Sympathy for the Multi-National

By: Olly Wehring - 9 September 2010 17:06

The temptation to side with big business has always been one that I've found pretty easy to resist. Stick it to the man, has been my mantra since student days – albeit more quietly these days (right, corporate subscribers?).

But, it's hard not to sympathise – if that's the word – with the multinationals of this world, when I read of India's decision to slap Vodafone with a US$2.6bn charge. The mobile 'phone giant was told by the High Court in Mumbai this week that it is liable for the charge after it acquired local operator Hutchison Essar three years ago.

Vodafone's defence has been that the transaction is not subject to the country's tax rules, because it took place in the Cayman Islands via a string of holding companies. This defence has cut no cloth with the High Court, though.

The aftershocks of the ruling pricked memories of the rumblings last summer, when Diageo had to tread very gingerly in Scotland, for fear of provoking the ire of politicians in the country.

Last year, the challenge laid at Scotland's door was that it was not a friend of big business. “What incentive is there to operate in a country that reacts like that?” was a question I was asked (rhetorically, thankfully) a year ago.

So, India, could you provide me with an answer, please?

What incentive is there to operate in a country that reacts like that?