Analysis: Scotland’s 11 billionaires – did they really get rich 'through their vision and tireless endeavours'?

Wealth of Gordon-Grant whisky family grown 5000 per cent since 1989, the fastest growth of anyone on the UK rich list since records began

THE Sunday Times Rich list 2018 has been published, revealing Scotland’s billionaires jumping from nine to 11 this year, with a combined fortune of £16.2bn. It was only 11 years ago when the first Scottish billionaire, Tom Hunter, was announced.

Robert Watts, compiler of the list, said: "Our list of Scotland's wealthiest people epitomises the seismic change we've seen over 30 editions of The Sunday Times Rich List.

"This is now largely a group of self-made individuals, with people like Sir Ian Wood and Philip Day growing billion-pound businesses through their vision and tireless endeavours.”

CommonSpace has analysed the 11 billionaires on the list and how they made their wealth, and found that “vision and tireless endeavour” is not exactly a complete portrayal of the factors involved in becoming the richest of the rich: control over Scottish natural resources, tax avoidance/evasion and questionable employment practises have all played their part. Most have also used their accumulated wealth and power to influence Scottish and UK politics, while many had the good fortune of inheritance to get to where they are.

Of the 11 billionaires:

  • 7 have been known to be involved in some form of tax avoidance, evasion or accountancy practices considered to be objectionable.
  • 6 were on record as having questionable practises in relation to their employees, including anti-trade union activity, poverty wages and unfair dismissals.
  • 4 built their wealth at least in part off the back of Scotland’s natural resources, through Scotch whisky, land, mineral water and oil.
  • At least 6 were rich from birth.
  • 9 have been known to use their wealth and power to influence politics, including the Scottish independence referendum, the Leave campaign and ‘cash-for-questions’.

Tax avoidance and evasion

It probably comes as no surprise that Scotland’s richest people are not entirely tax compliant – the super-rich have the means to pay for high-powered lawyers to avoid tax in ways that are legal, due to the UK’s antiquated tax code which makes it easy for those with the means to pick holes in it. Nonetheless, the ways in which Scotland’s 11 billionaires avoid and evade tax vary greatly. Here’s just a few:

  • Mahdi Al-Tajir, owner of Highland Spring, has a 24,000 acre estate near Gleneagles which is owned by a company in the tax haven of Liechtenstein and his own private bank in the Cayman Islands.
  • Sir Ian Wood, chairman of north sea oil Wood Group, sought to avoid the paying of Employer National Insurance by transferring employee registration to a holding company in the tax haven of Guernsey.
  • Businessman Jim McColl’s primary residency is in the tax haven of Monaco. Under questioning at a Scottish Parliamentary committee, he admitted his residence in Monaco meant he paid less tax than he otherwise would if his official residence was in the UK.

Bad employment practises

Exploitation of workers is an endemic issue with Scotland’s billionaires. While they will argue they are job creators, it is those who work for them who ultimately produce the goods and services which make them rich, but exploitative work practises in Scotland and further afield show employees are quite commonly not treated fairly and equitably. Here’s a few examples:

  • The newspaper publisher DC Thomson has been notorious for its anti-trade union practises since it established in 1905 – it still does not recognise the NUJ to this day.
  • In 2012 a former Highland Spring employee took Al-Tajir’s company to court for unfair dismissal, after it sacked 15 workers as it said it was closing, before re-opening eight weeks later and re-stating employees on worse terms and conditions.
  • Philip Day, retailer and owner of Edinburgh Woolen Mill, refused to participate in a 2015 BBC Scotland investigation into who pays the living wage. The retail industry is well known for paying poverty wages.

Exploiting Scotland’s natural resources

All businesses to one extent or another rely on the natural world for their success, but some industries are reliant on natural resources which are very specific to a particular place – in this case, Scotland. As such they are not liable to the usual rules of globalisation – it is not possible to move Scotland’s land, water or oil and build it in a Chinese factory. While some countries ensure that industries with these qualities are used for the general public good, not so in the UK state. Three examples of Scottish billionaires getting rich off Scotland’s natural resources are:

  • The Gordon-Grant family, which owns whisky empire William Grant & Sons, are unique in the UK Sunday Times rich list: no one who has been on the list since it began 1989 has seen their wealth rise faster – a 5,000 per cent growth in 29 years. Such is the wealth to be made out of Scotch whisky, legally patented as a good which can only be produced in a distillery in Scotland with water and malted barley.
  • Al-Tajir’s Highland Spring is the number one seller of bottled water in the UK, and its value comes from its access to the Ochil hills in Perthshire, which act as a natural spring.
  • Sir Ian Wood’s Wood Group made the most out of the UK being unusual in not nationalising its oil bounty since striking black gold in the 1970’s. The Wood Group has went on to be a FTSE 250 company, while in nearby Norway their oil fund is now has over $1 trillion in assets, which the country uses to finance pensions.

Inherited wealth

While the compiler of the Sunday Times rich list was keen to emphasise new wealth, the fact is that more than 50% of Scotland’s 11 billionaires got a big leg-up in the form of inherited wealth. Wealth due to birth right is the polar opposite of social justice, yet Scotland’s richest come from families where their riches began over 100 years ago. Here’s a few examples:

  • Arnold Clark died last year after building a car dynasty, becoming the UK’s first car dealer billionaire. The Clark family now enter the billionaires list based on his success.
  • Glenn Gordon’s wealth can be traced back well over 100 years, when in 1887 William Grant began distilling whisky in Glenfiddich.
  • David Coupar Thomson began publisher DC Thomson in 1905, but even he got a leg-up from his father, William, who was a shipowner. The Thomson family now reap the spoils.

Political influence

One of the problems with modern liberal democracies is that those with vast sums of wealth have a disproportionate ability to influence the political process. Almost all of our 11 billionaires have few scruples about using their economic power to wield political power, including in some of the most important democratic decisions the UK has taken in recent years. Here’s just three case studies:

  • Financier Jim Mellon, who made much of his money out of the mass privatisations in Russia after the fall of the soviet union, helped bankroll theknow.EU campaign, also backed by UKIP funder Arron Banks, during the recent EU referendum where Britain voted to leave.
  • Egyptian businessman Mohamed Al Fayed’s career has been continually marked by controversial political involvement, but the most prominent UK case was the 1994 cash-for-questions scandal, where Al Fayed revealed he paid two Tory MPs to ask questions for him in parliament, leading to the two MPs exit from government.
  • Sir Ian Wood intervened in the final week of the independence referendum, coming out publicly in favour of a No vote. Wood’s comments received widespread media coverage.

 

Picture courtesy of Ian Carvell

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