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Milton Friedman was wrong on the corporation

The doctrine that has guided economists and businesses for 50 years needs re-evaluation writes MARTIN WOLF in The FT

 

What should be the goal of the business corporation? For a long time, the prevailing view in English-speaking countries and, increasingly, elsewhere was that advanced by the economist Milton Friedman in a New York Times article, “The Social Responsibility of Business is to Increase Its Profits”, published in September 1970. I used to believe this, too. I was wrong. 

The article deserves to be read in full. But its kernel is in its conclusion: “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The implications of this position are simple and clear. That is its principal virtue. But, as H L Mencken is supposed to have said (though may not have done), “for every complex problem there is an answer that is clear, simple, and wrong”. This is a powerful example of that truth. 

After 50 years, the doctrine needs re-evaluation. Suitably, given Friedman’s connection with the University of Chicago, the Stigler Center at its Booth School of Business has just published an ebook, Milton Friedman 50 Years Later, containing diverse views. In an excellent concluding article, Luigi Zingales, who promoted the debate, tries to give a balanced assessment. Yet, in my view, his analysis is devastating. He asks a simple question: “Under what conditions is it socially efficient for managers to focus only on maximising shareholder value?” 

His answer is threefold: “First, companies should operate in a competitive environment, which I will define as firms being both price- and rule-takers. Second, there should not be externalities (or the government should be able to address perfectly these externalities through regulation and taxation). Third, contracts are complete, in the sense that we can specify in a contract all relevant contingencies at no cost.” 

Needless to say, none of these conditions holds. Indeed, the existence of the corporation shows that they do not hold. The invention of the corporation allowed the creation of huge entities, in order to exploit economies of scale. Given their scale, the notion of businesses as price-takers is absurd. Externalities, some of them global, are evidently pervasive. Corporations also exist because contracts are incomplete. If it were possible to write contracts that specified every eventuality, the ability of management to respond to the unexpected would be redundant. Above all, corporations are not rule-takers but rather rulemakers. They play games whose rules they have a big role in creating, via politics. 

My contribution to the ebook emphasises this last point by asking what a good “game” would look like. “It is one”, I argue, “in which companies would not promote junk science on climate and the environment; it is one in which companies would not kill hundreds of thousands of people, by promoting addiction to opiates; it is one in which companies would not lobby for tax systems that let them park vast proportions of their profits in tax havens; it is one in which the financial sector would not lobby for the inadequate capitalisation that causes huge crises; it is one in which copyright would not be extended and extended and extended; it is one in which companies would not seek to neuter an effective competition policy; it is one in which companies would not lobby hard against efforts to limit the adverse social consequences of precarious work; and so on and so forth.” 

It is true, as many authors in this compendium argue, that the limited liability business corporation was (and is) a brilliant institutional innovation. It is true, too, that making corporate objectives more complex is likely to be problematic. So when Steve Kaplan of the Booth School asks how corporations should trade off many different goals, I have sympathy. Similarly, when business leaders tell us they are now going to serve the wider needs of society, I ask: first, do I believe they will do so; second, do I believe they know how to do so; and, last, who elected them to do so? 

Yet the problems with the grossly unbalanced economic, social and political power inherent in the current situation are vast. On this, the contribution of Anat Admati of Stanford University is compelling. She notes that corporations have obtained a host of political and civil rights but lack corresponding obligations. Among other things, people are rarely held criminally liable for corporate crimes. Purdue Pharma, now in bankruptcy, pleaded guilty to criminal charges for its handling of the painkiller OxyContin, which addicted vast numbers of people. Individuals are routinely imprisoned for dealing illegal drugs, but as she points out “no individual within Purdue want to jail”. 

Not least, unbridled corporate power has been a factor behind the rise of populism, especially rightwing populism. Consider how one goes about persuading people to accept Friedman’s libertarian economic ideas. In a universal-suffrage democracy, it is really difficult. To win, libertarians have had to ally themselves with ancillary causes — culture wars, racism, misogyny, nativism, xenophobia and nationalism. Much of this has of course been sotto voce and so plausibly deniable. 

The 2008 financial crisis, and the subsequent bailout of those whose behaviour caused it, made selling a deregulated free-market even harder. So, it became politically essential for libertarians to double down on those ancillary causes. Mr Trump was not the person they wanted: he was erratic and unprincipled, but he was the political entrepreneur best suited to winning the presidency. He has given them what they most wanted: tax cuts and deregulation. 

There are many arguments to be had over how corporations should change. But the biggest issue by far is how to create good rules of the game on competition, labour, the environment, taxation and so forth. Friedman assumed either that none of this mattered or that a working democracy would survive prolonged attack by people who thought as he did. Neither assumption proved correct. The challenge is to create good rules of the game, via politics. Today, we cannot.

Inside the 21st-century British criminal underworld

There are almost 5,000 criminal gangs in the UK. But the old family firms are gone – today’s big players are multinational, diversified and tech-savvy writes Duncan Campbell in The Guardian

Who rules the underworld today, and where do they conduct their business? Once there were the familiar mugshots and Runyonesque nicknames, the clubs and pubs where the usual suspects gathered, plotted and schemed. Now organised crime is run like any other business, and its leading figures look like every other broker or tycoon. We have entered into a world of what Sir Rob Wainwright, until recently Europe’s most senior police officer, calls “anonymised” crime. The underworld has become the overworld.

The National Crime Agency has estimated that £90bn of criminal money is being laundered through the UK every year, 4% of the country’s GDP. London has become the global capital of money-laundering and the beating heart of European organised crime. English is now the international underworld’s lingua franca. Crime is an essential part of the British economy, providing hundreds of thousands of jobs, not just for professional criminals – the NCA reckons there are 4,629 organised crime groups in operation – but for police and prison officers, lawyers and court officials, and a security business that now employs more than half a million people.

Just as the names of familiar shops have been departing from the high street, the old family firms of criminals are disappearing, whether in London, Glasgow, Newcastle or Manchester. And just as British football fans have had to learn how to pronounce the names of the legions of new foreign players, detectives have had to learn to do the same for the increasing number of new criminals. Britain was once dealing with drugs imports from half a dozen countries; now it is more than 30. A young person who would in the past have sought an apprenticeship in a trade or industry may now find that drug dealing offers better career prospects. And, apart from drugs and guns, British trading channels now facilitate the trafficking of women from eastern Europe and Africa for prostitution and children from Vietnam as low-level drug workers.

The underworld’s modus operandi has shifted in the past quarter century. “The international nature of crime and technology are probably the two biggest changes,” says Steve Rodhouse, the NCA’s head of operations. Speaking at the NCA’s unprepossessing headquarters in Vauxhall, south London, Rodhouse explains how the agency’s work has mushroomed. “Pretty much all of the NCA’s most significant ‘high-harm’ operations now involve people, commodities or money transferring across international borders. The days of having a drugs gang, a firearms gang or a people-trafficking gang have changed because of the concept of polycriminality. Groups satisfying criminal markets, whatever they may be, is now much more common. These are businesses and people are looking to exploit markets, so why confine yourself to one market?”

Wainwright, who served as Europol chief for nine years, has also noted this internationalisation of crime. Addressing a Police Foundation gathering just after his retirement last year, he said that Europol, the European equivalent of Interpol, having expanded since its foundation in 1998 when “it consisted literally, of two men and a dog – admittedly, a sniffer dog – in Luxembourg,” now dealt with 65,000 cases a year. By 2018, he reckoned that 5,000 organised crime groups were operating across Europe and the mafia model had been replaced by a “more nimble” model, with 180 different nationalities operating, mixing legal with illegal business and working with between 400 and 500 major money-launderers. This was multinational business with specialists in recruitment, movement, money-laundering and the forging of documents.

The internet, of course, is a major factor. Wainwright likened its effect on crime to that of the motorcar in the 1920s and 30s, when suddenly criminals could escape at speed and take advantage of new markets. He cited the dark web, which he said was selling 350,000 different illegal items – 60% of which were drugs – but including everything from guns to pornography and even operating a ratings system for speed of dispatch and quality. The combination of new faces of whom the British police – and often Interpol and Europol – were unaware, along with an increasingly tech-savvy pool of criminals able to disguise their identities, made for a toxic cocktail. Crooks anonymous.

One group with little interest in anonymity are the Hellbanianz, a gang of cocky young Albanians based in Barking, east London. They went online in spectacular fashion in 2017 via Instagram and YouTube rap videos to flaunt their ill-gotten wealth and firepower.

Their most prominent member, Tristen Asllani, who lived in Hampstead, was jailed for 25 years in 2016 for drug dealing and firearms offences which included possessing a Škorpion submachine gun. He was caught after a police chase in north London which ended when he crashed his car into a computer repair shop in Crouch End. A photo of Asllani, showing him stripped to the waist after he had apparently spent long hours in the prison gym, appeared on a social media page called My Albanian in Jail, with a caption saying “Even inside the prison we have all conditions, what’s missing are only whores”.

The flashy cars and bundles of banknotes on display in the Hellbanianz videos were the result of the importation of cocaine and cannabis, but the gang was also involved in the weapons trade. The pictures showed £50 notes wrapped around a cake and their HB logo written in cannabis. After they were arrested and jailed, other gang members have posted pictures of themselves, taken with smuggled mobile phones, from inside prison where they cheerfully inscribe their gang name on the walls.

Muhamed Veliu, an Albanian investigative journalist, who knows London well, says that the Hellbanianz have been on the crime scene in east London for many years. “They are sending a bad message to young Albanians. By seeing such photos, they think the streets of UK are paved with gold … Bizarrely, despite the fact they are in the prison, they show the outside world photos of their life behind the bars.” He said that there was a concern that the British media stereotyped all Albanians as criminals but, he added, the 2006 Securitas robbery, in which two Albanians played key roles in the theft of £53m from a depot in Kent, was regarded with some national pride back home. “It was ‘the crime of the century’, it was seen as very different from making money from prostitution, which is the lowest form of crime. It is wrong, of course, but they did need bravery to get involved, and at least they went for a bank – that was the feeling in the Albanian community.” There are currently around 700 Albanians in British jails.

“Albania is Europe’s largest producer of cannabis,” says Tony Saggers, the former head of drugs threat and intelligence at the NCA. “It is important not to stereotype, but the Kosovan war led to Albanians pretending to be Kosovan in order to get asylum in the UK. Many of the people who came just wanted a better life, but there were criminals among them who were able to set up illicit networks … The UK criminal has a get-rich-quick mentality while the Albanians’ strategy was get-rich-slow, so they have driven down the price of cocaine in the UK. They knew that if they expanded, they could undercut the market.” It helped that their reputation preceded them. “The Albanian criminals may be ruthless and potentially murderous when controlling their organised crime,” said Saggers, “but when they come to the UK they try to be more charismatic and they use fear – ‘We’re here, we need to get on,’ that sort of approach. So there is little violence from the older Albanian criminals in the UK, because they know that violence attracts more attention.”

The Albanians had already established themselves in a darker fashion when 26-year-old Luan Plackici was jailed in 2003 and said to have made more than £1m from trafficking “poor, naive and gullible” young women who thought they were on their way to jobs as waitresses or barmaids. Some had to service up to 20 men a day to pay for the £8,000 “travel bill” from Romania and Moldova.

The international nature of people-trafficking was exposed fully in 2014 by a trial of a gang that imported more than 100 women into Britain. The trial ended with the gang leader, Vishal Chaudhary, being jailed for 12 years. Chaudhary, who lived the high life in Canary Wharf in London, contacted young women through social networks in Hungary, the Czech Republic and Poland, offering work as receptionists, nannies or cleaners in England. But when they got to the UK, the women were forced to work in brothels. Chaudhary’s team, all of whom were jailed, consisted of his brother, Kunal, who worked for Deloitte in Manchester, a Hungarian heavy called Krisztian Abel and the latter’s sister, Szilvia, who helped recruit the women.

 

A cannabis farm discovered in a house in Oldham in 2013. Photograph: Christopher Thomond/The Guardian

There are numbers of young people involved in what the legal system terms “forced criminality”. The lawyer Philippa Southwell has specialised in such cases, which apply in particular to young Vietnamese people brought illegally into the UK by traffickers and forced to work in cannabis farms to pay back debts of up to £30,000 that their parents have undertaken in order for them to have a new life in Europe.

“The modus operandi of criminal organisations is to target children or young adults, trafficking them across the world in a journey that can take months,” Southwell says. “Those being trafficked from Vietnam, often transit via Russia, Germany and France, by boat, lorry and even by foot. Once at their destination, they will be locked in a premises and made to tend the cannabis plants, by watering them and ensuring the lighting is on. These cannabis grows are sophisticated multi-million-pound drug operations, with the electricity often being extracted illegally and high-value equipment used. The windows of the buildings may be nailed shut. The farms normally operate in rural areas where the chance of detection is reduced.”

The boys and young men were in a form of debt bondage, but no matter how hard they worked, their debt never seemed to be paid off. “There is a misconception within the criminal justice system that they are free to leave because the doors may not always be locked,” says Southwell, “but the reality is that they have nowhere to go – they are controlled through threats of violence, debt bondage, isolation, fear and other complex control methods that are regularly used by traffickers.”

From the Chinese opium dealers in the 1920s, the Italian gangsters in the 30s, the Maltese pimps in the 50s, the West Indian Yardies in the 60s, the Turkish heroin dealers in the 70s to the east Europeans gangsters and Nigerian fraudsters today, there has long been an unfair tendency to blame foreigners as dominant figures in the underworld. While they may have all had their parts to play, the homegrown British villain – whether artful dodger or ruthless kingpin – has always been the bedrock of the underworld.

“Everyone wants to be a gangster,” says BX, a young former gang member from north-west London. “Everyone’s seen it on TV and that’s what they want to be. They look at music videos and it looks like the people in them are making hundreds of thousands of pounds, although the reality is that they are still living at their mum’s house. Most of them come from estates and they see their parents going to work, struggling to pay the bills. They come home, their mum’s not there, and all the places where kids could play are closing down. Nine times out of 10, they leave school without qualifications. So if you’re broke, if you can’t get a job, you’re going to take the opportunity. My parents had no clue what I was up to – I didn’t come back with any marks on my face.”

The recent upsurge in knife attacks has focused attention on gangs. At one stage last year, there were six separate knife murder trials underway at the Old Bailey, all gang-related, all involving more than one defendant, none older than 22. “It’s not a black thing, it’s not a white thing, everyone’s doing it,” says BX. “There’s no: ‘I’m black, he’s white, we can’t get along’ any more.” There were still ample opportunities for smaller-time dealers: “You can make a grand a week.”

An organised gang carrying out robberies on scooters in London in 2018. Photograph: MET Police

The hierarchy of gangs remained a key factor. “If you’re a drug dealer, you have to find people who will do your dirty work for you. The way it works is the elders, who are, say, 24 or 25, they see you doing well, so they might take you under their wing. The young kids acting as look-outs, they’re thinking: ‘I’m part of that guy’s enterprise. That could be me in however many years, I could get promotion.’ As they say, loyalty brings forth royalty.”

Territory is important commercially. “If you’re doing five keys (kilos) a week and then suddenly you’re only doing three a week, it doesn’t take long to realise that someone’s out there taking your customers. So you have to eliminate the opposition. How do you do that? By either taking them out, or tipping off the police. You are never supposed to snitch, but I know one guy, from Southall, who’s a millionaire now; he was in competition with a guy from the same area so he informed the police.” There’s a not-unfounded suspicion that some informers have continued to commit crimes while under police protection. “All the old-school rules – they’re gone. I know people who work with the police to get immunity for themselves. I know one who everyone knows works with the police, he’s even been shooting people, but you type his name into Google you won’t find anything about him and, believe me, his record is way longer than my arm.”

The risks are high. “Of the people I grew up with, only three of us haven’t been to jail, although I’ve been arrested many times. My older brother has been in and out of jail – nine months here, six weeks there. But there are less police than ever, so that gives you the incentive, and even if you get arrested, you’re not going to do that long.”

While the young gangs have largely replaced the old family-based crews, so have young, helmeted, scooter-riding robbers smashing their ways into jewellers and mobile phone shops taken on the role of the old sawn-off shotgun-wielding bank robbers.

While those smalltime home-grown villains may still thrive, an increasing number of members of the British underworld have followed old imperial traditions and headed abroad to cut out the middle-man, establishing themselves not only in the traditional bolt-hole of Spain, but in the Netherlands, Thailand and South Africa. The person who was to rewrite the rulebook on drug dealing is the street-smart Liverpudlian Curtis Warren, better known by his nicknames Cocky or the Cocky Watchman. Born in 1963, his criminal career started at the age of 12 with a conviction for car theft. By 16, he was on his way to borstal for assaulting the police. Other offences followed, but it was only when he moved into the drugs business, working out of Amsterdam, that he established his reputation as one of the most prolific traffickers of modern times – Interpol’s “Target One” and the subject of a joint British–Dutch investigation codenamed Operation Crayfish.

While Warren’s move to Amsterdam, where fellow British dealers also established themselves, seemed like a smart idea in that he was less exposed to the British police, it was also a weakness, because the Dutch authorities were able to tap his phone without restriction and secure the evidence they needed. (Although they also required English help in translating Liverpudlian for them.) In October 1996, police in the Netherlands seized 400kg of cocaine, 60kg of heroin, 1,500kg of cannabis, handguns and false passports. Nine Britons and a Colombian were arrested, and Warren was soon portrayed as the biggest fish in the net. He was jailed for 12 years for a conspiracy to import what was claimed to be £125m of drugs into Britain. The Observer suggested he was “the richest and most successful British criminal who has ever been caught”, and he was the only drug dealer to make it on to the Sunday Times rich list. T-shirts with an old mugshot of Warren on them were still for sale in Liverpool 20 years after Operation Crayfish.

After his release from jail in the Netherlands in June 2007, Warren was only a free man for five weeks. He headed to Jersey, but was under constant surveillance and soon arrested. In 2009, he was convicted of conspiring to import £1m of cannabis into Jersey and jailed for 13 years. Warren was alleged to have invested his wealth in everything from petrol stations to vineyards, football clubs to hotels. A Jersey court ordered him to pay £198m after he failed to prove his business empire was not built on the proceeds of cocaine trafficking. Detectives had secretly recorded him boasting during a 2004 prison visit of funnelling huge amounts of cash via a money launderer. “Fuckin’ ’ell, mate, sometimes we’d do about £10m or £15m in a week,” he told some of his visitors. “I was bragging like an idiot and just big-talking in front of them,” was Warren’s explanation later. The Jersey attorney general, Timothy Le Cocq QC, described him as “one of Europe’s most notorious organised criminals”. His failure to pay the money resulted in a further 10 years’ jail time.

He told Guardian journalist Helen Pidd, when she interviewed him in jail in Jersey, that he disapproved of drugs: “I’ve never had a cigarette in my life or a drink. I’ve never tasted alcohol or anything. No interest.” His ambition after he was freed was to leave England – “and never come back”. He added: “I just wish I’d not been such a worry to me mum.”

Few people were better qualified to comment on Warren than former NCA man Tony Saggers, who was an expert witness in Warren’s trial and proceeds hearing. “Curtis Warren was a forerunner,” he said. “You get people like him who come from a tough background, a council-house environment, and he had a sort of bare-faced courage in some respects, to put himself in places like Venezuela and Colombia, which were probably even more dangerous then than they are now. He put himself at the other end of the supply chain, and in a way established that pattern for the elite drug trafficker. But nowadays, high-level, high-profile criminals play less and less of a role, and make use of others below them in a detached way.”

Other British criminals have also cast their nets wide during the past two decades. One of the best-known was Brian Wright, once one of Britain’s most active cocaine smugglers, who was nicknamed The Milkman – because he always delivered. He operated from both Turkish-controlled Northern Cyprus and Spain. In 1998, he was alleged to have imported almost two tonnes of the drug, with the result, according to one customs investigator, that “the cocaine was coming in faster than people could snort it”. The Dublin-born Wright owned a villa near Cadiz, which he named El Lechero – the Spanish for milkman – and had a box at Ascot, a flat in Chelsea’s King’s Quay and used some of his proceeds to fix races on which he then bet, thus laundering his drug profits. Finally arrested in Spain, he was brought back to England and, in 2007, at the age of 60, found guilty at Woolwich crown court of conspiracy to supply drugs and jailed for 30 years.

Some very successful scams have been perpetrated on elderly Britons. John Palmer, who had been involved in the Brink’s-Mat bullion robbery (from whence he got his nickname “Goldfinger”) made his fortune in a crooked timeshare business in Tenerife. A ruthless operator, he took advantage of thousands of gullible souls, many of them elderly holidaymakers, who believed his spiel about the fortunes they could make by investing in timeshare apartments that were never built. Outwardly, he appeared to have it all: the yacht, the cars with the personalised number plates, dozens of properties. He even made it to No 105 in the Sunday Times rich list. “Remember the golden rule,” was the motto he loved to quote, “he who has the gold makes the rules.” But in 2001, he was convicted of a timeshare fraud in which 16,000 victims lost an estimated £33m and served eight years in prison.

Then, in 2015, Palmer was shot dead by a hitman in his garden in Essex. There were rumours that he was killed because he might have been cooperating with the Spanish police over another fraud case. His co-accused were convicted in Spain in May this year and the police in Britain have duly issued a fresh appeal for help to find his killer – with a reminder that there is a £100,000 reward on offer in case that tempts an elderly underworld grass.

Any notion that Spain might still be a safe haven for expat criminals was dispelled in 2018 when Brian Charrington – a close associate of Curtis Warren and regarded as one of the major international drug dealers of his generation – was jailed for 15 years for trafficking and money-laundering in Alicante in 2018. Described in the Spanish press as “el narco que escribia en Wikipedia”, because of his reputation for updating and correcting his Wikipedia entry, the former car-dealer from Middlesbrough had been arrested in 2013 at his villa in Calpe, on the Costa Blanca, an area where some estate agents offer bulletproof glass as a special feature along with the spa bath and barbecue area. There had been wild rumours of crocodiles in his swimming pool, but disappointingly, the police found none.

Charrington was alleged to have brought vast quantities of drugs into Spain via a yacht docking in Altea, north of Benidorm. He claimed his money came legitimately. “I buy and sell villas and I pay my taxes,” he told the court, but was still fined nearly £30m. Following a lengthy investigation involving Spanish, British, Venezuelan, Colombian and French police, his assets, including a dozen houses and his cars and boats, were impounded. After his sentence, his Wikipedia entry was speedily updated.

The titles of true crime memoirs published in the past decade or so tell their own tale. The Last Real Gangster by Freddie Foreman came out in 2015; The Last Gangster: My Final Confession by Charlie Richardson arrived just after his death in 2012; The Last Godfather, the Life and Crimes of Arthur Thompson, was published in Glasgow in 2007. A requiem for the old British underworld.

In many ways, it was already slipping into a haze of nostalgia. The television series Peaky Blinders has spawned its own fashion accessory industry. You can now buy Peaky Blinders cufflinks shaped like razor-blades, or wear a Peaky Blinders cap and waistcoat from the new David Beckham clothing line, something that might have prompted a dark smile from the ruthless and acquisitive 1920s Birmingham gang on whom the series was based. The website henorstag.com even recommends “the Peaky Blinders look” as perfect for a stag night: “For a theme the ladies will love, you will need to capture the stylish world of the early 20th century with black peak caps, stylish grey or black suits with waistcoat, as well as a dusty black coat and shoes in order to complete the look.” (Add a cosh and a cut-throat razor and you’ll really slay ’em.)

While the Kray twins brand continues as the underworld’s equivalent of Marks & Spencer – a framed letter from Ronnie Kray in Broadmoor is currently on offer on eBay for £650 – changes in the law have made criminals less prepared to boast about past crimes. In the old days, under the “double jeopardy” rule, once you were acquitted of a murder, you could never be tried for it again. That rule was overturned with the 2003 Criminal Justice Act, so the days when a villain could explain in their memoirs how they got away with a crime have gone. The 2009 Coroners and Justice Act made it an offence for criminals to profit from accounts of their crimes, so they could no longer sell their stories, or at least officially. The 2002 Proceeds of Crime Act and its increasing use against career criminals has meant that illicit incomes can be seized.

No wonder the Hatton Garden burglary of 2015 – that “one last job” carried out by the elderly “diamond wheezers” – received such attention. Even one of the “last of the last”, Fred Foreman, was hoping he was going to be offered a role in it. “I heard that Terry (Perkins, one of the ringleaders) was looking for me, not long before the burglary took place, so I presume that would have been what it was about,” he says.

Perkins died in his cell in Belmarsh prison last year. Foreman, who made his name with the Krays in the 1960s, now lives in sheltered accomodation in west London. He doubts that the current generation of gangsters will ever write their memoirs: “I don’t think that anyone who has turned to crime these days is going to live long enough to build up a reputation, are they?”

But the recruiting sergeants of the underworld – poverty, greed, boredom, envy, peer pressure, glamour – will never be short of volunteers, whether they live long enough to make a name for themselves or not.

Meritocracy is a myth invented by the rich

The college admissions scandal is a reminder that wealth, not talent, is what determines the opportunities you have in life writes Nathan Robinson in The Guardian 

 
‘There can be never be such thing as a meritocracy, because there’s never going to be fully equal opportunity.’ Photograph: Dan Kitwood/Getty Images


The US college admissions scandal is fascinating, if not surprising. Over 30 wealthy parents have been criminally charged over a scheme in which they allegedly paid a company large sums of money to get their children into top universities. The duplicity involved was extreme: everything from paying off university officials to inventing learning disabilities to facilitate cheating on standardized tests. One father even faked a photo of his son pole vaulting in order to convince admissions officers that the boy was a star athlete.

It’s no secret that wealthy people will do nearly anything to get their kids into good schools. But this scandal only begins to reveal the lies that sustain the American idea of meritocracy. William “Rick” Singer, who admitted to orchestrating the scam, explained that there are three ways in which a student can get into the college of their choice: “There is a front door which is you get in on your own. The back door is through institutional advancement, which is ten times as much money. And I’ve created this side door.” The “side door” he’s referring to is outright crime, literally paying bribes and faking test scores. It’s impossible to know how common that is, but there’s reason to suspect it’s comparatively rare. Why? Because for the most part, the wealthy don’t need to pay illegal bribes. They can already pay perfectly legal ones.

In his 2006 book, The Price of Admission: How America’s Ruling Class Buys Its Way into Elite Colleges, Daniel Golden exposes the way that the top schools favor donors and the children of alumni. A Duke admissions officer recalls being given being given a box of applications she had intended to reject, but which were returned to her for “special” reconsideration. In cases where parents are expected to give very large donations upon a student’s admission, the applicant may be described as an “institutional development” candidate—letting them in would help develop the institution. Everyone by now is familiar with the way the Kushner family bought little Jared a place at Harvard. It only took $2.5m to convince the school that Jared was Harvard material.

The inequality goes so much deeper than that, though. It’s not just donations that put the wealthy ahead. Children of the top 1% (and the top 5%, and the top 20%) have spent their entire lives accumulating advantages over their counterparts at the bottom. Even in first grade the differences can be stark: compare the learning environment at one of Detroit’s crumbling public elementary schools to that at a private elementary school that costs tens of thousands of dollars a year. There are high schools, such as Phillips Academyin Andover, Massachusetts, that have billion dollar endowments. Around the country, the level of education you receive depend on how much money your parents have.

Even if we equalized public school funding, and abolished private schools, some children would be far more equal than others. 2.5m children in the United States go through homelessness every year in this country. The chaotic living situation that comes with poverty makes it much, much harder to succeed. This means that even those who go through Singer’s “front door” have not “gotten in on their own.” They’ve gotten in partly because they’ve had the good fortune to have a home life conducive to their success.

People often speak about “equality of opportunity” as the American aspiration. But having anything close to equal opportunity would require a radical re-engineering of society from top to bottom. As long as there are large wealth inequalities, there will be colossal differences in the opportunities that children have. No matter what admissions criteria are set, wealthy children will have the advantage. If admissions officers focus on test scores, parents will pay for extra tutoring and test prep courses. If officers focus instead on “holistic” qualities, pare. It’s simple: wealth always confers greater capacity to give your children the edge over other people’s children. If we wanted anything resembling a “meritocracy,” we’d probably have to start by instituting full egalitarian communism.

In reality, there can be never be such thing as a meritocracy, because there’s never going to be fully equal opportunity. The main function of the concept is to assure elites that they deserve their position in life. It eases the “anxiety of affluence,” that nagging feeling that they might be the beneficiaries of the arbitrary “birth lottery” rather than the products of their own individual ingenuity and hard work.

There’s something perverse about the whole competitive college system. But we can imagine a different world. If everyone was guaranteed free, high-quality public university education, and a public school education matched the quality of a private school education, there wouldn’t be anything to compete for.
Instead of the farce of the admissions process, by which students have to jump through a series of needless hoops in order to prove themselves worthy of being given a good education, just admit everyone who meets a clearly-established threshold for what it takes to do the coursework. It’s not as if the current system is selecting for intelligence or merit. The school you went to mostly tells us what economic class your parents were in. But it doesn’t have to be that way.

Should the rich pay more for the same services – and higher fines too?

Patrick Collinson in The Guardian

The government is considering a sliding scale of probate fees, an idea that could apply elsewhere


 

In Finland, speeding fines are based on the offender’s income. Photograph: Danny Lawson/PA

There was outrage this week when the government said it was pressing ahead with a new approach to charging for its role in probate (the legal process for settling your financial affairs on death). Instead of the current £155 flat fee for the paperwork, the government is considering a sliding scale of probate fees based on the value of the estate, from zero to £6,000 – even though the cost of the paperwork is virtually the same.

The Law Society – representing the solicitors who do probate work – says it’s unfair. “The cost to the courts for providing a grant of probate does not change whether the size of the estate is £10,000 or £1m.” It argues that this is no longer a fee but a “stealth” increase in inheritance tax.

Much steeper inheritance taxes are perfectly fine, but this back-door attempt to raise IHT will strike even soak-the-rich types as a bit odd. What next? Should a homebuyer pay a higher fee for local authority searches depending on the sale price of the property? Should your TV licence be based on your income? Should you pay a bigger fine for not having a TV licence, if you have an above-average income?

Actually, on the last one, plenty of countries do go down that path. In Finland – to which we must now genuflect on all things progressive – there is a system called “day fines”. If you commit a misdemeanour that may result in a fine issued by a public authority – such as a speeding ticket – then the size of the penalty is based on the person’s income.

In 2015, a millionaire in Finland was hit with a €54,000 (£4,700) fine for speeding, while in 2002 a Nokia executive received a €116,000 fine for speeding on his Harley Davidson motorcycle, and in 2001 a driver was punished with a €35,300 fine for going through a red light.

Behind the idea of bigger fines for the rich is the fear that they can “purchase” the right to commit offences, because the relative cost to them is immaterial. Anybody who speeds, or evades their TV licence, or who goes through a red light, is equally blameworthy, but the richer person is less deterred from repeating the offence because the fine is relatively meaningless.

Of course, this is all about misdemeanours. Surely there’s no read-across to pure government services? But there is: your family might produce the same amount of rubbish as a similar family on the other side of town, but you are already effectively paying a much higher price (through your council tax) for it to be collected if you live in a pricier house.

There may be more merit in a sliding scale for probate fees than first thought – and a very good case for making speeding and other fines payable according to income.

Why we may never know if British troops committed war crimes in Iraq

Samira Shackle in The Guardian

January 2004. The mobile phone footage is grainy, the sounds of a riot audible in the background. A group of British soldiers grab four Iraqi boys on the street and drag them into their barracks. The camera zooms in and out as the soldiers beat them. A soldier walks up to one boy and kicks him between the legs. Another punches a boy in the head and stomach. The soldier filming keeps up a steady patter. “Oh yes! You’re going to get it,” he says. He imitates their screams for mercy. “Oh please! Please no!” Other soldiers pass in and out of shot, apparently indifferent.

This footage, from southern Iraq, would be passed to the News of the World and published two years later. It was one of the first cases of British soldiers abusing Iraqi civilians to become public, and provoked fury both in Iraq and Britain. “Jail them,” demanded a Daily Star article. Across the Middle East, the footage looped on news channels. In the southern Iraqi city of Basra, where British troops were stationed, 1,000 people took to the streets in protest, chanting “No, no, Tony Blair” and burning British flags outside the consulate.

The nine soldiers involved – eight carrying out the beating, one filming the attack – were questioned. But almost a year later, the Service Prosecuting Authority (SPA), the military equivalent of the Crown Prosecution Service, decided not to bring charges. Although there was sufficient evidence to prosecute two of the soldiers, the statute of limitations had expired and it was deemed not in the public interest to pursue them.

This was not the only case of alleged abuse by British soldiers in Iraq. Over time, a steady drip of shocking allegations about British troops emerged in the press. One of the most notorious was at Camp Breadbasket, an aid distribution centre in Basra, where a group of soldiers beat and humiliated Iraqi prisoners, taking photographs of the abuse. As stories of torture and unlawful killings in British custody came out, they fed into the wider sense of outrage about the war. The public wanted answers about how politicians had sold the war to them in the first place, how the media had failed to scrutinise politicians’ claims in the run-up to the war, how the military had failed to prepare and equip its troops. The shocking stories of abuse and torture by British troops added to the fury.

But over the past three years, the question of whether British soldiers committed crimes in Iraq, and the scale on which it happened, has been largely displaced by outrage over attempts to investigate them. In the media, rhetoric has shifted radically – from horror at the alleged crimes of British soldiers, to outrage against human rights lawyers pursuing such allegations. “Mr Cameron MUST stop these vile witch-hunts against our brave troops,” read a 2016 column in the Daily Mail. Conservative politicians have echoed this line. David Cameron, then prime minister, promised to stop “spurious” claims. Defence secretary Michael Fallon criticised “unscrupulous” lawyers; armed forces minister Penny Mordaunt described these lawyers’ actions as the “enemy of justice”. When Cameron left office, his successor, Theresa May, lambasted “activist, leftwing human rights lawyers”.

The target of most of these complaints from cabinet ministers has been an investigation launched by the UK government itself. The Iraq Historic Allegations Team (Ihat) was set up by the Labour government in 2010, to draw a line under lingering allegations from an unpopular war and dispatch the idea that military misconduct was widespread. It aimed to investigate credible claims of abuses in Iraq and secure criminal prosecutions where appropriate. But if Ihat was supposed to be a way to decisively establish guilt or innocence, it failed spectacularly.

By February 2017, the investigation had become the centre of a national scandal over its methods and scope, and the government announced it would shut Ihat down. “What was meant to be an administrative exercise, tidying up a few loose ends, had taken off into the stratosphere,” Nick Harvey, minister for the armed forces from 2010-12, told me. A parliamentary inquiry concluded Ihat had “directly harmed the defence of our nation” by making soldiers on the battlefield anxious about later legal repercussions. When Ihat closed, outstanding cases were reduced, overnight, from 3,400 to just 20. It had cost the taxpayer £34m and failed to secure a single prosecution.

The collapse of Ihat seems likely to mark the end of serious attempts to investigate alleged crimes by British soldiers in Iraq, leaving questions about the scale of abuses and accountability unanswered. After such a public failure, what politician would want to reopen the issue? Yet, behind the headlines of corrupt lawyers and incompetent investigators, the true story of Ihat is more complicated. Both military advocates and human rights defenders agree that the scandal around Ihat was at the very least, politically convenient for the Ministry of Defence. With human rights lawyers cast as the villains, the MoD could avoid uncomfortable questions about its own role in training soldiers in procedures that breached the Geneva conventions. “At times, the MoD has been tempted to throw the uniform under the bus,” says Johnny Mercer, a Conservative MP who was instrumental in Ihat’s closure.

Fifteen years after it began, we are no closer to holding any politicians or high-ranking soldiers accountable for the disaster of the Iraq war. The further we get from the events, the more elusive proper examination has become. Rather than time giving a measure of distance, the tenor of the debate has degenerated to a point where the very words “human rights lawyer” are used as an insult by top politicians. Meanwhile, anger at the government’s own investigation into alleged abuses by British soldiers in Iraq has fuelled scepticism about civilians’ right to even question the actions of the armed forces overseas.

When British combat operations in Iraq ended in 2009, Saddam Hussein had been ousted, but terrorism and sectarian war were surging. More than 100,000 Iraqis had been killed, as well as 4,371 Americans and 179 British soldiers. “Daily life was a mess,” says Safaa Khalaf, a journalist from Basra who covered the British occupation. “The British were saying the city was safe, but armed groups controlled residential areas. Services had been completely destroyed and there were no efforts to rebuild.”

British involvement had cost £9.6bn and the war was grossly unpopular at home. A ComRes poll at the time found that 37% of the British public believed that Blair should be tried as a war criminal. Gordon Brown, keen to differentiate his premiership, established the Chilcot inquiry to help the UK to “learn the lessons” of the Iraq war. In the same month that combat operations ended, a public inquiry was also launched into the killing of Baha Mousa, a 26-year-old hotel receptionist beaten to death in Basra by British soldiers in 2003. (The inquiry would later conclude that these soldiers subjected Iraqi detainees, including Mousa, to “serious, gratuitous violence”.) Another public inquiry into claims that British soldiers murdered and mutilated nine Iraqi detainees, known as the al-Sweady inquiry, launched the same year.

 

A crowd burn a British flag to protest the 2003 killing of 26-year-old Baha Mousa. Photograph: AP

The families of Iraqi victims in both inquiries were represented by the same lawyer: Phil Shiner, founder of Public Interest Lawyers, a small Birmingham-based practice. Within government, Shiner was hated – “We had the strong feeling that he was a bad apple,” one former Labour minister told me – but many of his fellow lawyers admired his determination to hold power to account. In 2004, Shiner had been named human rights lawyer of the year by the campaign group Liberty, and in 2007, the Law Society named him solicitor of the year.

In February 2010, Shiner began court proceedings to seek investigation into further claims of ill-treatment of Iraqis. “We were at risk of having a public inquiry for every allegation [of abuse in Iraq],” says Bill Rammell, who was minister for the armed forces during that period. “That would take years – and in the intervening period, the whole reputation of the armed forces would be besmirched.”

To draw a line under the continued legal challenges, MoD officials proposed the creation of Ihat, a legal body that would investigate allegations of crimes, and where appropriate, pursue prosecutions of individual soldiers. Having been signed off by Brown, it was announced publicly in March 2010. “Ihat was a concerted attempt to pull all the allegations together, throw resources at them and process them as quickly as possible,” said Rammell.

One of the central questions raised by Ihat is who, ultimately, is responsible for crimes committed by British personnel in war? Individual service personnel bear criminal responsibility for crimes they commit in war, such as murdering civilians or torturing prisoners. Under international criminal law, senior officers can also be held accountable for the actions of their subordinates if they did not take “necessary and reasonable” action to prevent it. Under the act that Britain signed when it joined the international criminal court (ICC) in 2001, generals and even politicians are potentially liable for systematic abuses by British soldiers. This has proved largely theoretical, however: the last person in Britain to be prosecuted for crimes committed by forces under their command was in 1651 during the civil war.

In Iraq, this question of command responsibility was particularly important. Numerous public inquiries have concluded that five banned interrogation techniques were widely used by British soldiers. These techniques – hooding, white noise, sleep deprivation, food deprivation and stress positions – were outlawed by the UK in 1972 and breach the Geneva conventions. But by the time of the Iraq war, training manuals did not mention that these techniques were forbidden. Nor did the manuals formally advocate using these techniques – they simply were not mentioned at all. Institutional knowledge of the ban seemingly having been lost, in the chaos of the war – where thousands of Iraqi men and boys were arrested without adequate holding facilities – soldiers may have been told by commanding officers to, for instance, hood detainees. This meant that, under Ihat, soldiers could theoretically face criminal prosecution for things they were told by their commanders to do.

Crucially, Ihat was set up in such a way that it could not address wider questions of accountability. Rather than considering systemic problems, it was limited to prosecuting individual soldiers. Overseen by civil servants employed by the MoD, Ihat had a main staff consisting of around 150 investigators who would look into allegations in the same way that civilian police might. If an investigation gathered sufficient evidence, the case would be passed on to the SPA, which would then decide whether to proceed. The odd structure of the organisation – not quite a public inquiry, not quite a police investigation – is a sign of how unusual it was; there are no comparable examples of a country domestically investigating allegations of crimes committed in an overseas war.

By the time Ihat got going in November 2010, the Labour government had been replaced by the Conservative-Liberal Democrat coalition. Government insiders told me that David Cameron was reluctant to proceed, and would have preferred to shut down the whole process. But he had little choice. In 2011, the European court of human rights ruled that the UK had a duty to investigate allegations of deaths and ill treatment involving its service personnel in Iraq. If it didn’t, Britain and the politicians and generals in power at the time of the Iraq war might have a case to answer in the ICC.

The view within government under Labour, when Ihat was set up, was that it would show Britain was taking responsibility by punishing the worst cases of abuse, while simultaneously proving that there were relatively few serious incidents. Despite Cameron’s reluctance, the coalition had a broadly similar attitude. “What was not anticipated at the outset was the sheer scale of what Ihat was going to end up looking at,” said Nick Harvey, the Liberal Democrat who replaced Rammell as minister for the armed forces.

On launching Ihat in 2010, Harvey predicted that it would conclude its work within two years. In fact, it barely even started until 2012, as Shiner repeatedly took the government to court to dispute its structure and independence. (“He could start an argument in a phone box by himself,” said one acquaintance.) Initially, Ihat’s investigative team were mostly drawn from a branch of the British military police that had been active in Iraq during the occupation. Shiner successfully argued in court that they had a conflict of interest, and in 2012, Ihat was restructured and restaffed with civilians – mostly retired police detectives. The new aim was completion in 2019, with a budget forecast of £57m.

For the first few years of its operation, few people paid much attention to the work Ihat was doing. In 2013, Shiner’s daughter Bethany, a recent law school graduate, started working at Public Interest Lawyers’ Birmingham office. It was a small firm, employing around seven solicitors, and Shiner was the only partner. Public Interest Lawyers took the lead in gathering cases from Iraqis, ultimately bringing 65% of Ihat’s cases, although another firm, Leigh Day, was also involved. Public Interest Lawyers was paid a set fee for gathering statements on a case-by-case basis by the Legal Aid Agency.

Bethany Shiner, who is now 30, was immediately thrust into the Iraq litigation. She and other junior lawyers took statements from Iraqis over the phone, with the help of an interpreter. Many of them were based in Basra, although calls came from around the country. “The allegations ranged from beatings, hoodings, poor detention conditions, all the way to sexual assault,” Bethany said. “You’d hear the same details again and again.” Some of the firm’s lawyers were traumatised by repeatedly hearing stories of sexual assault and torture.

 

A youth hurls a rock at British soldiers during a violent protest in Basra in 2004. Photograph: Reuters

Most of the cases came to Public Interest Lawyers via a UK-based translation and logistics company run by a British Iraqi, which employed a fixer in Basra, Abu Jamal, to liaise with Iraqi claimants and witnesses. Abu Jamal was a prominent local figure who was well trusted in Basra, and connected Iraqis to the lawyers. In addition to working for Public Interest Lawyers, for three years Abu Jamal was hired directly by Ihat for a salary of £40,000 per year, to find witnesses, help them get visas, and sometimes accompany them overseas for interviews with Ihat staff. “Without him nothing would have happened,” one former investigator told me.

It is testament to the internal chaos of Ihat that no one appears to have stopped to question whether it was appropriate for someone to be employed by both lawyers bringing the claims and the investigators scrutinising them. Although Public Interest Lawyers maintain that Abu Jamal was simply liaising, some journalists later alleged that he had directly approached clients to solicit for business. This practice – often dismissed as “ambulance-chasing” – is permitted in some countries, but is strictly forbidden in the UK. If claimants were coming to Abu Jamal – as he and Public Interest Lawyers have maintained – then that was permissible. If he was cold-calling them, as alleged, it would not. It has never been proven that Abu Jamal was paid to directly solicit clients for Ihat.

Whatever was happening behind the scenes, hundreds of Iraqis were coming forward with stories of abuse at the hands of British soldiers. As the number of claims grew, a sense of purpose united staff at Public Interest Lawyers. “We were trying to find out what happened,” said Bethany. “It was about finding the truth and holding those responsible accountable.” This was no easy task. Because it was pursuing criminal prosecutions, Ihat’s cases had to meet the standard of criminal proof: it had to be beyond reasonable doubt that the alleged incidents took place. Yet most of the alleged crimes had taken place a decade earlier, in an active war zone, so crime scenes were never secured and vital evidence had not been gathered. Alleged victims and witnesses were thousands of miles away, in a still war-torn country. Ihat judged it unsafe for investigators to go to Iraq, so arrangements were made for Iraqi victims and witnesses to be interviewed in Turkey. From 2013, when investigations got underway in earnest, until 2016, these trips happened almost monthly.

As Public Interest Lawyers gathered cases, they passed them on to Ihat for consideration. Usually, this would consist of a written statement, accompanied by supporting documents, such as evidence of detention, medical records or photographs of injuries. The lawyers would ensure the basic facts checked out and that claims were credible, and pass the cases on to a team of civil servants, who decided which claims merited further investigation. As the number of allegations mushroomed, there appears to have been little direction from above about which cases were worth pursuing. “There wasn’t much of a triage system to focus attention on the most serious allegations or those most likely to result in prosecution,” one insider told me.

Of the hundreds of cases Ihat investigated, not one ended in prosecution. While this has been held up in the rightwing press and in government as evidence that the claims were “spurious” and the investigation incompetent, those involved feel that the structure of Ihat was the stumbling block. “My overall feeling is that there was a lot of evidence of criminal wrongdoing, and that nobody has been held to account,” said Jonathan (not his real name), who was part of an Ihat team that went on numerous trips to Turkey. Usually, these trips would last about a week, with five or six Iraqi witnesses interviewed by Ihat investigators. Legal representatives from Public Interest Lawyers would also be there. “Of course there were some false claims, but most of the people I saw I believed to be genuine,” said Jonathan. He emphasised that many interviews were with witnesses who had no financial motive as they were not eligible for compensation.

Many working at the ground level – from the lawyers representing Iraqis to the Ihat investigators – felt that they were being asked to pursue the wrong target, investigating individuals rather than looking at systemic problems in the military. But they were trapped within the process. “Of course, individual soldiers had personal responsibility – but allegations often related to the way in which personnel had been trained, what they were told to do, how they were told to treat people,” said Bethany. “It was about the government and the MoD in particular.”

Paul (not his real name), a retired police detective who worked as an investigator, felt frustrated that his inquiries were limited to low-ranking individuals. Some of the British soldiers he interviewed were functionally illiterate, he said: “They’d signed statements taken immediately after the event [for which they were being investigated]. But I found they could barely read or write, and they’d just signed anything so they could go home,” said Paul. Wanting to investigate the chain of command, in one case, he requested permission from Ihat’s leadership to interview a senior army officer in relation to an alleged unlawful killing. This was refused. Every time he tried to pursue this line of inquiry, he claims that it was shut down by Ihat’s leadership or MoD lawyers.

According to Jonathan, many of his colleagues felt increasingly frustrated. “Many complained that they had gathered what they thought was enough evidence to prosecute, and then they’d have an MoD lawyer go to the senior leadership of Ihat and tell them to drop the case.” An MoD spokesperson denied these claims, saying that “Officers of very senior ranks were interviewed in many Ihat investigations when the evidence and line of inquiry required it, and no investigation was shut down prematurely.” Paul says: “I don’t think anyone there was bright enough for it to be a conspiracy, but I felt the MoD were putting pressure on the senior leadership to wrap things up.”

Paul describes meeting the family of an Iraqi who had allegedly died in British custody. They asked how they could trust him when he was employed by the British government. “I will never forget that I looked that man in the eye,” said Paul. “I made a promise to do a fair investigation that I wasn’t able to keep.”

At the end of 2014, Maj Robert Campbell was on leave and about to go on holiday when he received a call from an ex-girlfriend, who told him Ihat investigators had been asking about him. It was the first indication Campbell had that he was under investigation for murder. The inquiries related to a 2003 incident where a 19-year-old Iraqi, Said Shabram, had drowned in Basra. At the time, to control crowds and prevent looting, British troops would sometimes force civilians into the Shatt al-Arab river that runs through the city, a practice known as “wetting”. The allegation was that Campbell and two other soldiers had forced Shabram into the water, which they denied. Campbell and two of his soldiers had been investigated and cleared on four separate occasions by the military authorities. Ihat’s involvement marked the fifth investigation, although it was the first by civilians.

 

Front cover of the News of the World from Sunday 12 February 2006. Photograph: PA

After Campbell had spoken to his ex-girlfriend, he immediately called his commanding officer. “They said ‘There’s nothing we can do, don’t worry about it’,” Campbell told me. He suffers from PTSD, and his mental health deteriorated as allegations that he had thought were settled suddenly resurfaced. In the months that followed, he received no clear information on how the investigation was progressing – a charge echoed by other soldiers investigated by Ihat, many of whom spent months or years under a cloud of uncertainty. Nor was Campbell offered support by the army or the MoD – there was no clear advice about what to do, and no financial support was provided to cover the cost of hiring a lawyer. He and the other soldiers accused felt ostracised. “We were guilty until proven innocent,” he said.

One of Ihat’s principles, set out by the MoD when it was launched, was that witnesses would always be given advance warning before being approached in person, and that suspects would be informed first by their chain of command. But the MoD later admitted that over 300 potential witnesses, as well as seven suspects, were contacted without prior warning. It would later emerge that some Ihat investigators had used troubling techniques such as telling soldiers not to mention the allegations to anyone, or asking them to meet in car parks. One Ihat investigator was later convicted of impersonating a police officer after using an old warrant card to demand entry to army barracks.

Campbell’s anxiety turned to anger when he found out that the army had disclosed his service records to Ihat without his consent and without informing him. “The army sold us out,” he said. “Forget the MoD. The army handed over my service records and kept me in the dark about what was going on with the investigations. So who is looking out for us?” While unaware of the murder investigation against him, Campbell was deployed to Afghanistan in 2011, where he was severely injured. He is now permanently disabled, with damaged hearing, and walks with a cane. “I would have made different decisions had I known I was under investigation for murder. I might not have continued fighting and fucking dying for these wankers,” he said. “I’m finished now. I’m broken.”

For years, the day-to-day problems with Ihat attracted little media attention. But as the verdict in another inquiry into alleged crimes in Iraq became a national scandal, the controversy engulfed Ihat. On 17 December 2014, the judgment in what was known as the al-Sweady inquiry came out. A group of Iraqi complainants, represented by Public Interest Lawyers and Leigh Day, had alleged that British forces had committed serious battlefield crimes during hand-to-hand combat in a 2004 clash called the Battle of Danny Boy, culminating with the murder and mutilation of nine detainees. The judge found that nine detainees had indeed been mistreated – but that the most serious allegations, of torture and murder, were “wholly without foundation and entirely the product of deliberate lies, reckless speculation and ingrained hostility”.

The al-Sweady inquiry was not part of Ihat, but both Leigh Day and Public Interest Lawyers had worked on the case and both received furious criticism. On the same day the inquiry released its report, Michael Fallon, then defence secretary, gave a statement to the Commons, calling for measures to stop “unscrupulous” lawyers receiving public money for lengthy inquiries. (The inquiry cost around £31m.) Fallon said that the al-Sweady claims were a “shameful attempt to use our legal system to attack and falsely impugn our armed forces”. This was a remarkable attack. Ihat, a state-funded criminal investigation, was ongoing, and the defence minister was criticising the lawyers involved. At Fallon’s request, the two firms were referred to the Solicitors Regulation Authority, a professional body, for misconduct.

Although the al-Sweady case was separate to Ihat, in retrospect it is clear that the judgment marked the beginning of the end for Ihat – and helped transform the public conversation about British military conduct in Iraq. The day after Fallon’s speech, the tabloids went to town (“Shame of the lawyers”, said the Daily Mail’s headline). Staff at Public Interest Lawyers received death threats by email and over the phone. The more serious threats were reported to police. The firm installed a security gate and CCTV. “We felt as if we were under siege,” Bethany Shiner said.

By 2015, Ihat had outlasted yet another government. Among the new MPs elected in May was Johnny Mercer, a former army officer who had served in Afghanistan. Mercer is a young, dynamic man who feels strongly about the poor treatment of veterans. “We treat them like shit,” he told me when we met late last year.

One of Mercer’s highest priorities upon entering parliament as the new MP for Plymouth Moor View was to fight back against Ihat. “It just struck me as a profoundly wrong process,” Mercer said. “I don’t know a single person who served who doesn’t think that those who committed offences should be held to account. But what this struck me as was the denigration of almost the entire British army on baseless evidence.” (Mercer endorses existing measures, such as internal army investigations and courts martial, as a means to hold soldiers to account.)

 

An image of Iraqi detainees guarded by a British soldier shown at the al-Sweady inquiry. Photograph: PA

When it comes to the scale of British wrongdoing in Iraq, many human rights advocates point to the £21.8m paid out by the MoD to Iraqi claimants in over 300 cases, citing it as a tacit admission of guilt. Mercer disagrees. “To settle without even speaking to the soldiers, you’re assuming their guilt before any sort of due process or investigation has taken place,” he said. “I certainly got the impression in Whitehall that somehow soldiers are ‘bad’. They were looking at two accounts, and always siding with the Iraqi civilian or with Shiner. I just don’t believe that that many of our servicemen and women were liars.”

Mercer began asking questions within parliament about the slow progress of Ihat and the behaviour of investigators. He was shocked to find that “ministers didn’t really know what was going on”, denying that Ihat investigators had knocked on doors of soldiers without writing to them in advance. Mercer felt colleagues didn’t appreciate his probing on this issue, particularly given his low place in the “pecking order” of parliamentary politics. But at least in public, his Conservative colleagues seemed to side with him. Penny Mordaunt, then armed forces minister, accused lawyers of “churning out spurious claims against our armed forces”.

Ever since the al-Sweady judgment there had been an intermittent drip of negative coverage about Ihat, which increased as politicians such as Mordaunt, Fallon, Cameron and May criticised the process. In early 2016, the backlash began in earnest, after an article in the Independent stated that prosecutions of soldiers were on the horizon. Disturbing testimonies from soldiers and veterans hit the press, as they described how old allegations had been revived by Ihat, sometimes triggering relapses of PTSD.

Amid these individual tales of human suffering, a clear narrative coalesced: crooked human rights lawyers were persecuting “our brave boys”. Some newspapers even appeared to suggest that civilians had no right at all to question what the military does in the fog of war. “What other country would pay lawyers to persecute its own war heroes?” asked one Daily Mail headline. “Craven politicians and shyster lawyers are not fit to clean our soldiers’ boots,” proclaimed the Sunday Express.

In the run-up to the September 2016 Conservative party conference, Fallon vowed to end Ihat, along with other historic allegations inquiries into Northern Ireland and Afghanistan. The perceived failure of the investigation into abuses in Iraq had become a way to discredit the entire idea of looking seriously at historic abuses committed by British troops. In her keynote speech to conference, the new prime minister Theresa May pledged: “We will never again – in any future conflict – let those activist, leftwing human rights lawyers harangue and harass the bravest of the brave.”

In February 2017, after Mercer’s parliamentary inquiry had interviewed Ihat’s top leaders, he published a report. It described Ihat as an “unmitigated failure” that had “negatively affected the way this country conducts military operations and defends itself”. The day the report came out, Fallon announced Ihat’s closure: a direct response to its findings. Mercer describes it as the best day of his career.

Meanwhile, the Solicitors Regulatory Authority was pressing ahead with its investigation of Public Interest Lawyers and Leigh Day over professional misconduct in the al-Sweady inquiry. Legally, a lawyer isn’t culpable if their client has lied – so although the central claims in the al-Sweady case were untrue, that was not the basis of the misconduct allegations. Instead, they mainly related to a complex web of financial arrangements between the two law firms and a network of Iraqi caseworkers. Leigh Day defended itself at a cost of £7.8m. In September 2017, its lawyers were exonerated of all charges of misconduct. (This verdict is being appealed.)

Public Interest Lawyers could not draw upon the same kind of funds to defend itself, and shut down while the tribunal was going on. Ultimately, the Solicitors Regulatory Authority upheld 22 charges of misconduct against Phil Shiner, who did not attend the tribunal or appoint representation. Most of the charges related to improper fee-sharing arrangements but the authority also found that Shiner had “failed to take proper steps to ensure that the relevant al-Sweady clients complied with their duty of candour to the Court.” It announced he was to be struck off and charged the full costs of the prosecution, with an interim payment of £250,000 due. He declared bankruptcy soon after. (Gavin Williamson, Fallon’s replacement as defence secretary, said prison was “too good” for Shiner.)

Yet despite Shiner’s misconduct in the al-Sweady inquiry, this does not mean that every claim submitted to Ihat was erroneous. In many cases, hard evidence exists – videos of interrogations, medical records, or other documents. “What the government has done is taken the findings against Phil and applied it to all the claimants,” said Bethany. In Iraq, when claimants were informed their cases had been closed, they had no opportunity to challenge it. “They’re frustrated and feel completely out on a limb,” said Bethany. “The one rope that was out there to try and deliver something for them has been cut.”

As politicians rode the wave of outrage over Ihat’s treatment of soldiers, bigger questions about culpability were brushed aside. The aspects of the parliamentary report that criticised Ihat and Shiner were widely reported. Less well remarked was a paragraph towards the end: “It is not disputed that there were incidents of abuse by British armed forces service personnel. However, it appears that this may have been at least partly because the training given to military interrogators was inaccurate and may have placed them, unwittingly, at risk of breaking Geneva conventions in their work”.

When Ihat was closed, all but 20 of the 3,400 investigations into cases of alleged abuse were suddenly shelved, with little explanation. “I don’t think the British army has been held accountable for its actions in Basra,” says Khalaf, the Iraqi journalist. “It’s all been vague and incomprehensible. The Iraqi courts have no authority over the British, while reaching British courts presents obstacles like language, visas and people’s ignorance. Ihat followed up some cases but failed to achieve justice.”

The remaining cases were passed to a new body, the Service Police Legacy Investigations. “I feel like I’ve wasted four years of my life,” said Jonathan, the Ihat employee. Paul, the investigator, felt the same. “When I started, I feared the worst and hoped for the best,” he said. “My wife said: ‘They won’t let you succeed.’ And she was right. I think, without a doubt, the MoD are happy.”

 

Lawyer Phil Shiner. Photograph: Reuters

Ministers in successive governments had hoped Ihat would finally put to bed the idea that British troops committed widespread abuses against civilians in Iraq. When it closed, it had certainly ended the discussion – but not with a definitive answer on the scale of abuses. Rather, the tone of public discourse had become so partisan that any who questioned the actions of British troops were cast as unpatriotic traitors, while the armed forces were valorised by the very same institution that had, in the words of Johnny Mercer, been tempted to throw them “under a bus”. Everyone involved – whether as an advocate for service personnel or for Iraqi civilians – agrees that the MoD takes great care to protect its own interests, sometimes to the detriment of those serving on the ground. “We’re just political fodder,” Maj Campbell told me. “I think Ihat was possibly set up to cover up the MoD’s lack of training and infrastructure – to cover up their mistakes,” said his lawyer Hilary Meredith. (An MoD spokesperson said: “Ihat investigations were subject to the highest level of scrutiny, including regular and detailed progress hearings in the high court and an independent review. Sir David Calvert-Smith, former director of public prosecutions, found no major flaws with the investigating process.”)

In January 2014, long before his public downfall, Shiner referred Britain to the international criminal court, submitting a dossier of evidence of alleged atrocities in Iraq. This suggests that he, too, was doubtful about the Ihat process. The court only investigates when the state in question is unable or unwilling to examine war crimes domestically. When Shiner filed the motion, he said that it was about “individual culpability” for top leadership. In 2014, the court opened a preliminary investigation, and published initial findings in 2017. All the evidence presented to the ICC had been gathered by Shiner and Public Interest Lawyers, and much of this initial inquiry involved assessing whether the evidence was reliable despite Shiner being discredited. The ICC judged that it was, stating there was evidence of sufficiently widespread wrongdoing – mostly relating to treatment in detention – to merit investigation. The report noted fears of “political interference” in the closure of Ihat.

The ICC looks at the decision-makers: the generals and senior politicians and officials, not at low-ranking soldiers. When Campbell complained about the Ihat investigation to his commanding officers, he was told the process was vital to avoid scrutiny by the ICC. “Why would I care about that?” Campbell asked me. “If Britain goes to the ICC, it’ll be Tony Blair in the dock, not Tommy Atkins from wherever.” He says he would welcome an ICC investigation. He was recently told that he had been referred to Iraq Fatality Investigations, a body with no powers of criminal prosecution, for yet another investigation of his case.

The ICC is now progressing to the next stage, when the court will consider the state’s ability to investigate war crimes fairly itself. Experts suggest that the furore over Ihat might harm Britain’s case. “Clearly, it’s going to be an issue for the ICC,” says Thomas Hansen, a lecturer in law at Ulster University who is researching British accountability for Iraq.

On a cold day in December, I met Bethany Shiner at Middlesex University, where she now lectures in law. That morning, the high court had returned a judgment on two civil cases involving four Iraqis alleging mistreatment in British detention. The judge found them to be “credible” and ruled that soldiers had breached the Geneva conventions. The Iraqis were awarded tens of thousands of pounds in damages. “These trials took place against an onslaught of political, military and media slurs of Iraqis bringing spurious claims, and strident criticism of us, as lawyers, representing them. Yet we have just witnessed the rule of law in action,” said Sapna Malik, a partner at Leigh Day who represented two of the claimants.

Bethany, tentatively, shared this sense of vindication: “They were testing the facts – evidence of inhumane and degrading treatment. The court found that it was true and it amounted to a human rights violation. They found the witnesses credible. That’s really important.” Taken alongside the ICC’s preliminary assessment, this judgment demonstrated that not all the evidence submitted by Shiner and Public Interest Lawyers comprised of bogus claims from fakers, as had been suggested.

Meanwhile, in Basra, hopes for a genuine reckoning are receding. The city is the largest in southern Iraq, rich in natural resources such as oil, but today it is still run by mafias, a legacy of British occupation when armed militias and religious groups flourished. “People in Basra are always angry at the British army, for the simple reason that it did not fulfil its promises of bringing us stability, prosperity, construction, and turning Basra into a wonderful city,” says Khalaf. “The British have tried to buy people by providing some compensation to those whose property was destroyed. But none of us ever really believed Britain would try its army and soldiers.”

Oligarchs hide billions in shell companies. Here's how we stop them

The Panama Papers have helped tax authorities recover over $500m around the world. Property registries could ensure that even more is recovered

Frederik Obermaier and Bastian Obermayer in The Guardian 

 

According to Navi Pillay, the former UN high commissioner for human rights, ‘The money stolen through corruption every year is enough to feed the world’s hungry 80 times over.’ Photograph: Arnulfo Franco/AP


Two years ago we published the Panama Papers after an anonymous source provided 2.6 terabytes of internal data from the dubious Panamanian law firm of Mossack Fonseca. We shared the data with 400 journalists worldwide and together revealed how the wealthy and powerful use shell companies to hide their assets. Such companies are exploited by dictators, drug cartels, mafia clans, fraudsters, weapons dealers and regimes like North Korea and Iran to hide their shady business transactions.


As a consequence, Sigmundur Davíð Gunnlaugsson, the prime minister of Iceland, resigned. Pakistani prime minister Nawaz Sharif did the same, and in the United Kingdom even David Cameron’s father was implicated. So far, the Panama Papers have helped tax authorities around the world to recover more than $500m in unpaid taxes and penalties. It could be far more if lawmakers finally take action.

After publishing the Panama Papers, we have heard a lot of promises from politicians around the world. They have talked about the need for transparency, and while the discussion is warm, the details are complicated: a multilateral exchange of information and stronger anti-money laundering regulations are as difficult to implement and control as they sound.

But why bother? There is a far less bureaucratic and more powerful measure: public beneficial ownership registries. Databases in which citizens can easily access and explore the owners of companies. Not the nominee director, not the fake shareholder – the real owner. The person at the center of the matryoshka-like corporate structures, or, as experts refer to them: the ultimate beneficial owner of a company.

A database of actual owners would enable companies to check with whom they are actually doing business with. It would enable activists, journalists and skeptical citizens to investigate the individuals running dubious companies which earn millions in alleged “consulting contracts”, which are in many cases nothing more than concealed payments of corruption money. It would also give prosecutors the opportunity to follow dark money without having to rely on nerve-racking, time-consuming legal maneuvers with foreign governments.

Searchable by company and by individual names, it would enable investigators to see if Dictator X or Autocrat Y owns companies in Country Z. Combined with a public property register, it would narrow, if not close, loopholes which allow oligarchs and their relatives to betray their own citizens and stash plundered money across the globe.

Creating beneficial ownership registries will not be easy. Recently, the UK House of Lords rejected an attempt to force overseas territories under British control to create said registries. And in the United States, where some states make it more difficult to vote than to start a company, there has yet to be any reasonable public discussion about creating these transparent registries, making America a willing accomplice in global corruption. The treasury department in 2015 estimated that approximately $300bn in illicit proceeds are generated in the US per year!

Critics of public beneficial ownership registries often say that exposing company owners could put them in danger of blackmail or even kidnapping. However, no data supports such claims and there will likely never be any. As it is, the financial elite often surround themselves with the symbols and spoils of wealth, such as big cars, yachts and villas. There is no desire to hide their treasure; in fact, they often flaunt it.

Corruption is a scourge. It hits the poor first and hits them hard. Whole continents are plundered, the proceeds of human trafficking are laundered, wars are financed and violent religious extremism is supported.

The word “corruption” comes from the Latin “corrumpere”, which can mean “to destroy”. Corruption destroys democracy. Corruption costs citizens extraordinary amounts of money. According to estimates, corruption consumes more than 5% of the global gross domestic product.

Developing regions lose more than 10 times the money they receive in foreign aid to illicit financial schemes. Without corruption and the shell companies that make it possible, there might be no need for aid to Africa or Asia. Most importantly, corruption kills. According to Navi Pillay, the former United Nations high commissioner for human rights, “The money stolen through corruption every year is enough to feed the world’s hungry 80 times over”.

As Louis Brandeis, the late associate justice of the supreme court of the United States, once pointed out sunlight is the best disinfectant. Hence let the sunshine in! Lawmakers must make public beneficial ownership registries a priority to ensure that institutions remain transparent and democratic.

There is no legitimate reason to allow individuals to own anonymous companies or to help new “entrepreneurs” to create them. Lava Jato in Brazil, the Fifa scandal and nearly every other major corruption case have involved opaque company structures created to bribe, receive bribes or to hide dirty money.

Financial crimes rely on exploiting anonymous companies and trusts, and secrecy jurisdictions like the British Virgin Islands, the Cayman Islands and the states of Delaware and Nevada are partners in those crimes. They must be held accountable.

Waiting for a global solution means waiting a long time, if not forever. The only way to draw the corporate curtain back and expose corruption is for lawmakers to work in the public interest and create public beneficial ownership registries and public property registries now. The more countries that adopt these measures, the less places dictators, human traffickers, weapons dealers and oligarchs can hide.

Lawmakers that claim to stand against corruption should do so by fighting for these kinds of registries now, or forever hold their peace.