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The Mail on Sunday: BP boss: Threat that would devastate the City

6 May 2007

Oil giant BP threatened to switch its headquarters abroad, according to the former lover of its disgraced boss Lord Browne – a move that would have had devastating consequences for tax revenues and employment in the City of London.

Not only is the company Britain’s biggest firm and among the five highest payers of corporation tax – contributing £1.34billion to the Exchequer last year alone – but it employs thousands of people in London.

BP, now the world’s fifth largest company – employing 97,000 people – is an iconic British business founded as part of pre-war imperial foreign policy and was the flagship of Margaret Thatcher’s privatisation policy.

If it moved abroad there can be no doubt that other multi-nationals based in Britain, such as HSBC, GlaxoSmithKline and Vodafone would also consider similar moves.

Last year HSBC publicly mooted quitting Britain for a more tax-friendly environment.

The claim that BP was considering a move off-shore was among the allegations The Mail on Sunday put to the company after speaking to Lord Browne’s former lover Jeff Chevalier.

And it was over this that the peer decided to launch his legal action against this newspaper.

Despite The Mail on Sunday’s victory in court last week, which meant that allegations of misuse of BP assets and breaches of confidentiality could be published along with details of how he had lied to the High Court, the story remains subject to the injunction.

As a result The Mail on Sunday is unable to report any details relating to the claims or any related issues between BP and the Government which Mr Chevalier told us about or even the circumstances of how he claimed he knew this.

However, the court ruling failed to define what could not be published, with the result that the Daily Telegraph printed a brief version of it on Thursday, unaware that it was subject to injunction.

Now that these details are in the public domain, The Mail on Sunday can reveal their significance.

Last year BP paid £900 million more to the Exchequer than in 2005. The total amount paid over the past five years is £3.8 billion.

In January Kraft relocated its European headquarters from Britain to Switzerland because of its tax-friendly regime.

And insurer Hiscox has announced it is leaving the UK for Bermuda, where corporation tax is 10 per cent, compared to three times that here.

Financial Mail on Sunday has also discovered that dozens of other UK companies have been working on secret plans to move overseas in an effort to reduce tax.

Richard Lambert, director-general of the Confederation of British Industry, warned last year that the ‘unsustainable’ tax burden on business could lead to a flood of multinationals leaving the country.

In America the corporation tax rate is as little as seven per cent, while France is aiming to introduce a 10 per cent tax rate on big business.

For years Lord Browne extolled his company’s crucial role in the UK economy. And it is also the safe repository for billions of pounds of pension fund money and the investments of 1.3 million individual shareholders.

Any shift of BP’s operational centre to the US, where it earns most of its profits and employs most of its people, would help avoid the uncomfortable spotlight each time the price of a litre of fuel rose.

The vast remuneration packages enjoyed by the company’s top executives would also attract much less attention in the US.

Details of Mr Chevalier’s account of this threat were highly convincing.

And his version of events is further supported by the contradictory briefings The Mail on Sunday received from spokesmen representing Lord Browne and BP.

A spokesman representing the peer in a personal capacity suggested that the move had never been considered, while a senior spokesman for the company said it may well have been discussed.

Since then BP have officially denied there was any such threat and Treasury officials say they were not aware of it.

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