AGM Army challenged BG Group on use of tax havens

Jessica Hall BG AGM 2.jpg

By Jessica Hall, member of ShareAction’s AGM Army

I arrived at the Reading Hilton Hotel to be greeted by smart hotel staff wearing scarves and ties in the BG group colours (orange), it was all very polite and felt quite swish. There were a lot of smart looking people and I was relieved to be meeting Kat from ShareAction so I didn’t have to face the suits alone! The meeting was called to order and a panel of 12 board members of BG Group sat at the front ready to bring their shareholders up to speed on company performance and changes within the group.

The question and answer section was looming and I will confess to getting a bit nervous. There is something that feels a bit intimidating about a large panel of people wearing suits, whose jobs I really don’t know anything about. It was almost like some kind of nightmare interview scenario! But, I kept reminding myself that they are just people, and that as a corporate representative for ShareAction (who hold shares) I had every right to be there and ask my question. On top of these simple facts this was my chance to raise the issue of tax justice with the very people that can make a difference to company operations and tax practices.

So after sticking my hand in the air a few times to get my moment with the roaming mic I got to ask my question:

Good Morning Mr Gould (the Chairman) my name is Jessica Hall and I am the corporate representative for ShareAction, a shareholder.

BG’s recent decision to move the HQ of one of its business divisions from Britain to Singapore has been criticised for being tax motivated, though I note that the company has said any tax benefits arising were merely a ‘by-product rather than a driver of the move.’

I like many other people are uncomfortable about companies moving in and out of countries purely for tax avoidance purposes not only because of the impact on relatively wealthy countries such as the UK, but because of the impact on the tax revenues of many developing countries.

In May 2013, the Guardian reported that BG has subsidiary companies in secrecy jurisdictions such as the British Virgin Island, Mauritius and St. Lucia.

Do each of the BG companies located in such jurisdictions carry out substantial business activity or are they merely vehicles for tax minimisation?  

Thank you.”

Mr Gould assured me that the move of operations to Singapore was not tax motivated, and that any gains through lower taxes were marginal. The driver of the decision was the opportunity to be closer to China, one of the group’s main customers, in addition to their suppliers being in South East Asia. 

On the question of subsidiary companies in secrecy jurisdictions, this was deferred to Simon Lowth, Chief Financial Officer. Mr Lowth said that the ‘haven companies’ mostly own their own assets and are operating companies that pay tax. He also said that some of the subsidiaries are involved in joint ventures with operating companies that are paying tax where they are operating. 

I’m not sure if this could be described as ‘substantial business activity’ and I imagine that the choice of location for these asset holding companies is based on lower tax rates. However it was good to let the board know that there are shareholders that are uncomfortable with tax avoidance practices and that we are taking note of where the group is operating its business. 

Thanks Jessica! Fancy joining the AGM Army? Learn the ropes of shareholder activism and take your questions straight to company directors at Britain’s top companies: email Jo Beardsmore to find out about upcoming free training sessions.
GuestAGM Army challenged BG Group on use of tax havens

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