Macquarie ‘could be poised to asset strip UK Green Investment Bank’

11 January 2017

Greenpeace says that it has uncovered evidence of a potential preparation for ‘asset stripping’ of the UK-based Green Investment Bank and has called on the UK government to back out of the sale, for which the signing is due in late January. Concern about the deal has already been expressed by former ministers Greg Barker and Vince Cable, and by business figures such as Richard Branson. Macquarie is the preferred bidder, despite its track record of ‘asset stripping’ activity linked to other UK infrastructure acquisitions. According to Greenpeace Macquarie is known for buying up British companies, running down their capital base and loading the companies with large debts, while extracting dividends and engaging in large scale tax avoidance.
An investigation by Greenpeace and think tank E3G has uncovered a process within the GIB establishing corporate structures commonly used in preparations for asset-stripping, ahead of its purchase by Australian bank Macquarie from the UK government for an estimated £2bn.
Between 22 November and 1 December 2016, 10 new companies – corresponding to the GIB’s largest assets – were incorporated and registered to GIB’s London offices. This sudden proliferation of companies is uncharacteristic of the GIB, which has to date had a simple, stable and transparent structure. The establishment of holding companies, and multiple corporate layers, is often synonymous with practices such as leveraging excessive debt, asset stripping and financial engineering, including tax avoidance measures. A separate investigation by the Sunday Times concluded that over an eight-year period Macquarie and its investment partners paid only £1.8m in tax, despite banking £2.2bn in dividends and interest payments on its then four biggest British assets. This is equivalent to a tax rate of 0.01 percent.
Sepi Golzari-Munro, head of the UK Programme at E3G, said: “These findings make it incumbent on the government to stop and seriously question whether this sale is in line with its new, post-Osborne priorities - there are better alternatives which could instead promise productive investment in the UK economy and protection for the taxpayer.”

 



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