast-tracked for UK visas in return for investment.

Transparency International UK (TI-UK), the anti-corruption organisation, says that the Home Office should make public disclosures of who is investing, how much and what in, as well as their financial interests and assets for those eligible for “Tier 1 (Investor) visas”.

The more they invest, the quicker they can secure residency rights in the UK.

Rachel Davies, head of UK advocacy and research at TI-UK, said that the huge leak to the German newspaper, Sueddeutsche Zeitung, of material from the Panama-based law firm, Mossack Fonseca, exposed the UK’s “role in global corruption”. She said: “The Panama papers have confirmed that the UK is a prime location for corrupt individuals who are looking to hide their illicit wealth.”

The group makes a series of recommendations in a report on how to end the UK’s “role as a safe haven for corrupt money”, including greater transparency over wealthy foreign investors in the country.

Davies said that the system is open to abuse. “If corrupt individuals are allowed to continue to buy up luxury property and enjoy life in the UK, then the government risks its credibility in leading efforts to tackle corruption on the global stage,” she said.

The TI-UK report, ‘Paradise Lost’, says: “Upfront declarations should be required for politically exposed persons and public officials who should expect to meet a high level of transparency, even after they have left office.

“Retrospective checks should be undertaken on historical Tier 1 (investor) visas for visas granted in the ‘blind faith’ period and consideration given to publishing their details.”

The report also makes recommendations specifically on tightening up UK rules to tackle money laundering. It comes after Exaro revealed in November how ministers are under pressure to set up a national UK agency to fight money laundering to replace a patchwork of 27 bodies that currently supervise the reporting by accountants, lawyers and other professions of suspicious transactions.

TI-UK’s report today urges the government to “overhaul the supervisory regime for the UK’s anti-money laundering (AML) rules, notably for professional enablers”.

“The UK government should consolidate the patchwork of AML supervisors and consider introducing a single ‘super-supervisor’.”

The report continues: “The government should establish more effective administrative sanctions on professional enablers by encouraging professional bodies to withdraw professional licences from those implicated in such cases, in addition to prosecuting those who are personally involved.”

TI-UK also says that its research shows that 36,000 properties in London are owned by offshore companies.

Four years ago, Exaro revealed how thousands of multi-million pound homes worth around £25 billion are held through offshore and other corporate structures that allowed owners to avoid UK taxes.

Today’s report says: “The UK is a prime destination for corrupt individuals looking to invest or launder the proceeds of their illicit wealth, enjoy a luxury lifestyle and cleanse their reputations.”

“With the help of defamation lawyers and PR experts, they can start their life afresh, and embed their children in society’s elite through exclusive education and mixing in the right social groups.”

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Hackers to probe engine control units amid emissions scandal

ICCT hires computer whizz-kids to find out who besides VW uses ‘defeat devices’ in cars

By Mike Yuille | 30 March 2016

“We want to develop tests that governments could use to find conclusively whether a defeat device is being used” – ICCT source

Researchers who work for environmental regulators around the world are hiring computer hackers to examine the engine control units of several makes of car.

Exaro can reveal that the International Council on Clean Transportation (ICCT), which helped expose Volkswagen’s emissions scandal, wants the hackers to investigate whether several other car makers have been using “defeat devices” – special software in their engine control units (ECUs) – to cheat environmental tests.

The hacking of ECUs will be part of a wider project by the ICCT to develop a system for the world’s environmental regulators to test whether cars have “defeat devices”.

Regulators suspect that car makers other than VW have been using defeat devices, especially in diesel engines.

An IT specialist from the car industry told Exaro: “‘Dieselgate’ is not just a VW scandal, it is an industry issue. We need to test all vehicle makes.”

An ECU is a purpose-designed computer to control the engine. The ICCT’s hacking project is likely to be controversial because car makers regard ECU software as proprietary – a trade secret.

An ICCT source told Exaro why it is turning to hacking: “We want to develop tests that governments could use to find conclusively whether a defeat device is being used to cheat emissions testing.”

Another IT specialist who is helping with the project said: “Hacking by itself is not a silver bullet, and I do not think that all of the defeat devices will be so easy to find as the VW one.”

America’s Environmental Protection Agency (EPA) revealed in September that VW was using “defeat devices” in diesel engines to rig test results for emissions of nitrogen oxides. The EPA identified VW’s Jetta, Beetle, Golf and Passat models, and Audi A3, in its findings.

VW has admitted that about 11 million cars worldwide, including 8 million in Europe, are fitted with the defeat device.

The EPA has refused to say how exactly it found the cheating software, but it is including “defeat device screening” in all vehicle testing in America.

Insiders at the ICCT believe that the EPA hacked VW ECUs.

The US-based ICCT wants other countries’ regulators to develop similar skills. Headquartered in Washington DC, but with offices in San Francisco and Berlin, the ICCT is a research body that works for environmental regulators around the world, including the EPA.

IT specialists in the ICCT-led team will hack into the ECUs of several car makers, which are set to include Renault and Daimler’s Mercedes-Benz.

There is no evidence that the two companies have used defeat devices, and they both deny it.

However, a testing programme in France in January led to the recall by Renault of 15,000 vehicles to address an engine “calibration error”. It also triggered a formal investigation by France’s anti-fraud agency, the DGCCRF.

The French government, which owns around 20 per cent of the car maker, has denied that Renault has used software similar to VW. Segolene Royal, ecology minister, said that Renault had used “no fraud software”.

Meanwhile, consumers are suing Daimler in the US, claiming that the company deceived them over 14 models of Mercedes-Benz cars, which, they allege, emit nitrogen oxides far above the maximum allowed.

Daimler rejects the lawsuit as “without merit”.

The uncovering of the scandal over diesel engines can be traced back to 2014 when the ICCT, working with West Virginia university, tested cars in real-world driving. Two VW models, Jetta and Passat, showed high emissions of nitrogen oxides.

The ICCT presented its findings at a US conference on vehicle emissions, attracting the interest of the EPA, which embarked on its own research that culminated in its violation notice against VW in September.

Exaro revealed last month how the European Union failed to tackle car makers over emissions cheating despite a clear warning in 2012.

And the European Commission’s Joint Research Centre (JRC) discovered in 2011 that diesel cars were emitting up to four times maximum limits of poisonous nitrogen oxides in real-world tests. For parts of the test trips, emissions averaged 14 times the legal level.

Those findings are set to be raised in an inquiry by MEPs into what went wrong with the regulation of vehicle emissions in Europe.

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Court 73: where UK institutions are ‘in the dock’ in CSA inquiry

Britain – its churches, private schools, political parties and more – ‘on trial’ in lawyer-fest

By Tim Wood and Mark Watts | 23 March 2016

Court 73: where UK institutions are ‘in the dock’ in CSA inquiryTucked away on the third floor at the back end of the Royal Courts of Justice is where British institutions will come under painful scrutiny.

This is where, for many years to come, the UK state and a lot of its public bodies will face accusations that they failed many of the nation’s children fundamentally. This is the courtroom where the overarching inquiry into child sex abuse (CSA) is holding its hearings.

This is Court 73.

Many of the oak-panelled courtrooms of the Royal Courts of Justice – an imposing, Victorian, Gothic-style building on the Strand, near where Westminster meets the City – are lined with large, leather-bound tomes full of old judgements.

But Court 73 looks more like a large meeting room than a courtroom. With whitewashed walls, it is furnished with modern, light-teak desks.

It is where Lord Justice Leveson held his inquiry into newspaper practices in 2011-2.

The New Zealand judge who is chairing the CSA inquiry, Lowell Goddard, has already hit a problem that plagued Leveson: Court 73’s dire acoustics.

During a hearing last week, Goddard  said: “I have had a request – addressed to myself, as well as to all counsel – to please keep our voices up because the acoustics in the room make it difficult for people in the back of the public gallery to hear.”

Desmond Browne, one of more than 20 lawyers there to represent interested parties, said: “Do not reproach yourself, madam. Lord Justice Leveson had precisely the same problem.”

Goddard sits at the front, on the higher of two raised benches. The clerk to the inquiry, an usher and other administrative staff are on the second raised bench, also looking into the room.

Facing Goddard are three rows of the light-teak desks. In the middle of the front row is Ben Emmerson, counsel to the inquiry, flanked by other barristers who assist him. Either side of them are lawyers who represent “core participants”, parties or individuals who are strongly relevant to the subject matter of the hearing.

Behind them are two rows of lawyers and some of the core participants. Through their lawyers, core participants can make representations to the inquiry and, in time, can question witnesses. CSA survivors are among the core participants. And behind them are two blocks of about 35 seats – one area for the media, the other for the public.

There has been some effort to make it not feel like a courtroom. But with serried ranks of lawyers, albeit without wigs and gowns, it will be intimidating for many witnesses, especially survivors of abuse.

And the lawyers themselves can briefly forget that they are not in court.

At the first preliminary hearing a fortnight ago, for the investigation into the institutional response to allegations against the late former Labour MP, Lord Janner, one barrister addressed a point made by Emmerson. The barrister began: “The question my learned friend”, before correcting himself, “falling into court tendencies, apologies. The suggestion being made by Mr Emmerson…”

As inquiry counsel, Emmerson has been doing most of the talking. But often rather quietly.

Goddard’s main job, so far, has been repeatedly to peer over her black-rimmed glasses to tell Emmerson to speak louder as his voice became little more than a whisper.

At the start of the second hearing, on Anglican churches, Emmerson said: “I have a note in front of me saying, ‘Speak up.’”

Goddard: “Please keep your voice up.”

But it was not long before she had to remind him: “Keep your voice up.”

When he asked later whether he could turn to the unresolved issue about broadcasting any of the hearings, Goddard replied: “Yes, but keep your voice up, please.”

The fourth preliminary hearing is tomorrow, and will focus on children in care in Lambeth.

So far at least, there is no witness box in Court 73. But there have been no witnesses yet.

There is also no dock.

But many UK institutions find themselves in the metaphorical dock that hangs heavily in the air of Court 73. Britain is on trial here.

There can be no physical dock. It would not be big enough for everyone who needs to go in it.

How the CSA inquiry began: the Exaro story that started it all

Related Stories : Child sex abuse, ‘Fernbridge’ and ‘Fairbank’: Exaro story thread