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The Byron burger chain is facing a wave of protests and condemnation for helping the Home Office organize a series of immigration raids on its London restaurants that led to the arrest of 35 of its workers from Albania, Brazil, Nepal and Egypt last week.

And while their company is collaborating with the Home Office to deport people, Corporate Watch has found that the owners of Byron are siphoning millions of pounds offshore.

Since buying Byron in 2013, investment fund Hutton Collins has already made £14m through a complicated financial scheme that sees money routed through the Channel Islands Stock Exchange to companies in Luxembourg.

Mayfair-based investment fund Hutton, run by a group of financiers and former bankers, bought Byron in November 2013 for £100m. Paladin, a ‘boutique’ private equity group co-founded by Caffe Nero boss Gerry Ford, has also bought a minority stake in the company, as have Byron’s management team, including founder and chief executive Tom Byng.

Accounts filed at Companies House for the Byron group show that the new owners made the majority of their investment in the form of a £82.7m loan, at an interest rate of 10%.

On the face of it this makes no sense – why would the owners saddle their own company with so much debt, at such a high interest rate (Byron is paying just 3% on the loans it has from banks)? Hutton could have put this money into shares in Byron, and received dividends when the company made a profit. But dividends are paid after a company’s profits have been taxed, whereas interest payments are taken from profits before they are taxed, thus potentially reducing a company’s tax bill.

In the 19-month period from November 2013 to June 2015, when the latest accounts were made up to, interest of almost £14m was racked up on these “shareholder loans”. Instead of receiving the money straight away, the owners have chosen to add it back onto the original loan so that more and more interest can be charged every year, leaving them with a hefty reward whenever they choose to sell the business on.

The scheme is in its early stages and how much UK corporation tax the interest payments will help Byron avoid remains to be seen. But it is already helping the owners move their earnings from the burger chain into tax havens.

Hutton’s offices are on Pall Mall but the Byron group accounts show that the investment fund made the loans through a Luxembourg-registered company, HC Investissements VI Sarl, which is where their interest will be sent. To make things more convoluted, Paladin private equity owns its minority stake in the loan through its own Luxembourg-registered company, Paladin Holdings Sarl, plus one in the Isle of Man – Paladin Byron Limited Partnership. Eric Bellquist, a former Lehman Brothers banker and now a Hutton Collins partner, is also listed as a partner in the latter, while Graham Hutton, also a partner at Hutton Collins, “has an interest” in TH Lord Sarl, another Luxembourg company with a stake in the loan.

Records show that these loans have been made through the Channel Islands Stock Exchange, which, thanks to a legal loophole, means the interest can automatically be sent to the owners tax free (click here for an explanation of the ‘quoted eurobond exemption’, as the loophole is known).

Hutton Collins owns a number of other UK businesses including the wagamama restaurant chain, the Hunter clothing brand and Healthcare at Home, which receives the vast majority of its multi-million pound income from the NHS.

Byron’s accounts also show how lucrative the business has become for founder and chief executive Tom Byng.

The highest paid director – presumably Byng – made £266,000 in 2015, with an extra £19,000 of pension contributions on top. On top of this, he has a nearly 1% stake in the shareholder loans and as such will have earned around £72,000 from the interest on these in 2015.

According to Right to Remain, most of the workers deported were paid the minimum wage of £7.20 per hour.

The post Byron Burgers appeared first on Corporate Watch.

Devon resident Stan Beale analyses the prices that the water regulator Ofwat proposes to allow South West Water to charge over the next five years, and considers the company’s future profits and the impact on local households.

The pricing levels proposed by Ofwat for the next 5 years allow South West Water to make a profit before tax of more than a quarter of its total revenue, and more than a quarter of the bills paid by households. This is an outrageous return for a no-risk, run-of-the-mill monopoly, with assured revenues.

In the table below provided by Ofwat, projected operating costs account for about 40% to 45% of the company’s total revenue. The cost of processing each cubic meter of water is trivial, so that the operating cost incurred by South West Water for every household, irrespective of metered usage, remains essentially the same, at about £200. There is also the charge necessary to finance the investment programme which accounts for about £130 of the average household bill and, sensibly, since this charge is concerned with the infrastructure, should be borne equally by all customers. There is, on that basis, a charge due to every property, which should be included in every household bill, of about £330 simply for the provision of the necessary facilities, even before any water is drawn or a toilet flushed.

	2015-16	2016-17	2017-18	2018-19	2019-20	Totals
	Water (£M)
Operating costs	92.8	87.7	81.2	81.0	81.0	423.8
Investment Capital	45.7	46.6	47.7	48.8	49.7	238.5
Return on capital	44.1	44.7	45.3	45.8	46.2	226.1
Tax	6.2	6.0	5.4	4.2	3.3	25.2
Total allowed revenue	184.8	182.5	179.4	179.3	179.4	905.3
	Waste Water (£M)
Operating costs	98.3	98.8	98.4	99.7	98.9	494.1
Investment Capital	77.3	78.4	79.7	81.4	83.4	400.2
Return on capital	58.5	58.5	58.4	58.4	58.6	292.4
Tax	10.6	10.0	8.6	5.8	4.3	39.4
Total allowed revenue	240.0	240.9	244.4	244.6	244.3	1,214.2
	Combined Water and Waste Water Totals (£M)
Operating costs	191.1	186.5	179.6	180.7	179.9	917.9
Investment Capital	123.0	125.0	127.4	130.2	133.1	638.7
Return on capital	102.6	103.2	103.7	104.2	104.8	5 18.5
Tax	16.8	16.0	14.0	10.0	7.6	64.6
Total allowed revenue	424.8	423.4	423.8	423.9	423.7	2,119.5
	Budgeted Profits
Annual profit (£M)	119.4	119.2	117.7	114.2	112.4	583.1
Percentage profit	28.1%	28.1%	27.8%	26.9%	26.5%	27.5%
Average customer bill (£)	492	488	485	482	479
Average customer profit contribution (£)	138	137	135	130	127

After return on capital and tax are included, the company’s profit amounts to more than a quarter of the total revenue. This outrageous level of profit is computed to give shareholders a return on capital as if the shareholders had provided the necessary investment capital since flotation of the company and not the customers. Given South West Water, like all the other water companies of England and Wales, is a monopoly business, a projected profit of about 5% would seem more than generous. On this basis, the South West Water average household bill need be no more than about £350 – or even less if a close look were taken at how generous the Ofwat budgets for operating costs and investment capital might be.

We do not at this stage know how the South West Water household bills through 2015-20 will be made up but we can assume, for the purpose of discussion, that the standing charge and the metered charge will not be greatly different from those for 2014-15 – approximately £55 and £5 per cubic metre (1,000 litres) respectively. The standing charge will not cover even the operating costs, let alone the investment charge as well. It necessarily follows that the remaining charges, for infrastructure costs and profits, will bear more heavily on households with higher metered water usage.

For example, a household comprising only one or two people, especially one with nobody at home during the day, might use only about 100 litres or less of water a day. At the above prices this would incur an annual bill, including the standing charge, of about £240. On the other hand, a family of (say) 6, using about 100 litres each a day, would incur an annual bill of about £1,330. These figures are, of course, by no means precise but the discrimination against the larger household, which typically will include a number of children, cannot be disputed. The smaller household will, on the figures given above, contribute only a little more than the operating costs and none at all to the excessive profits. However, the larger family, who may very well live next door, will pay the total infrastructure cost of £330 plus a further £1,000 as their contribution to profits. This discrimination unfortunately bears most heavily on families where there are several children and in particular where the family income is low.

Concerns have also been expressed that this financial pressure might, in some cases, force economies in water usage (in handwashing and general household cleanliness) that could endanger the health of the whole family. There is clearly an urgent need for a more equitable and sensible pricing structure in terms of the standing and metered charges.

Finally, the Government adds further to this unfortunate discrimination with its £50 a year contribution to South West Water household bills through the subsidy introduced in April 2013. The small household, who may even have two salaries, have their already advantaged bill reduced from £240 to £190 while the larger family household will still face a bill of about £950.

* The details given in the table are derived from the Ofwat report “Draft price control determination notice: Company specific appendix – South West Water”, in particular from the tables on pages 4, 17 and 29 (click here for the original). The figures remain unchanged but some minor items, which do not seriously affect the totals, have been omitted.

The post South West Water: a ‘no-risk monopoly’ appeared first on Corporate Watch.

A male detainee passed away at Morton Hall immigration removal centre in Lincolnshire last night. Not surprisingly, detainees are angry about the man’s death and so there have been protests inside the detention centre throughout today.

Here’s one distressing account about how the man died, from a detainee at Morton Hall:

“Last night, at 10pm, the guy was pressing the emergency button because he was feeling ill. And what happened was the duty officer came after 5-10 minutes and asked him what was going on. He said “I’m feeling ill so I need some doctor or some nurses.” And then after 10-15 minutes again they [the officers] came and were dealing with him rudely. Normally they do it to everyone if they’re pressing the bell or if there is emergency or whether its not an emergency. And what happened was when he [the officer] was treating him rudely he didn’t say anything and the officer was shouting. There are witnesses all around next to his door and in front of his door and left and right and he was banging the door, he was screaming actually, I’m sure he was feeling pain or something actually and like eventually at 11pm or after one hour he died.”

“Obviously they are negligent you know”

“You know the funny thing is the doctor came after almost two hours like 12 pm”

“Ambulance came after … 3.5 hours – 1:30am”

“There are several witnesses here”

“He was screaming for some help.”

“Some units are locked at 8pm and when they’re asking for anything like paracetamol if they’re feeling very bad and the officer is coming very rudely to them so some people are scared of asking them but he was banging the door non-stop constantly asking them for help”

“15-16 detainees witnessed it closely but all the building heard that he was dying, he was screaming like a crazy guy because he need desperately some help”

The man told me this at 3.30pm this afternoon. He also said there was a “scary moment now”, and all the officers had gone outside the centre.

A few hours later, another detainee rang me from the Windsor block on Morton Hall, where the death is believed to have taken place. He said there had been a peaceful protest going on all day, but now he could see guards outside with dogs and shields. At 6pm, he called me back. I could barely hear him above the noise of a fire alarm and barking dogs. He confirmed that he could see flames and smell smoke.

Then the phone cut out. But he rang back after 15 minutes and said the guards had beaten people back into their cells, and everyone was locked up now.

The post Death at Morton Hall detention centre appeared first on Corporate Watch.

Outsourcing giant Serco has managed the controversial detention facility in Bedfordshire since 2007, but its contract expires in 2015.

The Home Office has now launched a one-month tendering process, with the deadline set for 23 April.

The bidding round comes at a time when Serco faces mounting criticism.

Shadow Home Secretary Yvette Cooper has questioned if Serco provided detainees with adequate medical care after a 40-year-old Jamaican woman, Christine Case, died at Yarl’s Wood on Sunday.

Details seen by Corporate Watch on the government’s Contracts Finder database reveal that, “The Immigration Enforcement Directorate is seeking commercial partners to provide a range of services related to the provision of Operation, Management and Maintenance Services in relation to Yarl’s Wood Immigration Removal.” The centre holds mostly asylum-seeking women and families pending possible deportation from the UK.

Serco in trouble at Yarl’s Wood

In September 2013, Serco faced allegations that its guards at Yarl’s Wood had raped and sexually harassed detainees.

In March 2013, a Ugandan woman died after injuries allegedly sustained during her deportation from Yarl’s Wood.

In September 2012, a group of women detained at Yarl’s Wood issued a series of demands in protest at their treatment.

In February 2010, Serco violently forced dozens of detainees to end a hunger-strike.

The other contenders

The Home Office anticipates that between five and six companies will bid to run Yarl’s Wood. According to the tender document: “Any bidder/consortium must meet the minimum standard in relation to reliability based on past performance.” However, none of the companies likely to bid for Yarl’s Wood have a clean record.

G4S, which runs three detention centres around Gatwick (Brook House, Tinsley House and Cedars), are still marred by their Olympics fiasco. Last month the Crown Prosecution Service decided to press manslaughter charges against three G4S staff for the unlawful killing of Jimmy Mubenga during a deportation in 2010.

Mitie, which runs Campsfield in Oxfordshire, is currently facing a bill of almost a million pounds after that detention centre was ravaged by a fire in October 2013. It is also set to become the largest provider of immigration detention in the UK in September 2014, when it takes over the running of Harmondsworth and Colnbrook.

The GEO Group, which also runs a pair of detention centres (Dungavel and Harmondsworth), was slammed by a prison inspector report in January over conditions at their Harmondsworth site. In February 2013, Harmondsworth detainee Alois Dvorzac, an 84-year-old Canadian man with Alzheimer’s, died while handcuffed.

Capita subsidiary Tascor run several short-term holding facilities for the Home Office at airports, as well as escorting deportees. Tahir Mehmood, a 43-year-old Pakistani man, died at Tascor’s Pennine House holding facility near Manchester airport in July 2013.

When faced with this choice, perhaps it is not surprising that campaigners plan to gather outside the Home Office tomorrow afternoon to demand that the government must simply, “Shut down Yarl’s Wood”.

The post Serco risks losing Yarl’s Wood contract after detainee dies appeared first on Corporate Watch.

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Oil giant Shell has recently won the Big Oil race to become the first major oil company to gain access to Iraq’s energy sector since the 1970s. With no competitive bidding process, the Dutch-British multinational has ‘won’ a $4bn contract to process and market natural gas with the South Gas Company in Basra.

The deal has been conducted in secret, leaving important information about the terms and authorship unknown. This secrecy has meant the contract was not subject to any public scrutiny or debate. Platform co-director Greg Muttitt surmised that “a country under occupation has introduced an oil policy that is favourable to western oil companies. The [US] State Department has already admitted that it has advisers working on oil policy and there is a likelihood they may have drafted the Shell contract.”

However, attempts to gain control over Iraq’s oil fields have not gone so well. As Corporate Watch reported last year (www.corporatewatch.org/?lid=2912), an oil law permitting de-facto oil privatisation was drafted under pressure from Big Oil, the US and UK governments, their consultants, and the IMF. It was presented to the Iraqi parliament in May 2007 and was expected to pass quickly. However, Iraqi and international opposition to transferring oil sovereignty to multinational oil companies has helped create a climate in which the Iraqi parliament has been able to resist the extreme pressure by US and UK governments and the has not been passed to date. So the big oil companies and governments are busy finding other avenues to the eventual prize of control over Iraq’s vast oil fields.

These avenues include discussing, preparing, and now bidding for contracts such as Risk Service Contracts (RSCs). While usually offering companies less in terms of long-term control over production and revenue than the prized Production Sharing Contracts (PSCs), they can nonetheless be written to be very similar to PSCs. The devil is in the detail with these complex agreements, details which have not been disclosed. What is certain is that, if secured, they will represent a radical departure from traditional Iraqi – and indeed international – oil policy.

Risk Service Contracts, for instance, would still put private companies in charge of oil fields that are currently run by the public sector. Even the rejected draft Oil Law prescribed that those oil fields already producing oil would be run by the Iraqi National Oil Company (INOC). But this policy was reversed in June 2008 when the government announced that oil companies would be invited to bid for RSC contracts on six fields which collectively produce over 90% of Iraq’s current oil. They also offer far more control and profit to the oil companies than in any other major oil-producing country. They grant INOC a mere 25% stake, paltry in comparison with the average 80% demanded by the Libyan State Oil Company for new exploration contracts, for example, or with Nigeria’s National Petroleum Company, which is regarded as one of OPEC’s members most friendly to western companies, with a 55% stake in onshore projects.

These PSC-lite versions represent a desperate attempt by Big Oil to combat the resistance and to get their foot in the back door to Iraq’s massive oil reserves. At the same time, the US administration is battling to ratify the Status of Forces Agreement (SOFA) in order to maintain the occupation beyond the end of 2008, when the UN Mandate expires. Rumours are circulating in Baghdad that this agreement will also include provisions allowing for the privatisation of the oil fields. While any agreement will not have the detail or the binding force of the Oil Law, the strategy seems to be to prolong the occupation to retain the political dominance to eventually get the privatisation they have been fighting for.

Of course, these attempts need coordination. On 13 October, 2008, Iraqi Oil Minister Hussein al-Shahristani will meet with representatives of 41 international oil companies in London. This will be the formal launch of a round of bidding for some of Iraq’s largest oil fields, with the aim of signing long-term contracts in June 2009. The Iraqi Oil Ministry claims these deals will be for risk service contracts – in theory, a significant improvement over PSCs. But with such secrecy, it is impossible to know what the Iraqi government is signing away. What we do know is what the US and UK government, and Big Oil want, and the force – enabled by prolonging the occupation – that they will use to get it.

For more details, see Greg Muttitt’s recent articles at:

www.carbonweb.org/showitem.asp?article=332&parent=39, www.niqash.org/content.php?contentTypeID=28&id=2230&lang=0 and www.carbonweb.org/showitem.asp?article=333&parent=9.

The post Shell ‘wins’ Iraq gas contract appeared first on Corporate Watch.