Cry for Argentina
Any professional Opinion Letter writer knows that the invention of the footnote was a godsend. Enabling the eternally cautious tax lawyer or accountant to throw caution to the wind in the main body of his document, the footnote can be stuffed with endless bits of what the paying client calls ‘fudge’ and the expert refers to as ‘caveat’.
Hilaire Belloc, the writer of those early twentieth century ‘Cautionary Tales’, penned the most famous footnote in literature:
He had a lot of stocks and shares
And half a street in Buenos Aires*
*But this pronunciation varies
Some people call it Bu-enos Airés
Read today, it appears ironically prescient that a Cautionary Tale resorted to Argentina as the seat of a person’s wealth. A hundred years ago, in 1914, Argentina was among the world’s 10 leading economies, a showcase of what South America could achieve. Today, in 2014, Argentina is a basket-case – a national cautionary tale, if ever there was one.
After a hundred years of intermittent catastrophic military rule, as well as not much less catastrophic civilian administration, Argentina’s last century is best remembered for Evita!, The World Cup, and the Falklands Fiasco. Not much of a record. At times it has looked like it might disappear down the plughole of history.
Current Argentine President, Cristina Kirchner, is agonizingly playing out the last year of her disastrous administration. Inflation is thought to be running at over 40% (Government Statistics are known to be in the ‘damned lies’ category), the country defaulted (again) on its sovereign debt this summer, and the peso has been in free-fall. Meanwhile, the Vice President has been indicted on fraud and corruption charges, but – and why not, indeed? – hangs on to office.
What is interesting is that, despite all this nonsense, the Argentine Revenue Service is going strong and to hell with the economic consequences, as if it were 1914 all over again and Argentina were on the way to overtaking the US.
Among the less exciting developments, thanks to Exchange of Information with the French, the authorities have uncovered a thousand unreported foreign bank accounts. Although nobody is making the connection, it may be no coincidence that a number of HSBC employees have been arrested for allegedly enabling tax fraud. Tax Amnesties are now being offered to those who come out with their hands up, waving a cheque book.
At the same time, the Revenue Service has gone to town on Transfer Pricing. They have shot broadsides at such companies as Procter & Gamble and GE. In the case of P&G they even suspended their operations for a while recently, which could not have been conducive to the sweaty population’s personal hygiene.
Of course, the Argentines have a history of picking their wars. They thought Mrs Thatcher wouldn’t hit back when they invaded the Falklands in 1982, but were comprehensively taken to the cleaners. It will be interesting to see how this widening conflict with multinationals pans out. I reckon it will all end in tears.
And meanwhile, the Vice President, facing fraud and corruption charges, carries on in office….