MPs question Inland Revenue over C&W tax deal
Flogs some Euro biz
Cable & Wireless today announcing that it's got "its" £1.5 billion, set aside to cover a secret potential tax liabilities, back from escrow.
At the same time, members of the House of Commons Treasury Select Committee are asking the Government some searching questions over the tax deal brokered with C&W, which saw the firm escape from its escrow fiasco in return for a full settlement of £380 million.
C&W fessed up to the secret prospective tax liability
in December when its credit rating was cut to junk status by Moody's. This triggered a provision to set aside £1.5 billion in escrow to cover liabilities inserted into the £3.5 billion sale of C&W's half-share in One2One (now the UK arm of T-Mobil) to Deutsche Telekom in 1999. C&W put the money into escrow in January, so it is a tribute to its negotiating skills that it escaped so quickly, and so lightly.
Norman Lamb, Lib Dem Treasury spokesman described the £380 million payment as "an unreasonably low sum" and has written to Gordon Brown, the Chancellor, and Sir Nicholas Montagu, head of the Inland Revenue, seeking an explanation, the Daily Telegraph reports.
"I would like to know whether this is a done deal or whether we can re-open the case," Lamb told the paper.
"We need reassurance about this settlement in the light of the £1.5 billion originally ring-fenced by the company to cover it.
"Such a wide discrepancy raises a lot of doubt about the ability of the Revenue to clamp down on tax avoidance at a time when the public finances are being stretched by the war in Iraq."
And if that wasn't enough excitement for one day, C&W is also flogging its domestic ops in Northern Europe (in Belgium, the Netherlands, Sweden and Russia) to an MBO team and its Swiss domestic ops to Smart Telecom. C&W will continue to provide network infrastructure services to IP-eYe, the vehicle for the MBO team. Prices are undisclosed. ®