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Alan Rusbridger On Tesco And The GMG

by | 29th, December 2008

TIM Worstall spots Alan Rusbridger, editor of The Guardian, writing in the New York Review of Books about the Tesco libel case against The Guardian :

The story over which The Guardian came to grief involved a program launched by Tesco in 2006 to raise $8.5 billion through mainly joint venture sales and leaseback property deals over the following five years. The Stamp Duty Land Tax, assessed on all land transactions, represented a potential $340 million cost to the purchasers on that $8.5 billion (which, if saved, would enhance the price that the third party would be willing to pay).

Take one of these deals, involving a company named Aqua: in the absence of a face-to-face meeting, a reporter trying to write about it would have had to piece together, from publicly available documents, a trail beginning with the creation of the vehicle for this transaction, the Aqua Limited Partnership (LP), whose partners were initially two Cayman companies (the limited partners) and Aqua, a UK company (the general partner, the GP). One of the Cayman companies was resident in the UK, the other in Cayman. A month after Aqua LP was established, in September 2006, public documents reveal that a Mr. Philip Shirley (a tax scheme promoter) became a partner in it and further contributions of cash to the capital of the Aqua Limited Partnership were made: $515,100 by each of the Cayman companies and $289,000 by Philip Shirley.

The reporter would have to follow the document trail on to October 2006, when Tesco Aqua (Finco) Limited loaned $732.7 million to the Aqua LP repayable in 2017. This loan originated from Tesco PLC, i.e., the main UK-based Tesco corporation. He would then discover that in December 2006 one of the two Cayman limited partners was replaced by a Jersey Property Unit Trust. In March 2007, as part of the initial property deal, the loan from Tesco was repaid and a new loan of $882,750 million was raised from Goldman Sachs, secured by the twenty-one Tesco stores that were owned by Aqua LP. The 2007 accounts for Tesco Aqua (Finco) show that it earned interest from the Aqua LP of $16.62 million and paid interest to Tesco of $16.58 million, leaving a minimal profit on which it paid full corporation tax. The accounts of the general partner show a minimal profit from its 0.1 percent interest in the limited partner.

Confused? Unhappily for The

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Posted: 29th, December 2008 | In: News Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink