Tesco - Guardian libel case moves forward

from today's Guardian - and of relevance to the Thai cases as well:

Tesco tax avoidance schemes can form part of libel case, judge rules

Company told to decide on offer of Guardian apology
· Refused leave to appeal and told to pay costs

• David Leigh
• The Guardian,
• Wednesday July 30 2008
• Article history

Details of elaborate offshore corporation tax avoidance schemes operated by Tesco were yesterday allowed to be introduced into evidence in a libel case the supermarket chain is bringing against the Guardian.

In a preliminary high court hearing, Mr Justice Eady ruled that the paper could file evidence of Tesco's tax avoidance by means of specially created partnerships and holding companies in Switzerland and Luxembourg. One such Tesco scheme was outlawed by the government in this year's budget legislation. The two schemes are alleged to have avoided up to £30m a year in UK tax on Tesco profits.

Tesco has so far refused to accept an apology from the Guardian for errors in an earlier article about the retailers' tax tactics, and has accused the paper and its editor of telling deliberate lies. The paper wrongly said that Tesco was avoiding up to £1bn in a corporation tax avoidance scheme involving windfall profits on sale and leaseback of its UK stores.

Eady also ruled that Tesco must decide by September 15 whether to accept the Guardian's offer of an apology and damages. He ordered a stay on a parallel claim by Tesco against the Guardian and its editor claiming "malicious falsehood". The judge refused Tesco permission to appeal and awarded costs against the company.

Lawyers for Tesco yesterday unsuccessfully argued that the fresh allegations about Tesco tax avoidance were irrelevant. Adrienne Page QC said Tesco did engage in what she called "low level tax planning, tax avoidance" but what the company objected to, she said, was the Guardian's false claim of "massive" avoidance and "plundering the Treasury".

She said the corporation tax avoidance claims and other avoidance by Tesco of up to £63m tax on its land deals, were "a drop in the ocean" compared to the millions spent by Tesco on charitable donations and its computers for schools vouchers. Tesco paid hundreds of millions in corporation tax, and was a major taxpayer compared with some other UK firms.

Tax avoidance was a "grey area", she claimed, and it was now usual to divide companies' avoidance tactics into "aggressive" and "non-aggressive" tax planning behaviour. Tesco "does not engage in highly aggressive tax avoidance".

Eady said he would allow the evidence of the Swiss and Luxembourg schemes, first disclosed in Private Eye, to be introduced into the case for the time being. Andrew Caldecott QC, for the Guardian, had argued it would not be fair to take any decision "in blinkers" on the amount of any damages to be received by Tesco, and claimed that evidence of other corporation tax avoidance schemes Tesco was operating at the time, covered the same ground as the original libel.

The judge also ordered the Tesco board to make a final decision within the next six weeks on whether they intended to push ahead with allegations of dishonesty against the paper and its editor, or whether they were prepared to accept the Guardian's "offer of amends".

Tesco claimed that the wording of the law allowed them neither to accept or reject the offer, and that they could go ahead with a full-scale libel trial regardless. The judge said the 1996 "Offer of Amends" special regime had been introduced by parliament to assist journalists who had made a mistake and were "over a barrel". "It enables them to climb off the barrel". This was a classic case for using the procedure, designed by parliament to achieve a speedy and inexpensive outcome. It was not legitimate, he said, for Tesco to hold up a decision indefinitely whether to accept the offer or not. "It is a tough choice for claimants sometimes, but so it was meant to be."

He ordered Tesco to decide by September 15 whether to accept the Guardian's offer of an apology and suitable damages, or whether to attempt to prove in court that the paper had been deliberately dishonest. Eady also ordered a stay on a parallel claim by Tesco against the Guardian and its editor for "malicious falsehood".

He said the lawyers in the case might wish to press on with the claim "no doubt at great expense", but it would be for no better reason than to establish malice for its own sake. The claim only appeared to serve tactical purposes, and it was inconsistent to keep open the possibility of accepting an offer of amends while going ahead with such a claim. "It is no part of the court's purpose to punish or humiliate the other party, or provide an opportunity for public relations purposes." He added that nowadays "litigation is no longer regarded as a game for lawyers". It was instead, he said, to be "aimed at achieving justice between the parties".

Tesco were refused permission to appeal the rulings and costs were awarded against them. It is open to the supermarket to apply direct to the court of appeal later this year.

Tesco case update: Guardian files defence

The Guardian have filed their defence against the Tesco libel claim. In line with their piece from a little while ago, they have bowed to the libel claim but are resisting the charge of malicious falsehood.

They also maintain that Tesco does evade its tax obligations and that its ethical stance is "a sham". The defence papers as filed calculate that Tesco have avoided Stamp Duty Land Tax to the tune of £85-95m, which though not as large as the original claim of hundreds of millions evaded in corporation tax is still a tidy sum of money. The defence says: "SDLT avoidance was the principal objective of the structure of the schemes analysed in the articles. Tesco has carefully built up a reputation for not being party to tax avoidance and therefore for being socially responsible. That reputation is not deserved and the public have been misled."

Meanwhile, Kamol Kamoltrakul has been in touch saying that Tesco Lotus have still not been in touch with him. His defence was filed May 2.

Tesco libel suits - more updates

The Thai National Human Rights Commission and the National Foundation of Consumers today held a joint seminar on Tesco's negative impact on communities and the media's freedom to report and criticise. Not sure if they also issued a statement but it keeps the story running so good stuff. Reported in today's Nation newspaper.

Meanwhile, in the UK, the Guardian has reportedly expressed its bewilderment with Tesco's decision to pursue its case against the newspaper despite last week's apology (which wasn't quite that, though, as I reported a few days ago).

Frankly I share their bewilderment and I also wonder why Tesco are persisting with the Thai cases. Not only do they not have a very strong legal case, you would have thought Tesco had learned from past mistakes of others. The McLibel case springs to mind: back in 1990, McDonalds sued two campaigners for libel after they had made allegations about the environmental impact of McDonalds food as well as about health risks. While McDonalds eventually won the suit in the UK, it cost them dearly in terms of PR - the allegations were hotly debated in court and received broad media exposure - and the decision was declared a violation of the campaigners' right to freedom of expression by the European Court of Human Rights. Are Tesco's PR people not aware of this? Nevermind its legal and CSR teams?

Tesco libel suits update

An update on Tesco's recent libel storm. Two sets of cases are ongoing: one set being populated by three Thai writers, and the other by the UK Guardian newspaper. The Guardian is being sued for allegations about tax evasion; the Thais for criticising Tesco's expansion tactics in Thailand. The suits have been ongoing for a few months now.

The Guardian have exploded their suit, claiming that there were wrong to allege evasion of corporation tax in their original story (only available through google's cache, and probably not for much longer) - sorry, they say, it was Stamp Duty Land Tax they were evading. Over to Tesco. I say the gist of their story stands and is even stronger now: that Tesco have set up "a complex web of companies, trusts and partnerships" to evade taxes. Nice background piece on the investigation here.

Meanwhile, in Thailand... A raft of UK writers have written to Tesco to protest about the suits, in the Guardian (twice) and the Times; both the Times and the Guardian have also picked up on the story that Tesco never actually approached any of the three for an apology or response before suing. A real groundswell is now building in UK broadsheets and mainstream media and some Thai media against Tesco: good pieces by the BBC, Channel 4 TV, the Independent, Bangkok Post, in addition to a raft of stories in the Guardian.

The Guardian has done a useful backgrounder.

First court date for Kamoltrakul: May 6.