How organised crime is harming Scottish businesses


By G.A.Ponsonby

The series of steps to tackle organised crime announced recently by the Scottish Government includes changes to the Proceeds of Crime Act that increases the total amounts which can be seized from criminals.

These changes not only allow profits from a wider range of criminal activities to be recovered but also lower the minimum threshold above which criminal assets can be seized.  The threshold is to be reduced from £5,000 to £1,000, which few would disagree with.  The moves are an indication of the seriousness with which the SNP government treated organised criminal gangs.

Other measures saw the establishment of the Serious Organised Crime Taskforce, providing an additional £4million of funding to the Scottish Crime and Drug Enforcement Agency and committing to the development of a Scottish Crime Campus at Gartcosh.

Funds seized through the Proceeds of Crime Act are now being returned to Scottish communities through the SNP’s ‘Cashback for Communities’ scheme, which has already led to the investment of more than £40million and benefited more than 300,000 youngsters.

But as a society how much do we truly grasp the extent of the organised crime problem and its wide ranging impact on the Scottish economy?

One illustrative example is the protection racket, rife in many communities and industries throughout Scotland.  Mention protection rackets and one usually thinks of pin-striped suited gangsters and the Kray twins.

However in Scotland paying protection to local villains is an all too familiar fact of life for many Scottish businesses.  This entails legitimate businesses paying what are often substantial sums to so called security companies to ensure that no harm comes to their business or property.

Should the business in question decide that they no longer wish to pay the ‘security firm’ then some form of violence normally ensues, this can take the form of physical violence against individuals or damage to the business’s property or assets.  Manifestly unfair and criminal activity.

Whilst I’m sure most people are familiar with the concept, I’m not so sure that as many realise just how widely this is perpetrated against the Scottish business community or the openness with which it is discussed with, for example, Her Majesty’s Revenue and Customs (HMRC).

In fact even where HMRC are aware of the nature of this expenditure (they are part of the Scottish Government’s Serious Organised Crime Taskforce), they do not allow it to be included on the company’s tax return.  This leads to a double whammy for the business in that it not only has to hand over cash to criminals, it also has to pay tax on the money.

The recent initiatives by the SNP may go some way to addressing the issue, however the question remains as to HMRC’s enthusiasm for addressing the situation given the apparent lack of progress up till now.

It goes without saying that recognition of this insidious expenditure and allowing tax relief would help Scottish businesses and by extension, the Scottish economy.  However HMRC is a UK body, and as such will not have the same incentives to act.  Officially recognising the nature of the payments would also mean more work for HMRC in collecting and disseminating information and would reduce the tax take by removing the revenues collected on these illegal payments.

The body is also not under the remit of the Scottish Government and thus the SNP cannot compel their co-operation.

This problem places a huge burden on the Scottish business community, particularly in current economic conditions where businesses are cutting costs where they can in order to survive.   Clearly ‘protection’ is not a cost that can be cut without outside help and official protection from the police.

There is also very often a significant ‘fear factor’ involved for the individuals, who may be subject to personal threats, violence and intimidation.  This leads to a self-perpetuating situation where the protection money is paid not just to ensure business survival but personal safety as well.

High time the UK government fell into line with the Scottish government in trying to stamp this problem out.