We published the original Prison Island report in August 2018. We then released an updated second edition in January 2019.

Download the report here:

• Low Resolution – Prison Island 2021 (877kb)
• High Resolution – Prison Island 2021 (4.5mb)

Grassroots groups are welcome to request printed copies of the report for free by emailing contact@corporatewatch.org

Order a copy of the report

Order a physical copy of the report via our store here: https://corporatewatch.org/prisonisland

Each copy includes the original Prison Island report published in 2018.

The post New Publication: Prison Island Winter 2021 Update appeared first on Corporate Watch.

The government has announced plans to build a new mega prison in Chorley, Lancashire. It will be huge, locking up more than 1715 people. It is part of a wave of prison expansion which has been reported on by Corporate Watch since 2017. See our Prison Island report for more info.

The site is owned by the Ministry of Justice (MOJ) and sits next to two existing prisons, HMP Garth and HMP Wymott. It is close to Chorley, Leyland, Preston, and Southport and only a train ride away from Manchester. It will no doubt imprison people from communities across the North West.

The government is currently running a consultation and intends to apply for planning permission later this year. It anticipates a planning decision by early 2022 and hopes to start construction in 2022 or 2023 before opening it in 2025. This timeline can’t be certain however – every single prison project the MOJ has begun has experienced massive delays due to organised resistance, tensions in the planning system, financing issues and sheer poor project management by the programme’s managers.

18,000 new prison places

The prison is part of the government’s ‘New Prisons Programme‘, formally branded the ‘Prison Estates Transformation Programme’ (PETP). It is spending £4 billion to create 18,000 additional prison places by the mid 2020s. Ten thousand of these places are due to be created in six new prisons and eight thousand will come from expanding existing prisons. Scroll down to see the status of these various mega-prison projects across England.

In documents about the project, Alex Chalk MP, Prisons and Probation Minister, said that prison numbers change over time, which is why it must have ‘robust plans in place to make sure we will always have enough places available’. However, it is clearly tied to the growth of other areas of the prison industrial complex, such as policing:

“The increasing numbers of police, in line with the Prime Minister’s commitment to recruit 20,000 additional officers, is also likely to contribute to a higher prison population, and we therefore believe that creating 18,000 additional prison places will help to mitigate pressure on prison places in England and Wales in the coming years.”

Photo by Ehimetalor Akhere Unuabona on Unsplash

A local prison economy

The Ministry of Justice is skilled in its location choices. After massive community resistance in places like Port Talbot, it’s clear the MOJ are now choosing sites adjacent to existing prisons. These locations have existing local prison economies; communities are already used to their presence and many people are employed by them. Chorley is no exception with HMP Garth and HMP Wymott next door to the proposed prison site. Are these local prisons good examples of what we may expect from a new mega-prison next door?

Prisoner deaths, violence and suffering

HMP Garth is a category B mens prison holding over 800 people. Its latest inspection reported that illicit drugs were easily available and that one in four prisoners said they had developed a drug problem while at the prison. In the six months preceding the inspection, there had been 119 violent incidents, with force used by officers more than 143 times. There was a massive 450 incidents of self-harm in the same period and 1406 complaints.

Disturbingly 29 people lost their lives in HMP Garth between 1995 and 2019, including 10 suicides. The average age between them is just 51 years old. Gross neglect has been reported on a number of occasions. Andrew Jones took his own life after being illegally held in isolated custody without essential medication, access to showers, exercise, or telephone calls. An inquest showed the prison broke the rules at least 600 times. The jury found that “a failing by senior management to ensure understanding of, proper use of, and monitoring of” the segregation rules was the “greatest contribution” to Andrew’s death.

Another prisoner Imre Paul Thomas died aged 47 after taking lethal doses of the painkiller tramadol. A total of nine medical appointments were cancelled by the prison before he overdosed on drugs. Grant Alam died at 28 years old after being electrocuted in his cell. Tales of neglect continue – from missed opportunities for treatment, delays in calling ambulances and poorly trained officers with inadequate first aid or mental health training, to not regularly checking people who were suicidal. HMP Garth’s history is wrought with so many preventable deaths. Yet the Ministry of Justice want to build a prison double its size next door, and increase the demand on local healthcare services when people are already dying through institutional neglect and poor management.

HMP Wymott is also a category C men’s prison. It imprisons 1100 men, including a special wing for elderly prisoners. 68 people died in the prison between 1995 and 2019. The deaths include not only some of the many elderly prisoners suffering from cancer and chronic illness, but younger people taking their lives. Once again, many have died unnecessarily due to failing to access treatment they needed. Ryan McGrath died in 2016 aged 46 from a heart attack. The Prisons and Probation Ombudsman investigated and said the healthcare was not equal to that in the community. His ongoing complaints of chest pains were ignored.

The prison was hit with a serious outbreak of Covid-19 at the start of the pandemic. The wife of one HMP Wymott inmate said “None of the prison officers at Wymott have ever worn masks or PPE, which I found quite alarming.”

Creating the conditions to exploit prisoner labour

Many existing prisons do not have facilities for extensive workshops to exploit prisoner labour. This is one of the reasons that the government is building the mega-prisons. In the consultation notes about the prison, the MOJ explicitly talks about building workshops inside:

“Workshops will help prisoners to gain new skills and qualifications. This will help them to gain work after release. Having work can help stop people re-offending. The workshops will include both heavy and light industry. For instance, prisoners can learn how to weld or how to make clothes. The exact industries will be decided closer to the prison opening.”

At HMP Garth, prisoners refurbish power tools for the company Speedy Hire. They also assemble lighting and smoke detectors and have plastics and textile workshops. None of these skills offer external accreditation and are basically ways to make money for the companies involved. Most work is monotonous and offers no real job training for life after prison.

HMP Berwyn. Image from https://www.meee.global/what-we-do/prisons.php

Prisoners at HMP Berwyn, the most recent prison to open in Wales, are paid next to nothing to work for companies including DHL, Interserve, Ink2Work, Emerald Trading, Census Data, City Windmills and LMB Textiles. Many people could be earning full salaries on the outside to sustain their families, yet prisoners are paid between £7-£25 per week depending on their job role. HMP Berwyn was touted as a ‘prison for the future’ due to its design and approach. However, like all prisons, no amount of cosmetic change can reduce the trauma of being locked up, nor solve the complex social and economic problems of why people are criminalised in the first place. One former prisoner described the jail as ‘the worst he’s ever been in‘.

Mega prisons being built around the country

The state currently has a number of prison construction projects happening around the country:

• Wellingborough: HMP Five Wells in Wellingborough is at the most advanced stage of construction and is due to open in early 2022. It will be run for-profit by G4S who have a ten-year contract until 2032.

• Leicestershire: HMP Glen Parva is still under construction. The prison lies on the outskirts of Leicester. It is due to open in 2023.

• East Yorkshire: A new mega prison next to HMP Full Sutton is in the final planning stages. It received outline planning permission but are still processing ‘reserved matters’ through the planning system.

• Buckinghamshire: The MOJ has announced plans to build a prison on land next to HMP Grendon and HMP Springhill in Buckinghamshire. The announcement came just before Christmas to reduce the likelihood of objection. The prison would lock up 1,440 people and be a category C prison like the new one announced for Chorley.

• One final location is due to be announced, most likely in the South of England.

Click here to see an overview of the companies building the prisons.

Constructing Wellingborough Prison. Picture from: https://www.kier.co.uk/media/5258/wellingborough-prison-1.jpg

Resisting the new prison

Local villagers are outraged and residents in Ulnes Walton are mobilising to fight the government after the proposal was announced.

The Parish Council will be opposing the plan, citing increased traffic, loss of greenfield land, construction noise and the impact on wildlife amongst its objections. Councillor Nicola Watson says: “We don’t want another prison here. The impact it will have on residents will be massive.”

National campaign group Community Action on Prison Expansion is also encouraging people to object to the plans. They say that since the George Floyd Uprising in 2020, interest in the campaign has grown massively, as many people recognise the racism and oppression that the prison system is founded on and seek alternatives to prison and policing. They said:

“We are trying to shrink the state’s capacity to repress. There is a once-in-a-generation opportunity to fight these prison expansion projects, and that time is now.”

People can object to the prison by completing this form: https://consult.justice.gov.uk/digital-communications/proposed-new-prison-in-chorley/

People are also encouraged to attend the live webinar sessions with the MOJ and make their views heard. You can also send your views via letter to PO Box 347, Manchester, M21 3ES. The deadline for objections is the 19^th July.

Learn more about prison expansion in our report, Prison Island.

The post Chorley mega-prison plans announced as part of plan for 18,000 new prison places appeared first on Corporate Watch.

About the Course

Do you have a problem with a company or industry and want to know more about it? Do you feel frustrated not knowing how to find the info you need? Do you want to fight back more effectively but get overwhelmed trying to find things online? Do you wish you could get a step ahead and finally find contracts and government plans before they hit the headlines?

The Know Your Enemy online course is designed for you. Whether you are a single mum fighting a landlord, a worker challenging your boss, part of a grassroots movement or campaign,  a student campaigner or a freelance writer – this course is designed to give you the practical skills you need to ‘Know Your Enemy’.

What will I learn?

This self-paced, online training, through a series of video tutorials, gives you practical skills to be able to:

• Get clear and organised – know what you need to research and how
• Research securely – learn simple tactics for online security
• Use search engines effectively – prevent overwhelm and find the info you need faster
• Build a company profile – mapping its ownership to the highest level
• Find directors, board members and other key players – find out who pulls the strings
• Find shareholders
• Read company accounts – learn simple strategies for cutting through the jargon and finding the information you need quickly
• Find government contracts
• Connect the dots between lobbyists, companies and politicians – know how to find donations to political parties and more
• Write and submit a Freedom of Information request
• Map out company supply chains and get industry insight about risks and vulnerabilities
• Undertake offline research – from speaking to workers to physical surveillance of factories
• Write up and share your research with the world

Interested? Enrol here for free.

The post Course launch! Learn online with Corporate Watch appeared first on Corporate Watch.

Tech: A guide to the politics and philosophy of technology by Corporate Watch
– book review by John de Plume

In ways that are not always immediately obvious, technology has come to be a defining feature of life today and indeed has begun to define the possible forms our future may or may not take. Corporate Watch’s Tech is an essential introduction to the topic, exploring a range of critiques and debates around technology, its dangers, and, nonetheless, its emancipatory potential.

2021’s proposed ‘Police, Crime, Sentencing and Courts Bill’ has been met across the county with mass mobilisations committed to ‘kill the bill’ and its draconian capacities. Anger towards the bill concerns its authoritarian character, which reveals the authoritarian tendency lurking inherent within Tory governmental ideology and neoliberal statecraft generally. But this authoritarian drift could never be realised through the police baton or the judge’s hammer alone; it is necessarily a high-tech issue too. Be it through the cameras everywhere in our streets or those that are worn on the jackets of the police, or through the data we willingly sign away to the algorithms and AI of Facebook, Google, et al, the so-called UK is already among the most technologically surveilled places on the planet. Today, a drift towards a real authoritarianism is made possible by and remains contingent on the development of technological apparatuses by big-tech corporations. These corporations, in turn, have themselves, famously, concentrated more wealth than has ever before been achieved in human history.

When today the forces of production are so well developed and the microelectronics revolution might offer so much in terms of automation of labour, how, we still ask, can it be that there exists a global crisis of wealth distribution with human need remaining so often unmet? As we are seeing so often, it is tech created in the interests of the market that has facilitated simultaneously the corporate concentration of hyper-wealth and, equally, the state toolkit necessary to defend that wealth from an ever-increasing mass of dispossessed surplus populations. As we move closer towards environmental catastrophe, moreover, the irrational impasse of this situation becomes evermore urgent. Addressing the issues around technology in view of real struggle today, then, is what makes the guidance and overview found in Corporate Watch’s Tech so useful.

The question of who it is that creates tech – in whose interests and for what purpose – is central throughout the analysis in Tech. Quite blatantly, technology does not exist in the world without application and, under the logic of the market, it is the pursuit of profit that governs its creation. However, ‘The dominant view presented in society’, as Corporate Watch note, ‘is that technology is apolitical and inevitable, that it represents human progress and makes our lives easier, more fulfilling, or just ‘better” (page 12). Tech represents an intervention into this dominant view, addressing the dynamics between technological production and its socio-political applications and consequence. Of particular concern is the environmental cost of tech production and its unsustainability; as is examining currently existing and future potential, alternative approaches to tech that might redeploy technological advancement in the direct interests of human need. Possibilities for open source and DIY design and utilisation of tech are explored, as are questions of how an environmentalist engagement with tech might supercede the individualist and anthropocentric world-views inherent to tech creation under the logic of the market.

Accordingly, the book collates varied analyses and critiques from such sources as Bookchin and Marx on the social dominance and application of tech; Donna Haraway’s Cyborg Manifesto and her feminist cybernetics; Deleuze and Guattari’s assemblage theory; postcapitalist formations of tech from communisation journal Endnotes, and speculative thinkers exploring the future imaginary of technology such as sc-fi writers Ursula le Guin or Philip K Dick. In laying out such ideas and discussions and in mapping the reality of the situation today, Corporate Watch address the immediate necessity for us to respond to these questions now and to take concrete action. They observe, ‘if the digital world is regarded as another terrain of struggle and effective strategies adopted, it could shift the balance of power towards those who seek liberatory change rather than those seeking to control and exploit’ (page 100). Deliberately avoiding obfuscating language and presentation, Corporate Watch’s publications are always clear and concise, working to illuminate the problematics of contemporary life in such a way as to make participation in the debate accessible and to provide resource for action and radical change.

Participation in struggle has never been more urgent. Today, from the ways in which we conduct our social lives online, to the ways in which we are surveilled and policed, from the methods by which high-tech capitalist extractivism ravages the environment and which automated capitalist exploitation diminishes our working conditions, technology has become fundamental to neoliberal hegemony, and to its emerging authoritarian drift. ‘We are’, as Corporate Watch observe, ‘at a unique moment in human history – an ecological precipice, perhaps a social tipping point’ (page 12). We ignore this and the expanding corporate, state and technological nexus at our peril.

Tech: A guide to the politics and philosophy of technology is available now from Corporate Watch. Corporate Watch is a not-for-profit co-operative providing critical information on the social and environmental impacts of corporations and capitalism. Alongside Tech, there is an extensive back catalogue of Corporate Watch’s previous publications available here.

The post Tech Book Review appeared first on Corporate Watch.

About the Course

Do you have a problem with a company or industry and want to know more about it? Do you feel frustrated not knowing how to find the info you need? Do you want to fight back more effectively but get overwhelmed trying to find things online? Do you wish you could get a step ahead and finally find contracts and government plans before they hit the headlines?

The Know Your Enemy online course is designed for you. Whether you are a single mum fighting a landlord, a worker challenging your boss, part of a grassroots movement or campaign,  a student campaigner or a freelance writer – this course is designed to give you the practical skills you need to ‘Know Your Enemy’.

What will I learn?

This self-paced, online training, through a series of video tutorials, gives you practical skills to be able to:

• Get clear and organised – know what you need to research and how
• Research securely – learn simple tactics for online security
• Use search engines effectively – prevent overwhelm and find the info you need faster
• Build a company profile – mapping its ownership to the highest level
• Find directors, board members and other key players – find out who pulls the strings
• Find shareholders
• Read company accounts – learn simple strategies for cutting through the jargon and finding the information you need quickly
• Find government contracts
• Connect the dots between lobbyists, companies and politicians – know how to find donations to political parties and more
• Write and submit a Freedom of Information request
• Map out company supply chains and get industry insight about risks and vulnerabilities
• Undertake offline research – from speaking to workers to physical surveillance of factories
• Write up and share your research with the world

Interested? Don’t forget to join the waiting list and be told as soon as the course is available to join.

The post New Online Course coming soon! appeared first on Corporate Watch.

Easy money if you’re at the top

The disclosures published last week show just how good life is for those at the top of Deliveroo. CEO William Shu’s controlling shareholding and generous salary have been well covered in the media. But he’s not the only director making big sums while riders complain of poverty pay. New chair Claudia Arney is paid an annual salary of £425,000, while fellow board members Rick Medlock and Lord Simon Wolfson make £125,000 and £90,000 respectively. They also have shares in the company.

Bear in mind that these are not full-time jobs. They are “non-executive” positions, meaning they are supervisory and do not include the day-to-day running of the company. Both Arney and Medlock will split their time with the various other boards they sit on. Meanwhile, Simon Wolfson is the boss of Next, the UK’s biggest clothing firm, so presumably won’t be spending much time down the Deliveroo office. Their hourly rates must be astronomical, and a fair bit higher than the £6.70 Wolfson reckons should be enough for workers to live on.

Riders’ pay still coming second to corporate growth

The registration document confirms Deliveroo is losing money because it is trying to expand so quickly. After revealing another multi-million pound loss in 2020 – £226.4 million – the company says the losses:

“resulted from our investments in, and expenditures relating to, the development of our platform and supporting technology, and the expansion of our business into new areas and further into our existing areas”.

There is more evidence that without this relentless desire to expand – a strategy designed to please investors and boost Shu’s ego – the business would be making enough money to pay its existing riders more and give them the rights they are demanding. Thanks to increased demand for food deliveries due to the COVID-19 restrictions, Deliveroo made even more profit from its riders in 2020 than it did the previous year. ‘Gross’ profit from deliveries increased to £356.3 million, with the ‘margin’ going up from 24% to 30% (there is a breakdown of what that means in last week’s profile). The registration document reveals that the company wrung more money out of riders than ever before, boasting there was a “year-on-year decline in the rider cost per order as we have continued to improve operational efficiency”.

And the company is cash rich. It generated cash from its operations for the first time ever in 2020, making £7.4 million. Another £178 million from shareholders in 2020 helped it increase total cash reserves to £379.1 million by the end of the year. Deliveroo hopes the IPO will add another £1 billion to its bank balance. Time for more of that to go to riders.

UK riders are particularly important

Deliveroo riders in the UK may also want to know they are working in Deliveroo’s biggest and most profitable national market. The document separates the business out into two “segments”: UK & Ireland and “International”, which includes the 10 remaining countries it works in. UK & Ireland contributes over half of total revenue and almost two thirds (£217 million in 2020) of total gross profit. Deliveroo needs to keep riders here happy.

Amazon’s servers are as important to Deliveroo as its cash

Amazon gave Deliveroo a huge chunk of change last year – £440 million – in return for a 16% stake. If Deliveroo raises as much money as it hopes from the stock market, Amazon’s financial backing will become less important. But the new disclosures show Deliveroo will remain dependent on its servers. Amazon Web Services (AWS) is the megacorporation’s cloud computing service, used by many of the world’s biggest organisations, including Apple, the BBC and much of the UK government. The AWS website boasts Deliveroo has gone “all in” on its servers and the stock market disclosure spells out how important its cloud infrastructure is. Deliveroo does not name Amazon, but says it “relies” on a cloud provider and that its Deliveroo app and other tech is “largely hosted” on it.

Who to woo

When Deliveroo shares hit the stock market, expected in the next few weeks, the vast majority of them will only be sold to “institutional” investors. As we set out last week, these are big investment firms, concerned only for whether the share price will rise or fall. Deliveroo aims to raise £1 billion from its IPO and the enthusiasm of these firms will determine how easily it can do that.

You can get an idea of which firms might be interested in a piece of Deliveroo from looking at who is investing in food delivery firms JustEat here or Uber here (scroll down the pages to the “Institutional shareholders” section). Will Shu, Claudia Arney and others at the top will currently be selling Deliveroo to them as best they can. Riders might want to share their side of the story.

Riders who want more information on Deliveroo as it prepares for its IPO can get in touch with us here.

The post Deliveroo’s IPO disclosures: what we’ve learnt appeared first on Corporate Watch.

Over the past four years Corporate Watch has supported Deliveroo couriers with research to help their campaigns for better pay and rights. In this profile we look at Deliveroo’s business model, how it makes money, who’s in charge, its important partners, who is set to benefit from its upcoming stock market splash, and who it needs to please for that to go well. Some stand-out points:

• CEO and co-founder William Shu could see his personal stake in Deliveroo rise to £500 million when the company puts its shares up for sale on the stock market this year. Other major Deliveroo shareholders, including corporate giant Amazon, also hope to make big sums.

• Meanwhile, Deliveroo couriers continue to struggle with poverty wages and insecure employment. They have taken strike action in at least 9 of the 11 countries Deliveroo works in over the last three years.

• Analysis of company accounts suggest Deliveroo was making good money from couriers’ work even before the pandemic and could have afforded to pay them better while still making money from its deliveries. The huge overall losses reported by Deliveroo appear to have been caused by its rapid expansion, a strategy designed to please investors, not riders.

• Ahead of the stock market launch Deliveroo has recruited new directors such as Lord Wolfson, multimillionaire boss of clothes chain Next. He has spoken out against the Living Wage and has said £6.70 an hour is enough for workers to live on.

• Deliveroo’s biggest partners include restaurant chains Wagamama, KFC and Nando’s, with grocery deliveries for Aldi, M&S, the Co-op and other supermarkets another growing business.

Can we help you look into a company? Click here to get in touch.

Deliveroo couriers in the UK are currently organising and campaigning through the IWGB union’s ‘RooVolt’ campaign. Click here to find out more.

What’s the business?

Deliveroo was founded in 2013 by William Shu, the current CEO, and Greg Orlowski. Customers order food from over 140,000 restaurants and takeaways through its app; Deliveroo sends its 110,000 couriers to pick up then deliver that food, and takes a cut from the orders, plus a delivery fee from customers.

Company propaganda paints Deliveroo’s rapid growth as due to its innovative business model and tech – the efficiency of its ‘Frank’ algorithm for allocating drivers. In reality, its money-making formula is nothing new: it takes as big a cut as possible from the restaurants, while also squeezing workers’ pay to the bone.

On the restaurant side, commissions in the UK can be as much as 35% plus VAT. In May 2020, one pizza restaurant owner told CNBC that Deliveroo’s cut works out at 42% per order when VAT is factored in.

On the other side, the business model means making sure very little of that commission reaches the people who actually deliver the food. Deliveroo has claimed it pays its couriers over £10 per hour, on average, across the UK. Couriers dispute this. A report compiled by MP Frank Field in 2018 found some made as little as £2 per hour once their costs were taken into account. Other common complaints include being classed as self-employed contractors with fewer rights than other workers, lack of safety and protection, job insecurity, and lack of support during the COVID-19 pandemic.

Registered under the name Roofoods Ltd, Deliveroo is headquartered in a swanky London office and is active in nearly 800 towns and cities across 11 countries. As well as the UK these are: Australia, Belgium, France, Hong Kong, Italy, Ireland, Netherlands, Singapore, Spain, United Arab Emirates and Kuwait. A failed attempt to enter the German market ended in 2019, as the company failed to win sufficient market share against established competitors.

Deliveroo has not yet published information on where it makes most of its money but research firms reckon the UK is easily its biggest market, followed by France, Italy then Spain. Within the UK, the company appears to do the most business in London, followed by Manchester, Birmingham and Leeds. The company delivers from a range of different restaurants but the most important appear to be the big corporate chains – particularly KFC, Wagamama, Nando’s and Burger King (see more on these at the bottom of this profile).

Rise of the dark kitchens

A further twist in Deliveroo’s business model is its use of “dark kitchens”. Also called “ghost” or “cloud” kitchens, these are low-cost food preparation units in industrial estates. The food may be prepared using the recipes, branding and pre-packaged ingredients of a recognised high street chain – without going anywhere near an actual high street restaurant, so slashing the bill for rent as well as front of house costs. As Financial Times columnist Tim Hayward puts it, dark kitchens are “the logical extension of a system that sees food as a manufactured item and replaces hospitality with a supply chain”.

Deliveroo helped pioneer the model in the UK. In June 2017 it had five “Deliveroo editions” sites in London and one in Brighton, hiring out kitchens it had built and equipped to restaurant chain partners. Shu then described the model as the “the biggest development in the market since we first launched”. By the start of 2021 Deliveroo operated 32 of its own dark kitchen sites worldwide, each of which may hold a number of actual kitchens, and it has announced plans to double this number.

Deliveroo is now by no means the only player in the market. Investment capital has piled into the idea in the last couple of years, including funding start-ups such as Karma Kitchen whose whole business offering is to hire out dark kitchen space.

However, there could yet be problems ahead for dark kitchen operators. Many may operate in a grey area without adequate planning permission. Deliveroo has clashed with local authorities over planning and nuisance complaints, and this could become a bigger issue as the sector grows – and possibly provokes resistance.

Worker resistance

In most places where Deliveroo works, there is resistance from its riders. There have been strikes across the UK and court cases around the company’s employment practices. A ‘RooVolt’ campaign by the IWGB union is currently focusing on unfair termination or dismissal, alongside longer-standing grievances over pay and the employment status.

Outside the UK, after a first flurry of transnational industrial action in 2016-17 (click here and here to read more about it), the struggle has been fought on diverse fronts across the world. Since 2018 there have been strikes in Spain, Ireland, Italy,the Netherlands, Hong Kong, France, Belgium and also Germany before Deliveroo pulled out.

Legal challenges to the couriers’ working conditions have been brought against Deliveroo in Spain, Italy, and Australia. In Italy its booking system was deemed “discriminatory”, while the Spanish Supreme Court ruled that couriers are employees, not self-employed contractors. This is similar to a recent Supreme Court decision in the UK concerning Uber, which may also affect Deliveroo in the future.

In addition, there have been some some moves by riders to set up their own courier platforms as a co-operative. This attempt to set up a rider-owned alternative started in France – in the UK, there is currently a branch in York.

Where’s the money?

The COVID-19 pandemic has been a boon for Deliveroo’s finances (see next section). Before the pandemic, Deliveroo was growing rapidly – yet also losing money in eye-watering amounts. Between 2016 and 2019 Deliveroo’s revenues grew sixfold, reaching £772 million at the end of 2019, the last year results are available for. However it posted overall losses of over £100 million in each of those four years: it lost £317 million in 2019.

Deliveroo revenues and losses 2016-2019

Source: Company accounts

This does not mean the company can’t afford to pay its workers better. Look deeper into the accounts and it turns out Deliveroo was making decent profits from its couriers’ work but its desire for international domination incurred huge costs that led to huge losses. This is important as it shows that even after the pandemic restrictions have passed, the business should be generating enough money from couriers’ work to increase their pay.

In 2019, Deliveroo spent £583 million delivering food. According to the accounts, “the largest element” of that spend is “the cost of delivery from restaurants to customers”. In other words, couriers’ pay. Deliveroo’s revenue from those deliveries was £772 million, meaning it made £189 million from deliveries in 2019 (its “gross” profit, in the jargon). After barely breaking even from deliveries in 2016, the profitability of its deliveries has been strong every year since 2017. Given the boom to Deliveroo from the pandemic and the increased cuts it can take from restaurants, this will likely have increased again in 2020.

Source: Company accounts

So if Deliveroo has been making decent money from its deliveries, why has it been making such huge losses overall? The accounts say its poor overall results came “principally as a result of the Group’s focus on investment, given it is still in a rapid growth and expansion phase”. The extra costs caused by this expansion are grouped together in “administrative” expenses. They peaked at a massive £502 million in 2019 but have been high throughout Deliveroo’s existence.

Source: Company accounts

These numbers will include some costs essential for the running of the business. The wages of software engineers running and maintaining the app, for example, or other workers employed in head office or other administration and a variety of other admin costs. But it is the costs of Deliveroo’s investment in its rapid expansion plan that appears to be causing the real damage to the company’s overall results. In just a few years since starting in 2013, Deliveroo has muscled its way into at least 13 countries and has set up a range of new business lines. That does not come cheap. Neither does failure: the 2019 admin expenses included a £43.4m “impairment” charge after it shut its operations in Germany and Taiwan.

The cash it used for this expansion has come from confident investors who have ploughed money into the company to push up its market value. But it has also come from the profit Deliveroo made from deliveries, generated by squeezing its couriers’ pay to a minimum.

Thank you Amazon and COVID-19

At the start of 2020, things were not looking great for Deliveroo. It seemed like Shu might have pushed his rapid growth strategy too far: delivery profits had grown, but expansion costs and so overall losses had grown even more. To keep going, Deliveroo needed more capital. It turned to the global platform capitalism behemoth Amazon, which in 2020 bought a £450 million chunk of Deliveroo, becoming the company’s biggest shareholder with a 16% stake.

The controversial deal was initially mooted in May 2019, but then blocked for a year by the Competition and Mergers Authority (CMA). They feared that even as a minority shareholder Amazon could wield “material influence” on Deliveroo and seriously impact competition in the delivery industry due to its massive market power. But in 2020 the CMA eventually backed down and agreed the deal – after Deliveroo convinced the authorities that it would indeed go bust without Amazon’s help.

Then came COVID-19. In the words of Will Shu, the pandemic has “accelerated strong underlying trends, and there is an enormous opportunity ahead”, After a rocky couple of months, restaurants opened up again and more people ordered meals to eat at home.

Buoyed by its new success, Deliveroo has played hardball with restauranteurs who have dared play away with any of its rivals. One London restaurant told the Financial Times that Deliveroo threatened to increase its commission after the restaurant also sold through UberEats. Deliveroo also struck deals with supermarkets to deliver groceries ordered through the app. The company now delivers for Aldi, Morrisons, Sainsbury’s and Waitrose.

Thanks to this, Shu announced in December his company was signing-up more customers, seeing existing customers place more orders, and seeing the average value of orders grow. All this helped it make its first ever operating profit in the first six months of 2020.

In short, COVID appears to have boosted revenue so much that the huge ‘admin costs’ are finally outweighed by increased sales. Again: this undermines any justification Deliveroo may give for not paying its couriers better. It has the money and can afford to do it.

The IPO

Thanks to its COVID boost, Deliveroo is now planning to ‘list’ its shares on the London Stock Exchange. The ‘Initial Public Offering’ (IPO) was officially announced on Monday.

Until now Deliveroo’s shares have been traded privately: the company has solicited money from specific investors, then given them shares in return. By ‘going public’, Deliveroo will issue new shares through the stock exchange, which greatly increases the number of investors it can reach. This should bring a huge amount of cash into the business – as Deliveroo will receive the money paid for the new shares.

It also means a potential bonanza for William Shu, Amazon and its other current shareholders, with increasing demand pushing the value of their stakes higher. We don’t know how much investors will decide Deliveroo is worth for the IPO but the company is reportedly targeting a valuation of £7 billion. This would make Shu’s stake worth around £500 million.

While individual investors will be able buy Deliveroo shares after the IPO, the biggest prize for corporations are the ‘institutional’ investors: huge investment firms that manage trillions in savings and pensions, many of which can only be invested in shares listed on a stock market. A look at who now owns rival Just Eat shows some of the firms that may be interested: Blackrock, Vanguard, Standard Life and other mainstays of global capitalism.

The more they like Deliveroo, the higher Deliveroo and its banks can set the share price (and the higher it is, the more money it can generate). Potential institutional investors will not be concerned about the ethics of Deliveroo’s business model – but they may be put off if they think workers’ challenges will be successful.

Deliveroo has already signed-up JP Morgan, Goldman Sachs and other investment banks to take care of proceedings and will currently be marketing itself directly to institutional investors to drum up demand. A next step will be to issue a ‘prospectus’ that will present the business to potential investors and should contain a lot of new information about the workings of the company. It should also identify any “material risks” that could cause problems for its business model.

This has to be signed-off by the state regulator, the Financial Conduct Authority. Will it insist Deliveroo list legal cases around workers’ rights or resistance as material risks? Let’s see, but given the government is currently trying to lure future tech companies’ IPOs to London, don’t expect too much.

Size wars

What is Deliveroo’s plan to impress potential investors this year? The company can’t bank on COVID lockdowns being around for ever – so can it use the current momentum to find more sustainable long-term profit?

Deliveroo’s biggest market is the UK. But it is not alone and is a long way from dominance. Its two main rivals are Just Eat and Uber Eats. Uber has a wide network and partnerships with major restaurant chains, while Just Eat’s app is still the most popular app for orders. Just Eat has also recently developed its own courier fleet (restaurants on its app previously had to arrange delivery themselves). Neither are short of cash to grow their businesses further. Ominously for Deliveroo, Just Eat’s CEO Jitse Groen issued a declaration of war earlier this year, announcing his company will “go all out” against Deliveroo and Uber Eats, with dominating London a particular focus.

There are also other up-and-coming players challenging Deliveroo: for example, dark kitchen specialist Karma Kitchens, which has a partnership with Uber Eats, raised £252 million in 2020 to massively expand its network.

In response to this competition, Deliveroo’s strategy appears to be simple – keep bulking up. So far in 2021 it has announced the following plans to expand its operations:

• Grow across the UK, with more restaurants and chains on its app. In January 2021 Deliveroo said it plans to cover 100 new towns and cities.

• More dark kitchens – plans to “more than double” the number of its ‘Editions’ sites worldwide in 2021 (there are currently 32, containing over 200 kitchens).

• More “on demand grocery” partnerships with supermarkets – the “fastest growing part of the business”.

It goes without saying that another key part of the strategy will be to continue to challenge any attempts by its workers to increase their pay.

Who runs Deliveroo?

Deliveroo is led by William Shu, who is also its co-founder (the other, Greg Orlowski, has since left the company). Shu used to work for investment bank Morgan Stanley. The Deliveroo origin story tells of Shu dreaming up the company while working late nights in the London office, where his number-crunching was interrupted by having to leave his desk to pick up food.

Also on the board is Deliveroo’s head bean-counter, Adam Miller, who was appointed as Chief Financial Officer last year. He used to be an executive at the travel business, Expedia.

The rest of the board are either representatives of existing shareholders or big corporate ‘stars’ hired to impress potential investors for Deliveroo’s big stock market opening.

Deliveroo signed Claudia Arney, Richard ‘Rick’ Medlock and Simon Wolfson last year and the company hopes they will all polish its image with investors – and thereby increase the cash it hopes to raise.

Medlock has a background in finance and is former Chief Financial Officer at Worldpay, a payment processing firm. Medlock was CFO at telecomms firm Inmarsat for nine years, where he oversaw its initial public offering.

Arney has a more impressive corporate CV: she has worked for Pearson, the Financial Times, Goldman Sachs, HM Treasury and has experience as a director at Ocado, Halfords, property firm Derwent London, Aviva, Which? and TFL. She was previously interim chair of the Premier League.

She will need to balance her commitments at Deliveroo with her directorship at Kingfisher plc, a large DIY retail group whose name is less familiar than its brands: B&Q, Castorama, Brico Dépôt and Screwfix. She is also currently a director of Bedales school, a boarding school in Hampshire. Bedales boasts an impressive list of alumni including Cara Delevingne, Daniel Day-Lewis and Lily Allen as well as knights, nobles and royals.

But perhaps the biggest signing is Simon Wolfson. Currently the CEO of Next, Wolfson is the FTSE 100’s longest-serving chief executive (when appointed in 2001, he was also its youngest). A Tory peer, ‘Lord Wolfson of Aspley Guise’ is the ‘scion of a well-known retail family’ and is reportedly worth an estimated £112m.

Wolfson is no stranger to Deliveroo’s key business strategy of squeezing worker pay. In 2015 he made headlines by criticising campaigns calling for firms to pay a Living Wage of £7.85 an hour. He said £6.70 an hour was “enough to live on” for a lot of people.

Wolfson has given serious financial backing to the Conservative Party and to Brexit. He has personally donated £630,850 to the party and to David Cameron, plus another £100,000 to the Vote Leave campaign. He has also been Chairman of Open Europe, a Eurosceptic research and propaganda outfit that merged with Policy Exchange, a powerful Tory think tank of which he is now a trustee.

Wolfson has further Tory connections through his family. He is married to Eleanor Shawcross, a Non-Executive Director at the Department for Work and Pensions, and former economic advisor to George Osborne. His father, David Wolfson, is a businessman and former chief of staff to Margaret Thatcher who was also raised to the peerage as Baron Wolfson of Sunningdale – though later kicked out of the House of Lords for non-attendance.

Some Next shareholders are reportedly none too happy with Wolfson’s new appointment at Deliveroo. They are worried the role will distract him from his duties at the fashion retailer at what seems a crucial time for the company. Some insiders reckon he wants the Deliveroo post as a way to get closer to Amazon, his ultimate target destination.

Aside from Next, Wolfson currently has shareholdings in the following companies: Superdry clothing, biotechnology firm ADC Therapeutics, Pembroke Venture Capital Trust, and nuclear fusion research company Tokamak Energy.

Also on the board is Darrell Cavens, an entrepreneur and founder of Zulily, an ‘e-commerce company’, who joined Deliveroo in 2017. The rest of the directors all represent current shareholders:

• Antoine Froger, representing Bridgepoint. He also currently sits on the board of Burger King’s France franchise, another of Bridgepoint’s investments.

• Martin Mignot, representing Index Ventures, one of Deliveroo’s earliest backers. A keen cyclist, he recently collaborated with London Cycling Campaign on a webinar about how to make London a ‘friendlier and safer for pedestrians and cyclists’. He has 45,000 followers on Twitter where he uses hashtags such as #humansnotcars.

• US-based Jayant Mittal, representing Amazon, where he is a Corporate Development Director.

• Benjamin ‘Benny’ Peretz, representing Greenoaks Capital.

• Seth Pierrepoint, representing Accel. Pierrepoint is described as having played a key role in Accel’s early investment in Deliveroo.

• Adam Valkin, representing venture capitalist firm General Catalyst. He posts about his business on Twitter.

Who owns Deliveroo?

Co-founder William Shu still owns a fair chunk of Deliveroo’s shares – 6.8% as of January 2021. His former partner Greg Orlowski also keeps a stake, possibly now around 2%. However, most Deliveroo shares are owned by investment firms – both big global investors and more specialist private equity funds – as well as the megacorporation Amazon.

As discussed above, Deliveroo never made a profit until COVID. It is only still in business thanks to being given piles of cash by these investors. They are betting that the value of their investment will increase and make them handsome profits if the coming IPO is well received by the stock market.

The current shareholders are:

Amazon

The delivery and cloud computing leviathan is now one of Deliveroo’s largest shareholders, and has a seat on the board. In 2020 it bought a £450 million chunk of Deliveroo in a controversial deal which at the time gave it a 16% stake – after a year of wrangling with the Competition and Mergers Authority (CMA). Amazon was fined £55,000 for failing to provide timely information during the competition inquiry – an amount that will mean little set against its multi-billion dollar profits.

Amazon’s intentions with Deliveroo are an interesting question, given its massive wealth and drive to dominate most of the markets it enters. One analyst speculates that the endgame may be eventually combining Deliveroo’s food-ordering app into an Amazon “super app”. Or perhaps Amazon could use the business knowledge it gains from Deliveroo to launch its own dark kitchen operations in other countries.

Fidelity

Just last month (Janary 2020) Deliveroo topped-up its capital by selling another $180 million in shares. The sale was led by two investment managers – Fidelity and Durable. It is not yet clear how many of the shares they kept for themselves, and how many they sold on to other existing investors. Fidelity is one of the world’s biggest investment fund managers, based in the US with a London office in Cannon Street. In June 2020 it managed assets of over $3.3 trillion.

Durable

Durable is a venture capital fund based in Maryland in the US. It was set up recently in 2019 by Henry Ellenbogen, a former “star fund manager” at big investor T. Rowe Price – which also owns shares in Deliveroo.

Index Ventures

US venture capital firm, putting its money into Deliveroo through two Jersey registered investment funds (essentially pots of money). Invests in 160 companies in 24 countries, including: Dropbox, Etsy, Sonos, SoundCloud, Squarespace, Lookout, Hortonworks, Pure Storage, Funding Circle, as well as Deliveroo rival Just Eat. Its London office is in Mayfair, naturally. Represented by Martin Mignot on the Deliveroo board.

DST Global

Hong Kong-based firm founded by Yuri Milner, Russia’s “most influential tech investor” according to Forbes. It is one of the world’s most successful internet company backers after making huge sums from stakes in Alibaba and Facebook. It invests in Deliveroo through three different funds. It has a London address in Mayfair.

Greenoaks Capital

San Francisco-based venture capitalists specializing in tech investments. They invest in Deliveroo through three different funds, all of which appear to be registered in the Cayman Islands. They are represented by Benjamin Peretz on the Deliveroo board.

Accel Partners

Another investment firm specializing in tech companies. They were one of the first investors in Facebook and also own stakes in Dropbox, GoFundMe, Groupon, GoCardless, Squarespace, Walmart.com, Wonga and a host of other companies. They have a UK office in Mayfair, London.

General Catalyst

US-based venture capital fund manager that invests particularly in “growing” tech companies. Has also backed Airbnb, Snapchat, among others. Represented on the board by Alexander Valkin.

Deliveroo’s key restaurant and grocery partners

Nando’s

Nando’s deliver exclusively with Deliveroo and have recently expanded the amount of restaurants on the Deliveroo app.

Nando’s is owned by Dick Enthoven, a South African billionaire who owns the company through a string of offshore companies. His son, Robby Entoven, heads the UK operation of Nandos.

Burger King

Burgers were the most popular Deliveroo order during the UK’s COVID lockdown, and Burger King has been ramping up its delivery business.

Burger King worldwide is owned by Restaurant Brands International, a massive Canadian-American company. The Franchise to operate Burger King restaurants in the UK is owned by UK-based private equity investment firm Bridgepoint Capital, which is also a Deliveroo shareholder.

KFC

KFC and Deliveroo’s relationship extends to holding joint publicity stunts together. KFC is another COVID winner, expanding business during the pandemic: they have recruited almost 10,000 new staff by the end of 2020.

KFC is part of major US company Yum! Brands Inc, which also owns Taco Bell and Pizza Hut. Pizza Hut also used Deliveroo, though is testing its own delivery options. Yum! Brands Inc Previously invested $200m in GrubHub. In the UK KFC’s restaurants are run by 37 franchise partners, who range from small family owned businesses to bigger franchise companies that run multiple outlets.

Wagamama

Wagamama was already expanding via “Dark Kitchens” before the pandemic in early 2020. It cited strong courier operations as part of its “covid resilience” strategy for the future in its annual report.

Wagamama is part of The Restaurant Group Plc, whose other restaurants include: Chiquito, Frankie & Benny’s, TRG Concessions, Brunning & Price, Coast to Coast, The Filling Station, Fire Jacks, Garfunkel’s, and Joe’s Kitchen. Not all of the group’s brands have done so well: during the Covid-19 outbreak and subsequent quarantine, The Restaurant Group closed 250 restaurants, with a loss of nearly 4,500 jobs.

Five Guys

The “Golden Burger” marketing stunt with Deliveroo that amounted to £25,000 worth of cash prizes shows the effort that has gone into marketing Five Guys on Deliveroo. There’s also evidence of the chain growing in the UK despite the pandemic. As a highly successful burger chain, and burgers being named the most popular take away during the pandemic, it’s safe to assume that Five Guys is an important partner to Deliveroo.

Five Guys internationally is owned by the US-based Murrell family. The UK operation is owned jointly by the Murrells and Freston Ventures, an investment company run by Carphone Warehouse founder Sir Charles Dunstone.

The Co-Op

The Co-Op has paid for TV ads to promote its partnership with Deliveroo. It has become the most “widely available supermarket on Deliveroo” with 400 stores now available.

The Co-Op is technically still owned by its five million members: anyone can become a member by subscribing for a £1 share. Co-Op members vote on motions at the AGM and also elect the members council which consists of 100 members from across the UK.

The post Deliveroo: we profile the dodgy delivery firm set to cash in on the stock market appeared first on Corporate Watch.

As part of this, we have profiled MSC, one of the world’s biggest shipping companies. You can read our profile below. Click here to read the full ENCO report.

ENCO will be holding a webinar on the report on Wednesday 27 January, 4-5.30 pm. To attend, please register by email: contact(at)corpwatchers(dot)eu

MSC and container shipping: spilling, polluting and exploiting

The Mediterranean Shipping Company (MSC) is one of the world’s biggest shipping companies. Its massive vessels transport containers full of goods across the globe, spewing out pollution as they go and making a fortune for its owners, the billionaire Aponte family. The expansion of ports and ‘mega-corridors’ are good news for them: more ports and more trade means more shipping. They also make money directly from their investments in the ports themselves. Following on from Re:Common’s report on the ‘New Silk Road in Italy’, we now look at MSC in detail, looking at the company’s operations, the people behind it and its devastating impact.

MSC is most famous for its cruise ships. Its MSC Cruises division carries passengers – mostly Europeans – around the globe in its huge ships offering cinemas, Cirque du Soleil shows, water parks, mini-Legolands, and celebrity chefs and hairdressers. Football fans may also know MSC as a sponsor of the Sorrento, Napoli Chelsea or Paris Saint-Germain teams. Cruise ships are renowned for producing enormous quantities of pollution, in the form of NOx, sulphur dioxide, particulates, sewage and of course huge quantities of carbon dioxide. It has been estimated that one cruise ship emits as many air pollutants as five million cars going the same distance.

However, the bulk of MSC’s money comes from the less glamorous world of container shipping. Global capitalism depends on shipping. Around 80% of world trade is carried on the seas and oceans. The majority goes by container ship. Food, car parts, stuff from Amazon – if you’re buying something that was made overseas, there’s a good chance it was brought on a container ship. And what ships. MSC’s biggest ship, the Gulsun, one of the largest in the world, is 400 meters long with 232,618 gross tonnage.

The environmental impact of these vessels is colossal. NGO Transport & Environment reckons MSC is Europe’s eighth biggest corporate polluter with its ships emitting 11m tonnes of C02. MSC and Ryanair are the only companies in the top ten that aren’t running coal-fired power plants. Statistics of environmental impact from the sector are stunning. Shipping accounts for around 3% of global CO2 emissions, and its contribution is expected to rise significantly. Of total global air emissions, shipping accounts for 18 to 30 percent of the nitrogen oxide and 9% of the sulphur oxides.

MSC ships have also been involved in specific environmental disasters. In 2010, for example, the MSC Chitra collided with another ship off the coast of Mumbai and spilled 700 tonnes of oil into the sea. Mangroves and marine life were “completely wiped out” in nearby areas, according to the Times of India. MSC then fought attempts to make it pay compensation in court.

Image of the Chitra Shipping Disaster from https://shipwrecklog.com

Containers can also fall from the ships. In the last two years, MSC ships have lost 270 containers in the North Sea and 20 containers off the coast of South Africa. After the North Sea spill the Dutch Coast Guard issued a warning that three containers contained hazardous, potentially explosive materials.

The effect of the Cruise division is also severe. In 2019, the MSC Opera collided with a small tourist boat and damaged the quayside of Venice’s Guidecca Canal. Residents had long been calling for such ships to be banned due to the damage and flooding they were causing and protests after the MSC crash led to the government banning them from the centre of the city.

Meanwhile, the COVID pandemic has highlighted treatment of workers, with management insisting some workers stay on board ships without pay.

The shipping cartel

Shipping is dominated by a few very big companies. The top 10 control 84% of the market. Not only that, they have joined forces through three mega alliances. MSC is the second biggest container shipping company after the Danish company Maersk. Together, they have formed the 2M alliance, sharing ships and space on each other’s vessels, and working together to ensure they are not sailing more ships that are needed. The also cooperate with Korea’s Hyundai Merchant Marine Co and Israel’s ZIM Integrated Shipping Services on certain routes.

This last point is crucial with the industry hit by the Covid-19 pandemic. After the financial crash of 2008, the major shipping companies competed with each other by investing in larger ships and dropping prices to attract business. But trade didn’t grow as they had hoped and the companies found they had too many ships and too little cargo. South Korea’s Hanjin shipping went bust as a result.

That’s where the alliances come in – by agreeing to collaboratively manage the amount of space they offer, the companies can keep prices, and therefore profits, higher. Market analysts reckon this should enable most of them to survive the contraction in world trade caused by covid.

The Apontes

Image from Thomas Sampson/AFP via Getty Images

So who is behind MSC? Step forward ‘Captain’ Gianluigi Aponte. Born in Sant’Agnello near Naples, Italy, but based in Geneva, Switzerland, he started MSC in 1970 with one small ship. Right place, right time: globalisation got going and suddenly cargo ships were in high demand.

Gianluigi Aponte was born from a family that – already at the beginning of the last century – operated small boats for the transport between Naples Calata Porto, Massa and Sorrento. Before the Second World War, his parents moved to Somalia, where they ran a hotel. Following the death of his father in Mogadishu, Gianluigi returned to Sorrento with his mother Gina Gatti. After completing the nautical institute, he meets Rafaela Denat, daughter of the Swiss banker Dominique Denat, and moves to Geneva. Here, after a brief experience in an investment bank, he founded his first maritime transport company together with his father-in-law, who became a business partner. The business started covering the transport route connecting Italy with Somalia. MSC’s first freight ship was called Patricia, after Rafaela’s mother, while the second was called Rafaela. It was 1970, and in a few years Mediterranean Shipping expanded its fleet and routes, in a few decades becoming the MSC giant.

MSC ports and terminals worldwide. From: https://www.tilgroup.com/terminals

Gianlugi and wife Rafaela are reckoned to be worth $8.7 billion, putting him at number 230 on Forbes’ billionaire list. Now 80, Gianluigi stopped being CEO of the company in 2014 and now oversees it as its Chairman.

Keeping it in the family, his son Diego Aponte is now President. Daughter Alexa is the Chief Financial Officer, while her husband is Pierfrancesco Vago, the Executive Chairman of MSC Cruises. The MSC Zoe, which spilt chemicals into the north sea last year, was named after their daughter, as is the voice-activated digital personal assistant developed by the company.

MSC businesses: shipping, ports, lorries, cruises, ferries… and an island

Container shipping makes up the bulk of MSC and the Aponte’s business activity. Here are some stats: it is the second largest container cargo business worldwide, with operations in 155 countries, employing 47,000 staff across 510 vessels. MSC boasts it has shipped “almost every conceivable type of cargo to destinations all around the globe”. Its customer list is likely to be long and to include pretty much every major company that makes something and ships in by sea.

A few we have found include: fruit firms Carlo Porro and Agricola Famosa, plus Exporters and growers of Australian citrus fruits; Sucafina, a coffee company in partnership with Nestle and accused of some pretty dubious labour practices, and lots of chemical and petrochemical manufacturers.

As well as shipping goods, the Apontes also run and own terminals at ports to process the containers on and off ships, through its Terminal Investment Ltd business, which the Apontes co-own with Singapore’s sovereign wealth fund and investment firm Global Infrastructure Partners. They are spreading across the world, with 39 terminals in 26 countries.

Terminal Investment Ltd global footprint

Then, once the goods have been unloaded, MSC’s Medlog Transport and Logistics business transports them from ports to warehouses or wherever else they need to be sent. The division now works in 70 countries.

MSC is also moving into islands. The company has bought Ocean Cay, a small island in the Bahamas and is making it into a luxury tourist resort. It holds a 100 years concession for the island, which will provide a docking point for MSC cruises along their Caribbean routes. In a nice piece of greenwashing, MSC has established a marine protection park at the island for coral and marine environment protection. Presumably the potential damage that may be caused by immense cruise boats docking on the island will not be part of the display.

Where’s the money?

Switzerland. Or, to put it another way, we don’t know. Because MSC is privately-owned by the Apontes and Swiss-registered it does not have to publish financial results that give a picture of its overall affairs. Records in the UK company register for their UK operations show Gianluigi and Rafaela are the ultimate owners of the MSC group through the Swiss-registered holding company MSC Mediterranean Shipping Company Holding SA. However we do not know exactly how the money travels through the MSC group as accounts are not published.

The estimate used by financial analysts for MSC’s overall annual revenue is $28 billion but we do not have any details for how much profit it makes from this. Of course, these numbers were posted before Covid-19 hit. But while MSC will take a serious hit from the pandemic, they are not expected to be finished by it. And if smaller rivals go down, MSC may be able to take their old business.

MSC Cruises is the only division that publishes financial results, perhaps because it is the only part of the business that raises financing through public debt markets that require more financial disclosure. These show it is a relatively small part of the overall group, but a rapidly growing one, at least pre-COVID. The cruise business’ revenue increased from €1.9bn in 2016 to €3.2bn in 2019. In 2019 MSC Cruises made a profit of €405m from this. Revenues and profits will have been hit by COVID but MSC has started operating cruises again and appears to be hoping to go back to something like normal business in the next year.

The bigger MSC shipping division does not appear to have borrowed through financial exchanges. The big question then is who is providing the financing for such a capital intensive business. MSC is unlikely to be funding its infrastructure simply through its profits or from money invested by the Apontes. Banks, possibly Swiss banks, would be a good bet, but thanks to the secrecy provided by Swiss regulations, we do not know.

The supply chain

Who else gains from the MSC’s work? Its ships are made by the world’s major shipbuilders, including the Chantiers de L’Atlantique shipyard in Saint-Nazaire, France, the Fincantieri shipyard in Monfalcone, Italy and South Korean giants Samsung Heavy Industries and Daewoo.

MSC lists over 570 ships on its website and just over half of these are owned by MSC itself. The others are owned by a multitude of different shipping companies from over 25 countries, with Germany the biggest single provider. Over 99 of MSC’s 570 Cargo ships are owned by 27 different German companies. Of these, 12 are owned by NSB Group, a large ship management company, which owns more of MSC’s cargo ships than any other company. Ironically NSB group boasts sustainability as being at the top of their agenda, despite the catastrophic consequences the industry has on the planet.

Based in Athens, Contships management is another leading provider of MSC ships, owning nine of MSC’s cargo ships in total. Curiously, leading arms company BAE Systems also owns an MSC ship, through its BAE Systems South Alabama subsidiary. The ship operates under the name “MSC Alabama”.

The insurance industry also makes good money from MSC and other shipping companies. We have found British companies insure 80% of MSC’s cargo ships. These companies include Britannia Steamship Insurance, London P&I, North of England P&I, Shipowners Mutual P&I, UK P&I and West of England P&I. The rest of the fleets are insured by Norwegian & Swedish insurance companies: Skuld P&I (Norway), Gard P&I (Norway) and Swedish Club.

All ships fly the flag of the country they are registered to. Although the majority of MSC’s cargo ships are owned by companies registered in Europe, many fly the flag of Liberia or Panama. This is part of the concept called the “flag of convenience”, when a ship flies the flag of a country other than the country of ownership. This allows companies to cut registration costs and exploit lenient regulations in relation to labour laws, tax and more. Due to this, more ships are registered in Panama than anywhere else in the world. The MSC Zoe for example, which despite being owned and run by the Swiss-based company MSC, it’s registered in Panama and flies their flag.

The post MSC: a profile of one of Europe’s worst polluters appeared first on Corporate Watch.

The programme was the topic of Corporate Watch’s Prison Island report about prison expansion in England, Wales and Scotland published in 2018. Read our take on the recent announcement and the status of prison projects so far here.

Opposition to prisons is often discussed in a conceptual way – organisers and communities contest their validity, explore alternatives and talk about abolition.

However, they are also very much real physical constructions, with companies profiting from their creation. Architects and engineers pore over designs of cells and wings, businesses create locks, alarm systems and fences. The ‘prison industrial complex’, is a term used to describe the overlapping interests of government and industry that use surveillance, policing and imprisonment as solutions to economic, social and political problems. It includes companies like G4S that win contracts to run prisons for profit, but also those profiting from continuous construction.

So, who is building the mega-prisons?

Constructing Wellingborough Prison. Picture from: https://www.kier.co.uk/media/5258/wellingborough-prison-1.jpg

Kier

Kier is a multinational construction company and the principal contractor behind the new mega-prison in Wellingborough, recently called HMP Five Wells. Nearly complete, the prison is set to create cells to imprison more than 1600 people.

Corporate Watch previously published a detailed profile about Kier that covered issues such as worker blacklisting, animal laboratory construction, and their role in building the controversial high-speed railway, HS2.

Kier were awarded £1.4 billion of HS2 projects in 2017 and are part of a group of companies managing the mega-project, which has faced resistance for over a decade. There are decentralised and autonomous camps across the HS2 route.

Lendlease

Lendlease is a global property developer and construction company that are the main contractors building the mega-prison HMP Glen Parva in Leicestershire.

They were awarded a contract after the original winner, Interserve, went under. The cost of building the prison jumped from £170 million to £286 million. After years of delays, Lendlease started building in September 2020.

Corporate Watch profiled LendLease in 2017 highlighting previous prison builds in Australia and the UK, gentrification, worker blacklisting and even Donald Trump.

Bison Precast and Forterra

Bison Precast is manufacturing more than 4900 components for Wellingborough mega-prison. Their scope includes bespoke precast walls, hollowcore flooring, columns, stairs and landings. The order also includes insulated brick-faced sandwich panels to the entry building façade.i

Bison Precast have three factories in the Midlands: Swadlincote and Somercotes, Derbyshire and Hoveringham, Nottingham. A worker was crushed to death at their factory site in Swadlincote after health and safety failings. The Covid-19 pandemic’s impact on the company has resulted in plans to mothball the factory site, leading to 225 job losses.

Tweet from: https://twitter.com/forterrauk?lang=en

Bison are seasoned prison builders, having worked with Kier to build HMP Oakwood, a mega-prison that opened in 2012. It regularly locks up over 2000 people and is run for-profit by G4S. It has been named an increasingly violent prison with many assaults, deaths and high rates of self-harm.

Bison Precast is owned by the Forterra Group, one of the largest manufacturers of building products in the UK. Forterra employ 1800 people and have 18 manufacturing sites. They are trying to build the largest brick factory in Europe at Desford in Leicestershire. You can find a list of Forterra’s shareholders here.

Workers at Forterra’s Newbury site previously went on strike over wages. One worker and GMB member said “It really sticks in our members’ throats when they are being offered low pay rises, only to see directors pick up higher and higher bonuses.”

In 2017, a worker lost his arm and was paralysed from the waist down due to Forterra failing to maintain its machines properly. The company was fined £200,000.

Banagher Precast Concrete

Banagher Precast Concrete is “very proud” to be supplying 3,600 precast cell wall units and heated floor slabs to Kier for Wellingborough prison.

From: https://twitter.com/banagherprecast?lang=en

The company currently operate a 50 acre site with over 70 gantry cranes. With a total of 5 mixers, Banagher has the capacity to produce over 150,000 m³ of concrete per year. They are an Irish company that has expanded into the UK. They have offices in Banagher, Ireland and Norfolk and employ over 270 people.

The also having a trading arm called Banagher Slats that profits from the dairy industry in Ireland by manufacturing slats for animal farm sheds.

FP McCann

FP McCann are the largest precast concrete manufacturer in the UK. They are supplying ground beams, internal cross walls, corridor walls, cell slabs and sandwich panels for HMP Five Wells mega-prison. They write: “Our early involvement in the supply chain ensured that our specialist skills and knowledge were embedded within the project.”

They have twelve manufacturing facilities across the UK, as well as seven quarries and a sandpit in in Ireland. They have depots in Northumberland, Cheshire, Warwickshire, Derbyshire, Leicestershire, Lincolnshire, Cambridgeshire, Gloucestershire and Glasgow.

A quarry worker who had worked for FP McCann for 19 years was killed in a dumper truck accident. The HSE inspector said the vehicle had “not been maintained in a safe condition and was not fit for use in a hazardous environment”. FP McCann and two other building firms were also fined £36 million for taking part in an illegal price-fixing cartel.

Campaign group, Save our Fens, have been resisting FP McCann’s plans to expand a concrete manufacturing site in Littleport, Ely, Cambridgeshire since 2013. They fear the health risks of increased silica dust and echo the Environment Agency who consider that the proposed development may pose an unacceptable risk of causing detrimental impact to the surface water quality, amongst other environmental concerns.

Image from: https://www.saveourfens.co.uk/

PCE

Kier has appointed PCE Ltd as Wellingborough’s superstructure and façade delivery partner. They will deliver a precast concrete DfMA (Design for Manufacture and Assembly) solution for substructure, superstructure and facade for the seven four-storey Houseblocks, Care And Separation Unit (CASU) and Entry and Visits building.

PCE have pocketed millions in the ‘custodial sector’ e.g. building prisons and police stations. They were part of building North Wales Police Eastern Command Centre, that includes 32 police cells, as well as Blackpool Police Headquarters. They also built Basingstoke Police Centre and were part of building HMP Oakwood.

Photo by Ethan Wilkinson on Unsplash

Unlike many companies, PCE continued to work through the pandemic, happy to put their workers at risk.

Curtins

Curtins has been employed as the structural engineer to design the seven house blocks, the CASU unit and the entrance building at Wellingborough prison. In addition to this they also worked for PCE to produce all the precast concrete fabrication drawings.

Eleonora Rocci is their project manager at Wellingborough, meanwhile Louise Rice is the design engineer for the project.

The Samaritans is PCE’s dedicated charity in 2020. This is ironic given the overwhelming number of people that kill themselves in British prisons. 334 people took their own life inside in 2018-19, many people fear that rate will be higher due to the increasing amounts of bang-up during the pandemic.

Curtins are also experienced in the custodial sector. Previous projects include HMP Oakwood and HMP Jurby, a prison on the Isle of Man where a man died this March. They have also built courts in Caernarfon and Stockport.

Mitchellson

Mitchellson Formwork and Civil Engineering ltd is a structural engineering firm making £8 million from Wellingborough prison. They are carrying out the substructure works on the site which includes the groundbeams and pile caps, underslab drainage, external drainage, cross site services and hard landscaping.

The company was fined £400,000 after a carpenter plunged to his death when a temporary platform collapsed during a £25m project. Two other workers were also seriously injured. The Health and Safety Executive ruled that there was no design for the unsafe temporary platform and no risk assessment.

Assa Abloy

The Assa Abloy Group is a multinational company that designs and makes locks, doors and security systems. They are a major supplier of custodial products to prison authorities both nationally and globally, used in prisons, immigration and detention centres, courts and other ‘correctional’ facilities. Their products include door and cell locks, holding room screens, prison gates, interview chairs, cell benches and handcuffs.

Image shows a detailed design for a prison cell door by Assa Abloy: https://www.assaabloyopeningsolutions.co.uk/en/assa-abloy-product-catalogue/high-security–safety-/sectors/custodial/9d008—prison-cell-door/

They own a number of brands, such as Yale and HID. Assa Abloy sold their Israeli subsidiary, Mul-T-Lock, after pressure from the Boycott, Divestment, Sanctions (BDS) movement in 2009.

From: https://www.assaabloy.com/en/com/about-us/strategy/brands/

British Gypsum

British Gypsum make ‘interior lining systems’ such as plaster, plasterboard and ceiling solutions. The company made £160k working as a contractor to build HMP Berwyn in Wrexham. This is the most recently built mega-prison which repeatedly makes the headlines for increasing violence. Over a thousand prisoners have been sharing cells throughout the pandemic. More than 60 prison staff and prisoners had contracted the virus between March and June 2020.

Image from: https://www.leaderlive.co.uk/news/18460731.dozens-coronavirus-cases-confirmed-hmp-berwyn-wrexham-figures-show/

They are part of the Saint-Gobain group, the french multinational linked to environmental health scandals across the United States. Celotex, another arm of Saint-Gobain, provided insulation for Grenfell Tower where 72 people lost their lives in 2017.

Crown House Technologies

Crown House Technologies is an engineering firm providing the mechanical works at Wellingborough Prison. They are owned by Laing O’Rourke and were one of eight construction firms subject to scrutiny over their blacklisting practices. In 2013 a worker died, and six others were injured after a preventable explosion of gas cylinders on one of their construction projects.

Crown House Technologies are no strangers to prison construction. They were actively involved in building HMP Shotts in Scotland and HMP Berwyn in Wales.

William Haley Engineering

William Haley Engineering is the programme’s steelwork fabricators. They are a family owned business based in Somerset. The company also helped to build mega-prison HMP Berwyn.

They are part of a company group called The Haley Group that includes FLI Structures and George Jackson Ltd.

Kingspan

Kingspan is a large building materials company based in Ireland that trades in over 70 countries. The specifics of their contract with the prison builds is unclear beyond ‘component assembly’, however, their major product is insulation.

Controversy has hit the company during the Grenfell Tower Inquiry, where it emerged that Philip Health, a technical manager with the insulation boards division until December 2009, said a builder who questioned the safety of the company’s Kooltherm K15 product should “go f**k themselves”.

Quantities of Kingspan’s K15 were used on Grenfell Tower, although much of the insulation on the building was made by Celotex (part of Saint Gobain who own British Gypsum listed above).

Image from https://en.wikipedia.org/wiki/Grenfell_Tower_fire. Kingspan and their subsidaries’ insulation made up much of the building where 72 people lost their lives

WMS Underfloor Heating

WMS Underfloor Heating is providing 2,110 underfloor heating mats for Wellingborough prison. The Cooper family-run company is based in Hertfordshire and supplies underfloor heating to a number of construction projects, including the headquarters for Greater Manchester police.

Resisting Prison Construction

Through resisting prison expansion, connections can be made between the violence of the state and the power of corporations, who both build prisons and exploit prisoners within them. By questioning the fundamental feature in society that is the prison system, more radical visions of society can be nurtured in our communities. Arguments for prison can be dismantled and solidarity extended beyond bars. There is a once-in-a-generation opportunity to fight these prison expansion projects, and that time is now.

• To get involved in campaigns against prison expansion contact Community Action on Prison Expansion – https://cape-campaign.org/
• To learn more about prison expansion, download Corporate Watch’s Prison Island Report – https://corporatewatch.org/prisonisland/

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