"In the early stages," says Mike Warburton, from accountant Grant Thornton, "it was like taking candy from a baby." Firms got downright epicurean in their efforts to avoid tax: paying bonuses in wine, cocoa, Napoleonic coins, platinum, or any commodity exchangeable for ready cash. But the tax man follows close behind, shutting loopholes as soon as they arise.
The most recent? Give execs a million pound "loan" in a falling currency like the Turkish lira. They can exchange it for sterling, and when the value of the 3 trillion lira "loan" falls to £500,000, repay it in lira, thus keeping a hefty tax-free profit. The latest rules announced by Chancellor Gordon "Scrooge" Brown, however, ban that scheme too. Still, the City wants to play Santa. "The race is on to find the next thing," says Warburton, "but of course I won't tell you what it is."
LITIGATION
Who's To Blame For Bhopal?
On a December morning 18 years ago, gas spewed from Union Carbide's pesticide plant in Bhopal, India, instantly killing 2,000 people; up to 20,000 eventually died. The years since have seen constant legal wrangling to fix responsibility, but last week Britain's New Scientist magazine claimed to find a smoking gun: newly released documents showing that Union Carbide's U.S. parent, now owned by Dow, cut corners, using unproven technology to save money. That could have billion-dollar repercussions in U.S. courts, where survivors are suing. But Union Carbide attorney William Krohley tells Time that in the 1980s a U.S. court "reviewed the entire history of the plant," including the "new" documents, before dismissing a similar case. The papers actually show just how tangled Bhopal's history was: layers of Indian restrictions kept U.S. owners at arm's length, mandating that locals design and operate almost everything. That may mean responsibility is more complicated, and closer to home, than activists think.
EURO BLUES
FT, Loan Home
Last week Thierry Breton made his first public appearance since taking over France Télécom, the world's most indebted company. The former math teacher's plans to cut the 170 billion debt added up well — 115 billion in new cash flow, largely through cost and spending cuts, plus a 115 billion capital increase — and markets handed out good grades. But then, Breton has a French connection to bail him out: the government, which owns 56.4% of FT, chipped in a 19 billion loan. The European Commission is examining whether the deal breaches rules against state aid. But the loan almost seems apt: it was, after all, government insistence on keeping control of FT that forced the firm to use cash instead of shares for acquisitions, driving it into debt in the first place.
INDICATORS
Rock On, In Six Easy Payments
So it really is "The Mortgage Tour." For their Belgrade concert, the Rolling Stones reduced ticket prices to 150, but since the average Serb earns only about 1200 monthly, the Komuna ticket agency will allow fans to pay off tickets over six months.
Slippery Situation
The world's fifth-largest oil industry fell into chaos as a protest strike against President Hugo Chávez brought Venezuela's exports to the U.S. and Europe to a halt. Nineteen people were killed when similar strikes led to an abortive coup in April.
A Hard Landing For United
America's second-largest airline, United, headed for bankruptcy after the government refused a $1.8 billion loan guarantee. United, which loses up to $8 million daily, vowed to keep flying, but cutbacks will likely hit international flights.
Just Whistle While You Work
Music profits may be losing ground to online file-sharing, but they're well protected in Finland, where the Supreme Court ordered taxi drivers who listen to the radio while carrying passengers to pay a copyright fee. The music is seen as live performance, and the fee is €22 per year.
BOTTOM LINES
"It's been a long while since they let me talk to someone who is not a lawyer or a banker or an accountant — and an angry one."
BARCLAY KNAPP, CEO of NTL, on running the indebted British cable firm
"In terms of eating hot food, among all the Westerners I've met, James and Rupert Murdoch are impressive."
LIU CHANGLE, CEO of Hong Kong's Phoenix Satellite Television, finds a compliment for his competitors
"We should wipe out the Fiat brand."
SILVIO BERLUSCONI, Italian Prime Minister, on how he could run the automaker better, starting by rebranding all its cars as Ferrari or Alfa Romeo