Tuesday, 22 February 2011

Guido slams Guardian for hedge fund investment

Political blogger Guido Fawkes, aka Paul Staines, has lit a bonfire under the Guardian today by crticising the Guardian Media Group for making £39.3 million by investing in hedge funds.

Guido writes on his blog: "Earlier this month the Guardian front paged a story revealing that the City of London accounted for £11.4 million of the Conservative Party’s funding in 2009 – 10, in lurid terms we learned of the millions passed to Tory coffers by rich hedge fund managers. Guido can reveal that during that same period the Guardian Media Group’s coffers gained £39.3 million from investments in hedge funds. More than three times as much as they castigated the Tories for taking from hedgies…"

He claims: "Documents obtained by Guido reveal that the GMG board approved investments now totalling £223.8 million in speculative funds in a range of assets...The funds are traded by a number of specialist fund managers, overseen by the giant U.S. based asset manager Cambridge Associates.

"Cambridge Associates is a secretive, privately held firm with a client list which includes billionaires and government sovereign wealth funds. Guido has discovered that the £223.8 million is invested in emerging markets, bonds and hedge funds. The investments are principally in US Dollars and offshore from the UK."

Guido has written an open letter to Guardian editor-in-chief Alan Rusbridger stating: "As you may have noticed my blog has been doing some investigative reporting of the kind for which the Guardian is famed."

He described the GMG accounts as "opaque" and asks Rusbridger to confirm the value of GMG assets held in "tax havens"; the value of GMG investments held in hedge funds; the names of the hedge funds and tax domicile of the fund managers.

Guido ends: "I look forward to lunching with you another time soon".

The information Guido has "discovered" and documents he has "obtained" are from the GMG annual report published last summer. GMG has an investment fund and it is stated in the annual report that hedge funds are part of it.

Update: GMG has issued the following statement: "In 2008 Guardian Media Group (GMG) established an investment fund portfolio, as part of its strategy to reduce risk. This fund consists of a wide range of different investments made directly by GMG. These investments are managed by a number of specialist fund managers, and include global and emerging markets equity, fixed income, real assets and hedge funds. GMG is advised by Cambridge Associates on these investments. These facts have been a matter of public record for some time, and are published in GMG's annual report.

"The investment portfolio is designed to be relatively low-risk (in line with GMG's investment strategy) and similar to those typically used by pension funds and other standard investment vehicles. While the majority of the funds are based outside the UK, GMG is subject to UK tax on all income and realised gains arising from these investments.

"GMG does not use derivative financial instruments for speculative purposes. Part of the investment fund portfolio is denominated in US dollars, and GMG uses currency hedging in order to protect its investment fund against fluctuations in currency values. Further details are available in GMG's annual report."

Rusbridger has also done a post on Inside Guardian in which he says: "If the argument is that no one should write critically about tax avoidance unless they can show total purity in all their dealings and investments, both personal and corporately, then the probable blunt truth is that not a single journalist would be able to write on the subject."

1 comment:

Anonymous said...

It's a ridiculous hypocrisy, no doubt there. But should the protesters care? The protests, thus far, have been against companies that makes millions/billions every year, and are using tax loopholes to make millions MORE every year.

The Guardian, as Guido admits, makes a loss on it's own. By using legal loopholes and hedge fund investment, they're propping up the newspaper side of the business. If nothing else, at least this is keeping hundreds of people in employment.

Both examples are the same thing, but also very different. The Guardians mistake was making itself some sort of campaigner against tax dodging. I can't believe they didn't see this coming back to bite them in the arse.