mast image

Impact Investing

IPE special report May 2018

Sections

APG, CPPIB hit back at UK trade union after 'tax dodge' accusation

Related images

  • Regent Street, London

Dutch pension fund manager APG has fiercely rejected accusations by the UK trade union Unite of involvement in “aggressive tax avoidance” along with Canada’s CPP Investment Board (CPPIB) in their ownership of a London shopping centre. 

Unite general secretary Len McCluskey said yesterday he had written to the chair of the CPPIB board of directors Robert Astley to express concern about the pension fund manager’s “apparent role in avoiding payment of UK corporate taxes”.

He cited a report by Australian trade union United Voice, which is linked to Unite, saying the Westfield Stratford City shopping centre in the east of London had an effective corporate tax rate of 0.5%. 

He said CPPIB and a Dutch pension fund – presumably meaning APG – had their 50% interest in the retail complex held in the offshore tax havens of Jersey and Guernsey. 

The other 50% is owned by Australian shopping centre group Westfield.

In a statement from the union, McCluskey said: “Tax dodging by those who can afford to pay and by those who benefit from public expenditures may be legal, but it is morally unacceptable.

“While tax minimisation by multinationals has unfortunately become the norm, we are deeply concerned to learn about the role of a major government pension fund being complicit in a significant tax-dodging scheme.”

CPPIB, which manages CAD240bn (€161bn) for the Canada Pension Plan, issued a statement in response to the accusations, saying it honoured its tax obligations around the world.  

“Consistent with its approach to good governance, CPPIB maintains a transparent relationship with government authorities, including the UK HMRC (HM Revenue & Customs), with which we routinely consult to confirm the appropriate taxation of our UK-based investments,” the pensions manager said.

A spokesman for APG, which manages €359bn of pensions assets, said: “In all the investments we do, we stick to international and national laws on taxes, and this Westfield shopping centre investment has been done in agreement with HMRC.”

APG naturally always tried to minimise its costs, he said, and taxes were one aspect of that.

He cited points in UK case law demonstrating that the principle that nobody should be frowned upon for trying to pay less tax was embedded in British law.

“If the union has a problem with this, they should first and foremost address this with the people who are able to change the laws,” he said.

The spokesman said Unite had been used by the Australian union that was currently engaged in a labour dispute with Westfield on behalf of members who were employed as cleaners for the company.

He also made the point that the UK tax regime was aimed at attracting foreign capital, and in the case of the Westfield Stratford City shopping centre, this had been successful, and the investment from CPPIB and APG together with Westfield had created thousands of jobs in an area where few British companies wanted to invest previously.

“It is a bit ironic we are now getting slammed by a trade union,” he said.

The spokesman also said the figure of 0.5% in the Australian union’s report arose from a first-year tax filing for the shopping centre, which is particularly low because it takes into account previous years’ tax-deductible losses.

“We have a fiduciary duty to our millions of pension scheme members to try to reduce our costs,” he said. “If we paid higher taxes than required, then we may be sued by them for breaching that duty.”

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2435

    Asset class: CLOs.
    Asset region: Global.
    Size: USD 50m.
    Closing date: 2018-05-22.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

Begin Your Search Here