Friday 15 August 2014

Weekly Wrap Up: A Lesson in Crisis Managment

Starbucks is a Company that has suffered from its fair share of negative media coverage of late. However, this week it may well have dodged another bullet with a carefully and most likely pre-planned demonstration of crisis management…

An article in the New York Times this Wednesday reported on the strife and struggles of the Starbucks worker, Janette Navarro. Her difficulties were largely driven by the lack of consideration by her employer. The paper published an article on the Starbucks employee’s work schedule and its damaging effects on her personal and academic life. As a mother of a 4 year-old, Janette struggles to drop her son at school whilst also attending her associate degree classes. On several occasions, she was made to work until late at night and then had to start in the early hours the following day, followed by another long shift.

The public’s concerns raised in the article could have led to a public relations disaster for Starbucks. However, immediately after the article was published, the company responded to the situation. It announced that it will update its scheduling software and allow for more human input from managers to achieve more stable and consistent work schedules for shift workers.

Cliff Burrows, group president for the U.S., the Americas and the Teavana division also sent an e-mail to all staff on Thursday morning expressing his concerns over the situation. He says that “taking care of our partners is a responsibility I take very personally. I was troubled to read a New York Times story this morning regarding scheduling challenges one partner, Janette, faced as she strives to balance work while also pursuing a college degree and raising her son.” He has also promised to ensure that workers with commutes longer than an hour are transferred to stores closer to their homes.

The response provides a great example of how companies should respond to a potential corporate crisis. The response was immediate, humane, and thoughtful. In addition, by responding directly to the staff, as well as addressing the media, Burrows as a member of the senior management, demonstrated respect to his fellow colleagues. Very often, rather than taking a defensive position in reaction to a crisis situation, admitting mistakes can be one of the most effective tactics. A PR program is essential, but it can only drive results with the support of a sincere and supportive management team, coupled with real actions.



This week, Liberum hired Anna Hartropp to its banking team, who previously worked at Laird. Jonathan Brown, previously senior associate at DWF Fishburns, joined Clyde & Co as a commercial disputes partner, whilst Ernst & Young appointed Jay Nibbe as the global vice chair for tax. He has been with EY since 1985.



The Seven Dails Spotlight event takes place tomorrow in Covent Garden. There will be various outdoor activities, including an Airstream photo booth, Sol Cinema, the world’s smallest solar movie theatre and an Emergency Poet, the world’s first and only mobile poetic first aid service.

London largest free Jazz Festival is taking place in Canary Wharf, featuring jazz-funk, Latin, big band, soul, Instrumental, folk and jazz music. Rising stars such as Andy Sheppard Quartet, Ciyo Brown’s the Motown Sound and the Riot Jazz Brass Brand will be performing.

For fellow food lovers, the Foodie Festival takes place at Battersea Park this weekend, serving popular street food. Top London chefs will be cooking live in the Chefs Theatre, whilst experts will be giving tips in the Cake & Bake Theatre and BBQ Area.

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Friday 8 August 2014

Weekly Wrap Up: Boris Johnson - zip wire to Prime Minister?

This week Mayor of London Boris Johnson announced the explosive news that he will, “in all probability”, work towards becoming an MP at the next general election.

As with every statement that Boris puts out, the media coverage was both wide ranging and abundant. The Express was kind to the incumbent Mayor, quoting the Culture Secretary Sajid Javid “it’s fantastic news”, whilst The Guardian was more sceptical. It focused on how the announcement “drew accusations of hypocrisy” in regards to his previous statements that he would not hold two political offices at once.

Stepping past the issue as to whether or not he would make a good MP (again), the dramatic announcement through Bloomberg says more about his long-term political intentions than his short-term plans to become an MP. A Mayor of London running to be an MP is not a new thing. It is exactly what his predecessor Ken Livingstone did for a year, so the news should not have attracted as much attention as it did.

Some in the City have speculated that Boris will do anything for a headline, an idea that suggests this announcement was just another headline grabbing ploy ahead of a much bigger campaign. Few can forget the famous zip wire event of 2012 when he was famously left stuck and dangling and his name subsequently splashed across the media. Did the zip wire really stick by accident, or was it planned?

Fast forward two years... Does Boris truly plan on running for MP and then “sticking” with these two roles? Or is he simply building his reputation ahead of a bigger and more prime ministerial campaign?

Almost every piece published on the topic speculated that this move could simply be a small step for Boris ahead of challenging David Cameron for the role of Tory Party leader / Prime Minister. Cameron’s quote, interactively shared through social media, suggests that he was delighted with the news. He said that he has always wanted his “star players on the pitch”. Whilst this comment is clearly very supportive towards his old friend Boris, we must bear in mind the old adage: keep your friends close and your enemies closer.

If further building his reputation and positioning himself as a potential PM was Boris’s intention when announcing his MP-ship plans, he satisfied his objective.

Of the comments that resulted from the news, many contained expressions of delight at the idea of Boris becoming Prime Minister:

BBC: Corrigenda (6TH AUGUST 2014 - 16:10): Excellent news. This will liven up politics and will much increase interest and further eclipse Milliwatt-Balls.

nj (6TH AUGUST 2014 - 12:36) I would really love to see this MAN as our Prime Minister who speak TRUTH and stand by his words. Who walks with the current times.

Twitter fans also shared their views: Chris Beech ‏@chris1310beech (Aug 6): Yess Boris Johnson says he is going to run for priminister, come on Bojo!!!!

For now we have to wait and see what comes of both the 2015 election and the Uxbridge & South Ruislip seat. What we can do, however, is take stock of the media coverage that Boris achieved this week and keep an eye out for more headline grabbing moves on Boris’s political road to Westminster.



There was a flurry of activity in the Abchurch office this week with two particularly good Market Lunches taking place. Following the successful float of Savannah Petroleum last week, there was lots to talk about at the Natural Resources lunch. The take-home point from the Environmental lunch was that it is down to larger tech companies to bring environmental technologies to the forefront of consumers’ agendas and so solve the current energy crisis.



This week we congratulate Anne-Sophie Girault on her appointment as managing director of EMEA business development at RBC Global Asset Management, having moved from Aviva Investors. Meanwhile, RPC appointed David Gubbay, from Dechert, as a Partner in their corporate team, whilst Stephenson Harwood announced that Ben Stansfield will join as a real estate partner after having worked in the environment and planning group at Clifford Chance.



“Political stunt” - When a politician seeking to influence a politician or governmental policy takes an action they know will gain attention but is not likely to achieve its stated goal.


Prudential RideLondon FreeCycle will take place this Saturday. 10 miles of road in central London will be closed for the occasion, enabling cyclists to pass through the city safely without regular traffic. The route features Buckingham Palace, Tower of London, and many more sites along the way.

For fans of underground opera, Grimeborn Festival of New Opera will take place from 4 August to 7 September, featuring new composers, musicians, and artists. The festival is taking place at Arcola Theatre in Dalston Kingsland.

The 3 Crowns Wine Fair will take place near the Silicon Roundabout. Branded Portuguese, French, and Italian wine will be available at £5 per glass. There will be original folk music performance throughout the event.

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Friday 1 August 2014

Weekly Wrap Up: International Tax Regulation – A Law to be Inverted?

The Democrat Party’s recent proposal to restrict companies from moving abroad for tax inversion has continued to cause considerable concern amongst US companies this week. It has been proposed that companies should be banned from tax inversions in destinations where less than 50% of the company’s dealings change hands. Previously, inversions were banned where less than 20% of the company changed hands, which would place home companies in a  disadvantaged position when compared to their foreign competitors.

Whilst many could, and do, argue that this change of regulation will be a positive step towards supporting domestic business; the international business community would do well to take into consideration the important part that Foreign Direct Investment (FDI) has to play in the growth of many of our world’s economies, and in the US itself. In the light of this new regulation, we should ask: how could the US economy suffer if tax inversion is banned?

Legal infrastructure is extremely important to Foreign Direct Investment. Asian cities like Singapore and Hong Kong have had great success in attracting FDI among their Asian counterparts due to their their transparent tax and fair arbitration systems, the explanation of their almost legendary success stories.

US trade groups have traditionally had a strong influence over tax policies, thus resulting in a distorted corporate tax system. America has the highest corporate tax rate among the 34 richest members of the Organisation for Economic Co-operation and Development (OECD), yet it implements tax breaks for interested parties from machinery investment to the highly popular NASCAR race tracks. This not only disturbs the business ecosystem, but it also increases tax risks and legal costs. The current attempt to ban tax inversion might drive businesses further away from investing into the US.

Aggressive and non-transparent tax authorities are often a great deterrent for foreign investors. One recent example being India’s Tax Authority’s attempt to recollect £1.55 billion of “outstanding” tax from Vodafone for its takeover of Hong Kong-based Hutchison Whampoa’s Indian mobile unit in 2007. Whilst under the previous tax regime it was stated that Vodafone should be subjected to no tax liability as the £6.5 billion transaction took place between two overseas companies (the transactions were made through both companies’ subsidiaries in the Cayman Islands), the Authority argues that they had the jurisdiction to tax the companies in question because the transfer of stock involved an interest in the Indian company. Despite the Supreme Court’s judgement in favour of Vodafone, the Tax Authority has reattempted to over-rule the Supreme Court judgement and collect the tax. The action has posted strong threats to multinationals that have wanted to invest into India, thus further hindering an economy already suffering from stagnation of growth.

The recent spotlight being shone on the tax situation in the US creates a useful thinking opportunity about the UK tax position going forward. Arguably, the UK has a very strong legal infrastructure in place. Its access to international arbitration, adoption of Common law, and a relatively simple tax regime places it in a much more business friendly position when compared to other places in the World. It seems that US companies are increasingly choosing to turn away from their home country so as to focus on investing into regions with more transparent and simple tax regimes. The proposed US regulation has highlighted the tax issues that US businesses currently face, issues that must be addressed if that economy is going to retain its best companies, technologies and talent.

From a British perspective, however, this development of the US tax system could represent a great opportunity to the UK for Foreign Investments. By maintaining the transparency and simplicity of the UK tax system, London could position itself as an attractive location for foreign investment, and therefore look forward to a prosperous future a buoyant economy.



As always, Abchaps were busy meeting up with City advisers this week. At a lunch completely dedicated to the Social Stock Exchange, the future of impact investing was discussed and debated. A little later in the week Abchaps swapped credentials with Altitude Corporate Finance, discussing each other’s expertise in the green and life sciences spaces. In smaller groups, Abchaps continued to be busy catching up with one of the City’s most prestigious lawyers, Richard Jordan of K&L Gates, who recently returned from cycling to Paris on a Boris Bike, as well as nurturing our relationships with a number of key journalists.



Neil McPherson has been appointed as Managing Director of pensions trustee company Capital Cranfield. He will be joining from the Conference Board’s European Pensions Council where he is currently the Council Director.

Hill Hofstetter has appointed Simon Halberstam to be the head of the firm’s technology law practice in London. He was most recently head of IT law of Kingsley Napley.



Economic Refugee” - A person (or entity) who leaves their home country for a new country, in search of better prospects, opportunities and an improved working environment.



The Phoenix Fringe – Can’t make it up to Scotland for this summer’s Fringe Festival? Do not fear; the comics are also descending on London, with big names like Frankie Boyle, Al Murray and Ed Bryne all "doing their thing" on stage as well as some of the smaller names on the circuit.

Camden Beach – The sun is shining in London; those who can’t get away this summer but who may still be in need of some sand between their toes should head over to Camden, where a 900 sq metre beach has been constructed for Londoners who are confined to the concrete jungle this weekend. There will be great music to help sunbathers relax too!

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