The National Union of Rail, Maritime, and Transport Workers (RMT) has hit out over the sale of Arriva transport company. It’s owners are selling it to a corporate entity registered in the Cayman Islands. Of course, that location is a hive for tax avoidance.
Arriva: funneling profits to Germany
Arriva runs CrossCountry, Chiltern, Grand Central, and London Overground rail services in the UK. It also runs buses. However, it is actually owned by Deutsche Bahn – Germany’s state-run train operator. Cleary, public railways are good enough for Germany – but not good enough for the UK, where Deutsche Bahn has made a tidy profit running Arriva.
For example, Deutsche Bank loaned Arriva’s parent company £827m for a year in 2021, with an interest rate of 1.1%. This means Deutsche Bank will make over £9.1m – just through moving money around its companies. Moreover, Arriva’s parent company also runs buses in the UK. As Unite the Union discovered, these operations paid Deutsche Bank £560m in dividends in 10 years.
So, if Arriva wasn’t a scam enough by Deutsche Bahn in the first place – it’s now about to become a bigger one.
€1.6bn to a tax avoider in the Cayman Islands
Deutsche Bahn has now sold Arriva to I Squared Capital. As the Guardian reported:
Arriva was put up for sale in 2019 by its German owner, Deutsche Bahn, which had originally sought to offload the company to reduce its own debts.
While the terms were not disclosed, Deutsche Bahn is understood to have sold Arriva for about €1.6bn, including debt…
The value of the deal suggests Deutsche Bahn – which has been described as being in a state of “permanent crisis” by Germany’s national audit office – made a loss on the sale, having paid €2.7bn for Arriva in 2010. The transaction is expected to be completed next year.
So, even while Arriva was sending Deutsche Bahn millions in dividends and loan interest – it was still in a mess. Meanwhile, UK workers struggled with the cost of living crisis but Arriva refused to give them fair pay rises.
However, what the Guardian failed to report was that I Squared Capital is registered in the Cayman Islands. The location is notorious for tax avoidance.
“Ill-gotten gains” from privatisation
The RMT has hit back. Its general secretary Mick Lynch said:
This sale of Arriva by German state railway to a tax haven-registered company underscores what a perverse and corrupt system rail privatisation is in this country. Our members have not had a pay rise in over three years despite huge profits and dividends generated for shareholders. And now we have the prospect of these ill-gotten gains ending up in a tax haven where there is even less scrutiny and even more wealth to be extracted from our railways.
The public through subsidies is helping to fund privatisation and potentially the closure of 1,000 ticket offices across the network, going against the best interests of the travelling public and railway workers.
It is vital to end the racket of privatisation and put the railways into public ownership as a matter of urgency.
As Lynch says, privatisation is a racket. When a German publicly-owned railway can run a privatised UK train operator, and then flog it to a tax-avoiding multinational – rail travel in Britain is a mess. It needs nationalising, and quickly.
Featured image via Chinabus – YouTube
By Steve Topple
This post was originally published on Canary.
