Sunday, May 12, 2019

The fiction in Irish Times Top 1000 2019 leading companies

This week the Irish Times announced the publication of its ‘Irish Times Top 1000 2019, the definitive guide to Ireland’s leading companies’ with a headline ‘Apple is still on top but Google is surging ahead in business league table.’

Apple Ireland is credited with about €120bn in annual sales while Google’s Irish revenues in 2017 were at €32bn.

According to Fiona Reddan of the Irish Times, Apple’s revenues were based on the disclosure by the European Commission in 2016 that “Apple puts all its sales outside of the US through Ireland.” However, the EC had said that Apple's sales in Europe “as well as in the Middle East, Africa and India” were diverted to the Irish shell company Apple Sales International.  As for “surging” Google, it booked 32% of its 2017 global revenues in Ireland; Facebook booked 50% and Microsoft 22%.

The European Commission had said in 2016 that:

“Apple set up their sales operations in Europe in such a way that customers were contractually buying products from Apple Sales International in Ireland rather than from the shops that physically sold the products to customers. In this way Apple recorded all sales, and the profits stemming from these sales, directly in Ireland.”

Reddan writes that “Irish GDP stood at about €319bn in 2018; Top 1000 companies on the other hand, generated revenues of almost €700bn in total…US internet giant Google has rocketed up into second place, having slipped back to fourth last year. However, with revenue growth in Ireland of some 22% over the year, bringing sales for its Irish operation up to €32.2bn, it is now Ireland’s second largest company, according to this year’s survey.”

In addition to the journalist providing a veneer of respectability to massive tax cheating, all the rocketing at Google required only some accounting entries supported by invoices between subsidiaries, including letter-box companies in Bermuda.

The majority of the Top 20 firms are American firms that are Irish for tax purposes. Thermo King (12) is a US subsidiary of American-Irish firm Ingersoll-Rand (10) and the data for the former appears to be wrong.

CRH (3) has about 2,000 of its 90,000 payroll in Ireland. Smurfit Kappa (14) Ryanair (19) and Kerry Group (20) also have significant operations in Ireland. Most of the shares of CRH and DCC are held internationally.

Sandisk (21), a subsidiary of US electronics firm Western Digital, had 40 employees in Ireland in 2017; a €5.6bn turnover and a profit of only €171m;  Kingston Technology (22) had a €5.1bn turnover in 2017 up from a €2.7bn turnover in 2016. It added 55 employees to 297; Microchip Technology Ireland, a subsidiary of Microchip Technology Inc. added €1.1bn in revenues in 2018 to make a total of €2.8bn. Profits rose from €68m to €300m and the payroll rose from 17 to 21!

Intel Ireland’s (41) 2018 revenues are estimated at €2.6bn and its payroll was 4,500. There is no profit estimate; Dell Ireland had a €10.5bn turnover in Ireland in 2018, a very low profit of €18m and 919 employees

William Shakespeare, Henry V (1599):

“It must be so; for miracles are ceased; And therefore we must needs admit the means; How things are perfected”* 

Why this is important

In March 2018 the Economic and Social Research Institute (ESRI) said it had become “almost impossible” to gauge Irish economic activity or produce an estimate of sustainable growth with the current set of indicators. The economics think tank said headline growth and its components were being distorted by large transactions involving a select number of firms.

The Central Statistics Office (CSO) has produced a Modified Gros National Income, excluding some multinational distortions that resulted in a value of €181bn for Modified GNI down from a GDP value for 2017 of €294bn.  

However, there are still massive distortions to trade data and the CSO has published a report stating that Irish owned affiliates overseas employ 856,000 people!!: See more here on tax avoidance distortions

Journalists and commentators regularly use what are false data as fact.

The Irish Times reported in March 2018, "According to the US Bureau of Economic Analysis (BEA), the value of Ireland’s foreign direct investment (FDI) was calculated at over $85bn (€69bn) in 2017, ranking Ireland the ninth largest source of FDI."

An Irish Times article paid by the American Chamber of Commerce in November 2018 reported, "However, it is a two-way street and Ireland is now the ninth largest source of FDI to the US, with 800 companies employing more than 100,000 people, the value estimated at more than $85bn."

Another paid Irish Times article stated, “The 2016 statistics show that Ireland won 12.1% of all US FDI into Europe. That’s a great achievement for a country which accounts for just 1% of the European economy.” This was a quote from Anna Scally, KPMG partner and head of technology and media. Scally should have looked closer at the data.

In March 2018 the BEA did not have 2017 data as it has to be collected by a survey of firms.

In 2017, the US direct investment position in Ireland (outward) was $446.4bn, a rise of 14.1% from 2016. The direct investment position from Ireland in the United States (inward) was $147.8bn, an increase of 39.8% from 2016. However, this total of $147.8bn mainly reflects CRH and the faux-Irish American firms. There are more than 20 Irish firms on the Nasdaq Stock Exchange but understand what "Irish" means in an age of corporate tax manipulation.

According to the BEA there were 121,00 employed in American owned firms in Ireland in 2016 and 263,000 employed in Irish firms in the US — the 263,000 mostly include American firms that are Irish for tax purposes. CRH employs about 45,000 in the Americas. 

The total historical cost value of US investment in Ireland in 2017 was $446bn compared with $136bn in Germany and $108bn in China.

This is the basis of false bragging!

Compared with Irish employment of 121,000 in US majority-owned firms, Germany employs 701,000 in US firms and China employs 1.8m.

More than half the Irish stock of investment of $446bn is in holding companies.  As Irish affiliates are made very profitable via tax avoidance in both services (Google, Microsoft, Facebook etc.) and booking of overseas manufacturing in Ireland, reinvested earnings in Ireland accounted for 29% of the European total in 2017.

Some insiders pretend to believe bullshit because they profit from it; others are too lazy to check the facts and the rest are deluded.  

*"That must be it, because the age of miracles is passed, and we have to find reasonable explanations for why these things happen" William Shakespeare in modern text from Henry V (1599).