The Daily GRRR! Nov 6, 2014 - Neoliberalism for all!

Today’s headlines feature several stories that illustrate why we need to relentlessly continue to question politicians, business and especially those projects where the two are intertwined.

1. Canada’s Public Sector Pension Investment Board stiffs German authorities $20 million in tax.

Yesterday’s expose of the many businesses accused of using European jurisdictions to cut their tax bills which includes the Federal Canadian Public Sector Pension Investment Board. The list of offenders include 300 companies, including PepsiCo, Ikea and FedEx. I’ll come back to the companies, but for now let’s look at the Public Sector pension Investment board. The pension board invests the pension funds of federal civil servants, RCMP officers and members of the Canadian Forces, and has its directors appointed by the federal government with some input from public servants. According to its website, it had $94 billion in assets under management as of March 31.

Treasury Board president and Cabinet Minister Tony Clement has moved to distance the federal government saying "PSP Investments operates at arm's length from the federal government. It is not part of the federal public administration, and its business and affairs are managed by a board of directors,"

Part of Clement’s job as Treasury Board president is to appoint the pension board's 11 members, so it may operate at arm’s length but there is involvement and you can’t tell me with $94 billion in assets, the pension board wasn’t a concern of Clement’s. papers are saying this is embarrassing to the government, this isn’t just embarrassing it’s complete hypocrisy especially given the fact the G20 vowed to crack down on tax evasion The tax-avoidance plan was obtained by the Washington-based International Consortium of Investigative Journalists as part of a larger leak of records exposing corporate offshore schemes set up to capitalize on advantageous tax and secrecy rules in Luxembourg.

The documents — which consist of a tax plan devised by global accounting firm PricewaterhouseCoopers — show that the pension fund acquired 69 mixed residential and commercial buildings, totalling nearly 4,500 suites and units, in Berlin in 2008. the buildings were acquired for close to $390 million. But as a result of the way the transaction was structured, the pension investment board would have avoided paying $20 million in German taxes.

This is not necessarily a covert scheme, PricewaterhouseCoopers's refer to it explicitly as a tax "avoidance scheme," The CBC writes, The revelations come as the Canadian government asserts it is fighting the very kinds of complicated, abusive tax practices that see multinational corporations route their profits through letterbox companies in tax-friendly jurisdictions. Just on Monday, Revenue Minister Kerry-Lynne Findlay told the House of Commons: "One of our government's key areas of concern is the issue of international tax evasion and aggressive tax avoidance." Clement’s case that the government didn’t know anything is hard to believe, again, remember this is 94 billion dollars we are talking about here.

The wider problem is evident in a NYT article entitled

2. Hundreds of Companies Seen Cutting Tax Bills by Sending Money Through Luxembourg

James Kanter says that companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. The European Commission is already investigating how Luxembourg provided tax incentives, alongside investigations into Apple in Ireland and Starbucks in the Netherlands. Today, Thursday, the finance ministers from eurozone countries are meeting in Brussels, so the report’s release has been specifically timed and hopefully there will be a frank and honest discussion. But maybe that’s impossible in the world of politics and business.

3. The Kinder Morgan Trans Mountain Expansion Project fiasco The Kinder Morgan pipeline fiasco in BC is another example of the unsavoury interaction that can occur when politics and business mix. Kinder Morgan is the fourth largest energy company in north America and their Trans Mountain Expansion Project is a proposal to expand the Trans Mountain Pipeline, which runs from Strathcona County, Alberta to Burnaby, British Columbia. The proposed expansion, if approved, would produce a twinned pipeline that would increase the nominal capacity of the system from 300,000 to 890,000 barrels per day which would triple the amount of oil the company ships to Burnaby and increase the number of oil tankers travelling through Vancouver Harbour and the Gulf Islands seven-fold.

Audio of Naomi Klein discussing "The Canadian Government is Completely Freaked Out" By Anti-Pipeline Movement!"

So the problem is this proposal is still under the National Energy Board (NEB)’s review process. But on Monday of this week Marc Eliesen — who over the past 40 years has served as the CEO of BC Hydro, a board member at Suncor, former chair of Manitoba Hydro and has served as a deputy minister in seven different federal and provincial governments. wrote to the NEB that the process is jury-rigged with a “pre-determined outcome.” In his letter, Eliesen tells the NEB that he offered his expertise as an intervenor in good faith that his time would be well spent in evaluation Trans Mountain’s proposal. “Unfortunately, I have come to the conclusion that the board, through its decisions, is engaged in a public deception,”

Eliesen writes. “Continued involvement with this process is a waste of time and effort, and represents a disservice to the public interest because it endorses a fraudulent process.” “They reflect a lack of respect for hearing participants, a deep erosion of the standards and practices of natural justice that previous boards have respected, and an undemocratic restriction of participation by citizens, communities, professionals and First Nations either by rejecting them outright or failing to provide adequate funding to facilitate meaningful participation,” Eliesen writes.

THE NEB board has allowed Kinder Morgan to elude cross-examination and to refuse to answer questions. About 50 intervenors, including the province, challenged Kinder Morgan’s responses to questions in roughly 2,000 instances. In a ruling in October, the NEB ordered the company to come up with more thorough answers in only 5 per cent of those cases. Kinder Morgan also refused to file their emergency spill response plans, citing proprietary and confidentiality issues. The NEB ruled in the province’s favour on this matter and Kinder Morgan had to file documents on the record by Oct. 17. But the company filed redacted versions of the material.

Mr. Eliesen called on the B.C. government to conduct a provincial environmental review independent of the federal process. The federal and provincial governments signed an equivalency agreement four years ago to send major pipeline and energy projects to the NEB, with final approval to be determined by the federal cabinet. The province can tear up the agreement with a month’s notice, but the BC government will not do so mainly because it is an interprovincial pipeline, which seems a terrible excuse considering the infarcations that are happening.

Who is on the NEB board? There are six temporary members and seven non-temporary members.

The chair is Peter Watson. He’s had extensive senior executive leadership experience in energy, natural resources and environmental issues. He was the Deputy Minister of the Alberta Executive Council, whatever that means, the Deputy Minister, Alberta Department of Energy Deputy Minister, Alberta Department of Environment, alright he’s the chair, it’s only natural he has a background in energy and the environment. Vice-Chair is Lyne Mercier, she was an executive at Gaz Métro for over 29 years, director of the gas supply division. Roland George, he worked primarily in the private energy sector for over three decades. Wow. One of his jobs was also at Gaz Métropolitain. Kenneth Bateman is an energy lawyer and a former senior executive, of what I don’t know – it doesn’t say on the NEB site, but it does say general counsel to a large Canadian Utility corporation in power generation, transmission, distribution and sale of electricity. But again no name. It does say he has extensive knowledge and experience in complex multi-party disputes involving national companies, environmental organizations, Aboriginal groups, landowners and others. Fantastic. Then there is Philip Davies who has over 30 years of experience in acquiring, constructing and operating energy infrastructures and facilities in North America’s oil, gas and electric power industries. Shane Parrish, it says on the NEB site, that he brings 24 years of experience in the area of community economic development in the Northwest Territories, Nunavut, and NE British Columbia. Over the past 18 years, Mr. Parrish has worked in consultation, indigenous business development and negotiations in the petroleum and mining industries. As a consultant in the firm he founded in 2002, he has represented First Nations clients in negotiations with major Canadian energy producers and pipeline companies, with a focus on access and benefits agreements. Previously, Mr. Parrish was Manager of Business Development for Canadian Petroleum Engineering Inc. Then there’s Ron Wallace who was in senior management positions with Petro-Canada, CanStar Oil Sands Ltd., the Nunavut Resources Corporation, the Northwest Territories Water Board and AGRA Earth and Environmental (now AMEC Americas Ltd). At AGRA, he was involved in major oil and gas operations throughout the former Soviet Union and Russia where he managed major project assignments in conjunction with the World Bank.

I won’t go through each of the six temporary Members, not all of them have oil and gas experience, there is one person lists no oil or gas experience in their bio. So the NEB has people with some First Nations experience, but no First Nation representatives precisely and none of the permanent members come from a non-energy background and only one of the temporary members do. These are people who may know Kinder Morgan employees, maybe they don’t, maybe they do, not to mention other oil companies.

And this is the group we are entrusting due process to. They have already shown themselves to be highly incompetent, flouting the rules. Which when you think about the Pensions board of Canada has done precisely the same thing. And it’s these kind of people in power who want us – in fact – ask us to trust them when it comes to business and politics, we are continuously led to led to believe that they have our best interests at heart. So perhaps all of this may help all four of you listeners to grasp why I am seriously sceptical of the Comprehensive Economic and Trade Agreement (CETA) the Canadian–EU proposed trade deal.

4. Francois Hollande, Frenchman, shows up in Canada Francois Hollande, the French president was in Canada this week to drum up support Hollande discussed many issues with our fearless leader, Mr Harper, including greater co-operation on international security and threats, trade and economic development, innovation, and broader people-to-people ties, whatever the hell that means. France is Canada's eighth-largest commercial partner, with bilateral merchandise trade totalling more than $8.5 billion in 2013. Which is not even a ripple in the pond of the pension board’s assets. The federal Employment Minister Jason Kenney said "It's not a coincidence that President Hollande asked to come to Alberta because I think the Europeans increasingly see Alberta as an engine of the Canadian economy. I think the largest French investments in Canada are here." I don’t think most Europeans know where Alberta is. Some of them know of Vancouver and that’s impressive.

5. Comprehensive Economic and Trade Agreement (CETA) the Canadian–EU proposed trade deal. Politicians and businesspeople are falling over themselves to make us want this trade agreement which is severely problematic – one of the more suspicious signs is that it was all agreed on behind closed doors. Now I understand that, the last thing politicians need are lobby groups or protestors at the doors when they go to work to deliver what they define as democracy, so they definitely needed peace and quiet in their five or even six star hotels. But there is little There is a lot of bad information and aggressive rhetoric on both sides. ON one side Canada is a victim with Europe being the hegemonic tyrant hell bent on destroying the country, on the other side Canada is licking it’s chops with the investment and money making opportunities CETA covers a broader scope of trade issues than NAFTA does. CETA reduces tariffs on goods but unlike NAFTA, the EU agreement covers “sub-national procurement,” that is the public contracts of Canadian provinces and cities, so European companies can bid on hydro or subway deals, and Canadians can do the same in Europe. The EU deal covers extensions of drug patents in Canada and bigger trade quotas for agricultural products. It also appears to cover services more broadly than NAFTA, including financial services, and allows more labour mobility, including efforts to work on recognizing each other’s credentials for professionals like architects and engineers. One of the most contentious issues is what the negotiators call investor-state dispute settlement (ISDS).

The treaty would allow corporations to sue governments before an arbitration panel composed of corporate lawyers, at which other people have no representation, and which is not subject to judicial review. Already, thanks to the insertion of ISDS into much smaller trade treaties, ISDS is already happening. The tobacco firm Philip Morris is suing governments in Uruguay and Australia for trying to discourage people from smoking. The oil firm Occidental was awarded $2.3bn in compensation from Ecuador, which terminated the company’s drilling concession in the Amazon after finding that Occidental had broken Ecuadorean law. The Swedish company Vattenfall is suing the German government for shutting down nuclear power. An Australian firm is suing El Salvador’s government for $300m for refusing permission for a goldmine over concerns it would poison the drinking water.

So companies can go after governments if their profits are jeopordised, professional workers will find it easier to move back and forth, sub-national procurement is open on both sides, drug patents will be extended There are major issues with the extended patent protection and the intellectual property rights that I hope to examine in the next few weeks. Basically CETA, as NAFTA before it, is indicative of the overriding neoliberalism that permeates modern society, that transnational capitalism has penetrated into all areas of collective life. Rather than examining the economic needs of the country or the people neoliberalism submits them to the needs and development of global capital.

Short audio clip of Noam Chomsky discussing neoliberalism

Thanks for Listening.