Goldman Sachs have £20m of our money, but we're on the road to getting it back

HMRC's sweetheart tax deal with Goldman Sachs must be declared unlawful

Last Wednesday we were delighted when a High Court judge declared that we will be allowed to take forward our case against HMRC over its decision to let banking giant Goldman Sachs off of up to £20m in interest on an unpaid tax bill. The banking giant has owed this sum since December 2010 and we want HMRC to correct their error and make Goldman Sachs pay their debt as soon as possible so that it can be invested in our vital public services at this time of unprecedented spending cuts.

Our aim now is to have the High Court declare that the agreement reached by HMRC with Goldman Sachs was unlawful. We also want the court to order HMRC to take steps to reopen the agreement it reached with Goldman Sachs about the interest owed and seek to recover that money.

Importantly, the day after we secured our review of HMRC's "sweetheart" deal with Goldman Sachs, the National Audit Office (NAO) published a report on how HMRC settled five large tax disputes with big business, each of these being examined by retired tax judge Sir Andrew Park. We believe that, while the report acknowledges some failures of decision-making and governance in the department, it raises far more questions than it answers.

For example, the five companies in question remain unnamed, so that the truth about these huge tax deals continues to be veiled behind HMRC’s claims of taxpayer secrecy for the powerful businesses in question.

Park also judges the merits of each of the five tax deals on grounds of "reasonableness", finding that each settlement was "reasonable". Crucially, however, Park does not – and cannot – make a judgment on whether the settlements were legal.

The report does appear to cover the Goldman Sachs dispute (understood to be "Company E") and gives some indication of why HMRC chose not to collect the unpaid tax owed to it.

Previously, HMRC's outgoing tax chief, Dave Hartnett – who is understood to have shaken hands with Goldman Sachs on the deal – admitted that he "made a mistake" for which he was "entirely responsible." However, Park finds that HMRC’s decision not to charge interest on Company E’s unpaid tax bill wasn't a mistake but a "deliberate decision" and "made sense in the context of reaching a settlement on all the issues under consideration" with the company. The problem with package deals like this is that they mainly benefit the interests of corporations, which want to minimise their tax bills, and enfeeble HMRC's ability to enforce its own rules and raise the necessary revenue.

Park outlines how the department's own "High Risk Corporates Programme Board" rejected the decision waiving Goldman Sachs interest on their tax bill, but that HMRC commissioners (which included Hartnett) decided to approve the settlement anyway. No explanation was given as to why the commissioners took this course of action at the time and no reasons were recorded until three months later. Even now those reasons remain secret.

Yet somehow Park still concludes that HMRC’s settlement with "Company E" was "reasonable". This is despite Park himself affirming that there was "no legal barrier to charging interest" on the company’s outstanding tax bill and the fact that HMRC's own rules prohibit it from making package deals with businesses.

Given the clear gaps and omissions in the NAO report, it remains vital that our case against HMRC goes ahead, to judge whether the deal with Goldman Sachs was legal, and to expose the truth behind this and other deals as far as possible. It is also important that the Public Accounts Committee follows up its December 2011 report concerning tax disputes in order to challenge and ultimately end the "cosy" relationship between HMRC and big business that it identified.

The public interest in these matters is clear – people have a right to know why a multi-billion pound investment bank and other corporations appear to have been let off the tax they owe while vital public services are being cut. The government now has a choice to make. It can clamp down on the billions of pounds worth of tax avoided by big business or continue making ordinary people pay for the economic crisis with their jobs and pensions.

The entrance to Goldman Sach's office in London. Photograph: Getty Images

Tim Street is the director of UK Uncut Legal Action

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Excitement, hatred and belonging: why terrorists do it

A new book by Richard English suggests that killing can bring its own rewards.

Like most questions about terrorism, why large numbers of people join terrorist organisations can only be answered in political terms. However terrorism may be defined – and disputes about what counts as terrorism are largely political in their own right – we will be ­unable to understand how terrorist groups ­attract members if we don’t consider the politics of the societies in which the groups are active. But terrorism’s appeal is not ­always political for everyone involved in it. Richard English, in his wide-ranging new book, highlights some of what he calls the “inherent rewards” of terrorism gained by members of the Provisional Irish Republican Army (PIRA). According to some former members, involvement in PIRA operations brought adventure, excitement, celebrity in local communities and sometimes sexual opportunities.

Terrorist activity also brought other intrinsic benefits. As one Belfast ex-PIRA man put it, “You just felt deep comradeship.” Or as another said, regarding involvement in the Provos: “Now I felt I was one of the boys.” Yet another reflected tellingly: “Although I was ideologically committed to the cause, for me, in many ways, being in the IRA was almost the objective rather than the means”; conspiratorial “belonging” and “comradeship” were, in themselves, rich rewards. Friendship, belief, belonging, purpose, community and meaning. One ex-Provo described his PIRA years as “days of certainty, comradeship and absolute commitment”. A bonus was that PIRA members’ actions could gain them influence and standing in their own communities; one ex-PIRA man reflected on how he saw himself after having joined the PIRA, in the simple words: “I felt important.”

English is a professor of politics and director of the Handa Centre for the Study of Terrorism and Political Violence at the University of St Andrews. He has studied political violence in Northern Ireland for many years and, for him, these inherent benefits are one of four ways in which terrorism can “work”. The other three comprise strategic victory in the achievement of a central or primary goal or goals; partial strategic victory, which includes determining the agenda of conflict; and tactical success, which may lead to strengthening the organisation and gaining or maintaining control over a population.

Understanding terrorism, English writes, requires taking it seriously: “treating it as the product of motivations and arguments which deserve serious, respectful engagement; and also assessing it as something worthy of honest, Popperian interrogation”. He is sanguine – surprisingly so, given the conflicts with which he is concerned – regarding the practical results such an inquiry might bring. Finding out how far and in what ways terrorism works has “practical significance” – indeed, its importance may be “huge”. As English makes clear, he “is not arguing that if we understood more fully the extent to which terrorism worked, then everything would have been fine in the post-9/11 effort to reduce terrorist violence”. He is convinced, however, that understanding how far terrorism works can greatly improve the struggle against it. “It does seem to me strongly possible that if states more fully knew how far and in what ways terrorism worked (and does not work, and why), then they would be able to respond much more effectively to it in practice.”

With all its caveats, this is a strikingly bold claim. It assumes that the failures of the post-9/11 “war on terror”, which no one can reasonably deny, were largely due to intellectual errors. But was it a lack of understanding that rendered these programmes ineffectual or counterproductive? Or was it that some of the West’s allies – Saudi Arabia, Pakistan and, more recently, Turkey – have been less than unequivocal in taking a stand against terrorism or may even have had some complicity with it? If so, it was the geopolitical commitments of Western governments that prevented them from taking effective action. Again, much of the current wave of terrorism can be traced back to the 2003 invasion of Iraq. Voicing a long-familiar consensual view, English criticises the US-led occupation for being “ill-planned”, leading to the destabilisation of the Iraqi security situation. But it is not clear that more forethought could have prevented this result.

If Western leaders had thought more carefully about the likely consequences of the invasion, it would probably not have been launched. With the regime and the state so closely intertwined, topping Saddam Hussein always risked creating a power vacuum. It was this that enabled al-Qaeda and then Isis and its affiliates to emerge, gain control in parts of the country and then project their operations into Europe.

Errors of analysis may have played a contributory role in this grisly fiasco. When British forces were despatched to Basra, it may have been assumed that they could implement something like the pacification that was eventually achieved in Northern Ireland. But the kinds of allies that Britain made in Belfast – and before that in the successful counterterrorist campaign in Malaya in the 1950s – did not exist in that part of Iraq. Like the overall programme of pacifying a country whose governing institutions had been dismantled abruptly, the mission was essentially unachievable. But this was not accepted by either the US administration or the British government. The invasion was based in ideological conviction rather than an empirical assessment of risks and consequences. In this case, too, high-level political decisions were far more important in unleashing terrorism than any failures in understanding it.

As has become the usual way in books on terrorism, English begins with his own definition of the phenomenon:

Terrorism involves heterogeneous violence used and threatened with a political aim; it can involve a variety of acts, of targets and actors; it possesses an important psychological dimension, producing terror or fear among a directly threatened group and also a wider implied audience in the hope of maximising political communication and achievement; it embodies the exerting and implementing of power, and the attempted redressing of power relations; it represents a subspecies of warfare, and as such can form part of a wider campaign of violent and non-violent attempts at political leverage.

This is a torturous formulation, not untypical of the academic literature on the subject. English tells us that his book is intended for readers in “all walks of life”. But the style throughout is that of a prototypical academic text, densely fortified with references to “majority scholarly opinion” and buttressed with over 50 pages of footnotes fending off critics. As a storehouse of facts and sources, the book will be a valuable resource for scholars, but its usefulness to the general reader is more doubtful.

The most interesting and informative of the book’s four main sections – on jihadism and al-Qaeda; Ireland and the IRA; Hamas and Palestinian terrorism; and Basque terrorism – is the one on Ireland, where English’s knowledge is deepest. Extensive interviews with people who had been involved in terrorist campaigns in the province led him to what is perhaps his most instructive generalisation: those who engage in and support terrorism “tend to display the same levels of rationality as do other people . . . they tend to be psychologically normal rather than abnormal . . . they are not generally characterised by mental illness or psychopathology . . . the emergence and sustenance of terrorism centrally rely on the fact that perfectly normal people at certain times consider it to be the most effective way of achieving necessary goals”. Terrorists are no more irrational than the rest of us, and there is no such thing as “the terrorist mind”. In many contexts, terrorism has functioned principally as an effective way of waging war.

As English notes, there is nothing new in the claim that terrorism is a variety of asymmetric warfare. The practice of suicide bombing has very often been analysed in cost-benefit terms and found to be highly efficient. The expenditure of resources involved is modest and the supply of bombers large; if the mission is successful the operative cannot be interrogated. The bombers gain status; their families may receive financial reward. (Religious beliefs about an afterlife are not a necessary part of suicide bombing, which has been practised by Marxist-Leninists of the Tamil Tiger movement and in Lebanon.) An enormous literature exists in which asymmetric warfare has been interpreted as demonstrating “the power of the weak”: the capacity of militarily inferior groups using unconventional methods to prevail against states with much greater firepower at their disposal. Understood in these terms, there can be no doubt that terrorism can be a rational strategy.

Yet there is a problem with understanding terrorism on this basis, and it lies in the slippery word “rational”, with which English juggles throughout the book. Terrorists are not always rational, he says; they are prone to overestimate the impact of their activities, and they make mistakes. Even so, what they do can be understood as rational strategies, and in these terms terrorism often works, if only partly. Here, English is invoking a straightforwardly instrumental view of reason. What terrorists do is rational, in this sense, if there is an intelligible connection between the ends they aim to achieve and the means they adopt to achieve them.

This means/end type of rationality typifies much terrorist activity, English maintains. But some of the ends achieved by terrorism are internal to the actual practice. “Inherent rewards from al-Qaeda terrorism might potentially include aspects of religious piety; the catharsis produced by revenge and the expression of complicatedly generated rage; and the remedying of shame and humiliation.” In this case, “hitting back  violently and punishingly at them [the US and its military allies] has offered significant rewards in terms not merely of political instrumentalism but also of valuable retaliation in itself”.

The inherent rewards of terrorism also include the expression of hatred. “The vengeful, terrorising punishment of people whom one hates, or with whom one exists in a state of deep enmity,” English writes, “might be one of the less attractive aspects of terrorist ambition. But it might also (perhaps) be one in which we find terrorists repeatedly succeeding fairly well . . .” Here, he may have understated his case. Killing cartoonists, customers queuing at a Jewish bakery in Paris and families celebrating Bastille Day in Nice will be a rational act as long as it succeeds in venting the terrorists’ hatred. Even if the operation is somehow aborted, the attempt to inflict mass death and injury may still serve as a type of therapy for those who make the attempt. If “hitting back at people whom one holds to be (literally or representatively) responsible for prior wrongs” can be rational on account of the emotional satisfaction it brings the terrorist, how can terrorism fail to work?

Clearly something has gone badly wrong here. Without mentioning the fact, or perhaps without noticing it, English has switched from one conception of rationality to another. Much of what human beings do isn’t the result of a calculation of con­sequences, but more an expression of their sense of identity. Philosophers describe this as expressive rationality, an idea they use to explain why voting in circumstances where you know your vote can make no practical difference can still be in accordance with reason. But is expressive rationality beyond rational criticism? In order to understand terrorism in Israel-Palestine, Ireland and Spain, English tells us, we need to understand the national context in which the terrorists act. This doesn’t imply “a comfortable acceptance of any single national narrative”, given that various terrorist groups “have done much to open such narratives to a very brutal interrogation”.

But is the terrorist narrative exempt from questioning? The reader might think so, as there is nothing in English’s account that fundamentally challenges the narrative of Hamas, for example. There is no discussion of the endorsement in the Hamas Charter of The Protocols of the Elders of Zion, and no examination of the influence on Hamas’s policies of the delusional world-view that this infamous anti-Semitic forgery articulates. If this is a Popperian interrogation of terrorism, it falls short of the impartial critical rationalism that Karl Popper recommended.

An analysis of the intrinsic rewards of terrorism may be useful in considering the outbreak of Isis-affiliated ­terrorism in Europe. In contrast to that of the IRA, including its ultra-violent Provisional wing, this cannot easily be understood in terms of instrumental rationality. Even when compared with its predecessor al-Qaeda, Isis has been notable for making very few concrete demands. No doubt the present outbreak is partly a reaction to the jihadist group losing ground in Iraq and Syria. But as English suggests, we need to ask for whom terrorism works, and why. When we do this in relation to Isis, the answers we receive are not reassuring.

Nothing in human conflict is entirely new. There are some clear affinities between anarchist terrorist attacks around the end of the 19th century and jihadist “spectaculars” at the start of the 20th. However, there are also certain discomforting differences. Anarchists at that time made public officials, not ordinary civilians, their primary targets; they attacked state power rather than an entire society; and they never acquired a mass base of supporters and sympathisers. Bestowing identity and significance on dislocated individuals and enabling them to discharge their resentment against a hated way of life, terrorism by Isis is of another kind. Against the background of deep divisions in European societies, these rewards could become an increasingly powerful source of the group’s appeal.

John Gray is the New Statesman’s lead book reviewer. His latest book is “The Soul of the Marionette: a Short Inquiry Into Human Freedom” (Allen Lane)

John Gray is the New Statesman’s lead book reviewer. His latest book is The Soul of the Marionette: A Short Enquiry into Human Freedom.

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue