The European commission’s ruling about Apple has once again highlighted the greed culture and inappropriate behavior of global corporate giants like Google, Starbucks, General Motors & Amazon – especially, when it comes to paying taxes.
The history of Apple’s irresponsible behavior, recklessness & greed seriously questions the company’s CSR initiatives.
Apple is known to exploit small mines: 70% of the tin used in Apple products comes from illegal mines. Middlemen use the small mine operators & workers who partake in delivering the product to Apple are still living in appalling conditions & are deprived of minimum wage.
With a surge in suicide cases at Apple’s manufacturing plants, the appalling conditions and plight of the workers was an open secret which led to worldwide condemnation of Apple’s greed and immoral behavior. Though, Apple had defended itself by arguing that it is doing more than other businesses to ensure the safety of its workers but the reality looks the opposite.
What about the workers at Apple’s manufacturing plants, do they have the choice to avoid such poor work life balance, where they work relentlessly to meet their life’s demands? With so much talk on China’s transition from a growth-based economy to a quality-based one, how long will these catastrophic work practices be allowed? Nobody is demanding for a six hour work day like Sweden, where such a model failed to bring dividends, but some respite for workers is needed.
In a country where Panama leaks failed to avert the minds of the voters & accountability institutions failed to be jerked into starting an investigation into the corrupt elite, can such scandal really change the minds of buyers about a tax thief & manipulator like Apple, which has blatantly used its advantageous position to forge a deal with the Irish?
For a very long time, Apple had been a beneficiary of the lose tax policies of the Republic of Ireland. It struck an extraordinary deal with Ireland, which helped the company avoid tax bills on sales in most of the global markets.
Apple has been penalized for its aggressive corporate tax avoidance. Ironically, the tech giant had been legally evading taxes. It was concluded by the fact finding committee in to Apple’s tax irregularities that such tax related privileges & arrangements were specifically designed to facilitate the company.
Some extraordinary arrangements were made using the rulings of 1991 & 2007, entailing the allocation of profits to Apple’s Head Office situated in Cork but, with no premises or staff. The head office exists only on paper & all the profits from Europe, India, Middle East and Africa were recorded in Ireland with no staff.
One of the most astonishing revelations made regarding this scandal, was that in the financial year (FY) 2011, one of Apple’s subsidiaries, “Apple Sales International”, recorded 16bn Euros in profit & Apple paid a mindboggling 10 million Euros, which was only 0.05% of the profits. Isn’t it unrealistic? This special arrangement allowed Apple to conceal its actual position & gave a significant unfair advantage to the company against other companies operating in Europe.
Other than the poor workers working long shifts to feed the ever growing demand for Apple’s products, continents and countries are also victims of Apple’s greed.
In an open letter, Tim Cook, Apple’s CEO, reaffirmed that Apple is committed to serve communities around the world – wherever it operates – and plays a crucial part in lifting the local economies through investment & employment opportunities. He was quite stern in his response, declaring that Apple pays & will continue to pay a bulk of taxes only where value is created. Does that mean that in areas other than Cork & California, where it sells its products, Apple will not pay taxes?
Some questions remain to be answered by the authorities in Brussels: Why did Apple never pay the taxes in the countries where it earned the profits? Why was Apple allowed to take illegal state aid in Europe under the noses of the European Commission for so long?
It is time for stern actions to be taken against those who make a mockery of the system and play and use the peculiar tax rules. The culprits in such a setup are not limited to the companies in question, but it also includes the financial advisers & countries which benefit from these handful of companies, by bending the rules to benefit a select few at the cost of common tax payers.
Apple, with its huge pile of cash, is hiding behind the rule that taxation takes place where value is created. It makes it exceedingly difficult for authorities to work out how much value is created in which country.
It works in favor of culprits like Apple who act like true capitalists: it maintains huge margins on its products, but fails miserably to share the cherry with rest of the world. Tim Cook’s response via a letter laments the authorities at the helm in Brussels. His letter also makes it clear the Apple workers working in mines in Indonesia are not value creators. A worker working in China at its manufacturing plant is also not a value creator. And those suffering after being exposed to hazardous substances in Chinese factories are not value creators, at all!
What really matters is how conscious today’s consumer is about the business practices of products he or she uses. How many of Apple’s potential consumers will give the new iPhone 7 a miss, after learning about the company’s unethical practices?
Is it possible for consumers to behave more prudently and value the ethical & moral behavior of the seller more than the satisfaction derived from the use of its products? It totally depends on people’s attitude towards morality and goodness. Would you really want to possess a product of a company which values hoarding big sums of money supposedly to be used partly for value creation, and shows reluctance to spend on those who create value for it?
When those who played a key role in value creation are deprived of their share, how on earth could one expect Apple to show any respect towards the outsiders?
Karl Marx was not wrong, when he argued, that the “contradictions of a market based on other nexus between man and man than naked self-interest, than callous ‘cash payment’, a system of exploitation and of endless accumulation can never be overcome; that at some point in a series of transformations and restructuring the development of this essentially destabilizing system will lead to a state of affairs that can no longer be described as capitalism."