The Apple brand and its CEO Tim Cook are surely hurting after they were magnificently tackled for the company’s spot in the Paradise Papers by Wolfgang Krach, the editor-in-chief of Germany’s leading daily the Süddeutsche Zeitung.
Apple is reported to feature prominently in the Paradise Papers, a trove of leaked files that exposes corporations and individuals who employ tax havens to dodge tax, thus robbing countries and the public of vast amounts of monies. Coming after the Panama Papers such exposes are catalysing a growing body of protest against bad behaviour by major corporations.
Krach penned a letter to Cook accusing him of hypocrisy. He reminds Cook about a claim that Apple does not depend on tax gimmicks for its profits.
My colleagues and I, writes Krach, have long followed the debates in the United States and Europe over the taxation of Apple. “You, yourself, have often taken a stance on the issue, like you did before the U.S. Senate in 2013. You said at the time that Apple did not ‘depend on tax gimmicks.’”
But then Apple features prominently in Paradise Papers alongside other names like Donald Trump’s billionaire Commerce Secretary Wilbur Ross, Queen Elizabeth II, Uber, Nike, Siemens, Deutsche Bank, Jundal Steel and Power, Gazprom, Barclays, Amazon, Facebook, Goldman Sachs, McDonalds, Walmart, Yahoo and Blackstone.
In developing countries the activity exposed in the 13.4 million documents, the Paradise Papers, the tax dodging becomes a matter of life and death. Millions die of disease and hunger in circumstances which could have been prevented had the diverted tax monies been available. It’s estimated that Africa suffers more than R1trillion in illicit financial flows.
Prominent South African names feature in the list of companies named in Paradise Papers. These include Illovo Sugar; Investec, Shanduka Group, Standard Bank and Glencore.
Krach charges that questions posed to Apple/Cook have “gone either unanswered or been met with, at best, tight-lipped platitudes.”
He reminds Cook of the benefit that Apple derives from the very tax revenues that his company is cheating.
“Apple employs thousands of excellent, highly qualified engineers, technicians, lawyers, managers and public relations specialists who attended colleges and universities around the world. Many of these institutions of higher education are entirely or partially funded with taxpayer money. Apple directly benefits from the infrastructure – educational or otherwise – that countries maintain.”
He adds “Mr. Cook, you recently told the New York Times that Apple had a ‘moral responsibility’ not only to help grow the U.S. economy, but also ‘to contribute to the other countries that we do business in.’
Of course we’re aware that Apple is one of the largest taxpayers in the U.S. But what about abroad?”
He further reminds Cook of the fact that Apple makes most of its profits outside its home country the US.
“Public filings reveal that between 2010 and 2017, on average, Apple generated two-thirds of its profits outside the U.S. Evidently, it earned $41.1 billion in 2016 and $44.7 billion in 2017. What these filings also show is that since 2010, Apple’s foreign-earned income has been taxed at a rate of between 1 and 7 percent. Mr. Cook, do you believe this comports with the ‘moral responsibility’ you have advocated?”
He adds that “Such ‘tax optimization’ – albeit legal – is only possible because specialized law firms such as Appleby devise complex company structures inaccessible to most other firms. Skilled workers, small business owners and employees in most countries outside the U.S., many of whom surely use Apple products, don’t have the means to shirk ordinary taxes.”
Süddeutsche Zeitung and Wolfgang Krach have set the bar when their case is arguably weaker than ours on the African continent. And so we kick off the campaign to name, shame and hold the culprits like Apple, Illovo Sugar; Investec, Shanduka Group, Standard Bank and Glencore accountable.
Watch this space!