Like everybody else I read about the demise of the
City Link parcel delivery firm on News Years Eve and felt concerned for the
many workers to be made redundant at this time of the year. I guess I felt sort
of resigned thinking that the venture capital firm behind City Link would take
a big hit as well as the workforce, and concluded that this is the downside of
venture capitalism. As in most things it appears that all was not what it
seemed.
Firstly most of the money invested in City Link was
in the form of secured loans, thus as the assets are realised by the Receiver the
venture capital firm is first in line for payment. The redundancy on the other
hand is paid by the government out of our taxation. Those smaller venture
capitalists that were encouraged to buy into the City Link dream by purchasing
and painting vans have no protection I assume as unsecured creditors. These are
the true risk takers as they will potentially lose everything.
Now I can just about understand this until I then
read that the chairman of this company lives in Guernsey thus avoiding UK tax,
and that he or his company donated substantial amounts to the Conservative
Party. The hypocrisy is breath taking, everybody is keen to enjoy the benefits
of a low tax economy as long as somebody else is there to pick up the pieces and
provide the safety net. They also through money donated have a disproportionate
influence on government policy.
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