Bill Gates preaches the aid gospel, but is he just a hypocrite

The world's richest man is seen as a secular saint. But he should question the example that Microsoft is setting by avoiding tax

Bill and Melinda Gates: 'In Britain, Microsoft reported revenues of £1.7bn in a single year for online sales on which it paid no corporation tax.' Photograph: Oli Scarff/Getty Images

He made his name as a sharp-elbowed businessman who rode the technology revolution with such style. But these days he is far more famous for his philanthropy, as a saviour of the poor who has made it his life's mission to change the world for the better. So it was something of a shock to see he is still the richest person on the planet, boosting his fortune by another £9.6bn last year to an astonishing £48bn after a big rise in the Microsoft share price.

It is easy to forget that Gates remains chairman of the software giant he founded in 1975, the largest individual shareholder with some 4.5% of the company's stock. He may have invested vast chunks of his cash mountains into other companies and may spend much of his time campaigning for poverty relief, but Microsoft remains the rock upon which he built those Croesus-like riches.

This presents a problem given the company's controversial record on tax. Gates has become something of a secular saint as he jets around the world discussing social justice and disease eradication. The left loves him as a rich man giving away much of his fortune for good causes. The right respects a business brain imposing financial rigour on a spendthrift aid sector. Charity chiefs and celebrities adore him, while politicians jostle to join him in the spotlight.

Clearly, he relishes his latest role, becoming increasingly influential and outspoken. He loves to lecture nations on how they should give away more of their taxpayers' money, urging them to hit the arbitrary and anachronistic target of handing over 0.7% of gross national income in foreign aid. He has applauded David Cameron for Britain's embrace of the target, even condemning a Lords' committee that criticised this cash cascade, while constantly telling other countries to do the same.

But like those other aid apostles Bono and Bob Geldof, he risks being perceived as a rank hypocrite. For he sees nothing wrong in complex tax avoidance schemes while telling nations how to spend their revenues, notwithstanding the growing body of opinion that aid undermines development and democracy by propping up poorly run regimes. The latest expert to highlight this "aid illusion" is Professor Angus Deaton, the leading expert on measuring global poverty and a former true believer, in his fine book The Great Escape.

Gates says he pays his personal taxes. Great. But he made all that money from Microsoft which, like other tax-avoiding technology giants such as Amazon, Facebook and Google, uses sophisticated systems to shift paper profits around the planet and evade the designs of governments. Indeed, so extreme are its methods the company was used as a case study in a Senate investigation into US corporate tax avoidance, which found one example of offshoring profits through a tiny Puerto Rico office alone saved it $4m a day in taxes.

Moving earnings through low corporation tax countries such as Ireland, Luxembourg and Singapore means the company saved itself, according to one estimate, almost £3bn annually in tax. A Harvard law professor pointed out that Microsoft's divisions in three low-tax nations employed fewer than 2,000 people, but supposedly recorded about £9.4bn of pre-tax profit in 2011 – more than the 88,000 employees working in all its other global divisions.

In Britain, Microsoft reported revenues of £1.7bn in a single year for online sales on which it paid no corporation tax. This is why if you look at the small print when buying software through its British website, you find you are dealing with a Luxembourg offshoot. A newspaper investigation found a small office there with just six staff handling online sales from around Europe.

None of this is illegal, however absurd it appears. But it is highly unethical, especially when the chairman is exhorting countries to hand over taxpayers' cash to his pet causes – and it certainly tarnishes that saintly image. According to tax campaigner Richard Murphy, Microsoft avoids a sum in tax equivalent to more than 3% of the global aid budget. Despite this, Gates was star speaker at the IF campaign rally against hunger in Hyde Park last summer – although one of the four central issues was supposed to be corporate tax dodging.

Gates, when pressed on his firm's tax policies, gave the usual glib response that they play by the rules. "If people want taxes at certain levels, great, set them at those levels," he said. "But it's not incumbent on those companies to take shareholder money and pay huge sums that aren't required."

Yet we all know these behemoths employ the best accountants and lawyers to engage in financial wizardry, unlike most ordinary citizens handing over their full whack of hard-earned taxes each year. In doing so, these global corporations clearly subvert national governments. Close one loophole and they simply find another, shifting assets around on their spreadsheets. This is partly why congressional researchers have estimated that in less than six decades the share of federal tax revenue coming from corporate income taxes has fallen from 32.1% to 8.9%, forcing a far bigger burden on to other taxpayers.

Governments could do far more to challenge tax-avoiding firms, not least refusing to award them state contracts. But given his status as a development guru, Gates should question the example his own firm is setting. One of the key problems facing the developing world is capital flight, which, according to one report, takes 10 times as much out of poor countries as they receive in aid. It is not just corrupt politicians and their cronies stashing stolen cash in secret accounts, but major companies using tax havens to boost profits at the expense of the poor.

Gates has every right to do what he wants with his wealth. It is to his credit he is giving away so much, persuading other billionaires to do the same and championing causes close to his heart – although as others have pointed out, even this is not immune to tax advantages. His determination to push vaccinations and prevent malaria is laudable. But if he wants to discuss development, preach about poverty and tell nations how to spend taxpayers' money, he should put his own house in order first

Michael Schumacher not skiing at excessive speed – French investigators

French officials give first full account of accident at Méribel resort in Alps last month

Link to video: Michael Schumacher was trying to slow down before skiing accident, say investigators

French investigators say Michael Schumacher was not skiing at excessive speed when he fell and smashed his head on a rock, leaving him critically ill in hospital.

In their first full account of the accident at the resort of Méribel in the French Alps, officials said they could not determine the exact speed the former Formula One star was going, but it appeared "normal for the terrain".

Patrick Quincy, the lead prosecutor in the inquiry, said Schumacher was a "very good skier" who knew the Méribel resort well.

"At one point his ski touched a rock, he lost his balance and fell forward. His head hit a rock three metres downslope," Quincy said.

Investigators said the rocks Schumacher hit, just eight metres from the nearest slope, appeared to be hidden by a light covering of recent snowfall.

Quincy said two teams of police and gendarmes were working on the inquiry and had spoken to many witnesses and experts. He added that speed "did not appear to be an important factor" in the accident on 29 December.

"We have examined the film in the camera fixed to Mr Schumacher's helmet and are transcribing it image by image to establish the place of the fall, the distance from the piste and the speed," he told a press conference in the Alpine town of Albertville.

Schumacher, 45, was skiing between a red piste, Les Chamois, and a blue piste, La Biche, at an altitude of 2,700 metres when he entered a small off-piste area between the two slopes heading back to Méribel.

He had left his chalet in the chic Alpine resort that morning with his 14-year-old son Mick and was wearing a back protector and using rented skis and a helmet on which he had fixed a camera.

After about four minutes, the pair were descending the red slope when Schumacher skied into the off-piste area.

Investigators suggested he was attempting to slow down but that it was not easy to make turns in the area. After falling and hitting his head, smashing his helmet, they said the German racing star was "inanimate".

Quincy said the film in the helmet camera – a GoPro model – was only two minutes long, gave a "very limited scope of vision", and was being re-analysed to establish "the circumstances and the cause" of the accident.

"The film doesn't appear to represent the whole descent. We don't see images of the accident in the field of vision. All you can hear is the gliding of skis on fresh snow. It is difficult to draw any conclusions from this," Quincy added.

Commander Stéphane Bozon said Schumacher was "a good skier and went off to the left of the marked piste. We cannot give an exact figure for the speed he was going, but this area is not one that allows you to turn very much to reduce speed," Bozon said.

Both prosecutors and police insisted the markings on the piste conformed to safety norms.

"But he was skiing outside of the marked zone … this carries a risk in itself on a mountain.

"The markings on the slope conform to the regulations. Unfortunately, it's a season where going off-piste is risky, where the rocks are hidden just below the snow."

The skis were almost new and not the cause of the accident, Bozon added.

Asked directly if Schumacher was at fault, Quincy refused to answer and said it was "too early" to attribute any responsibility for the accident.

Asked why he thought the racing driver had left the slope, he answered: "We don't know. If there are witnesses who do know, we have not heard from them. Mr Michael Schumacher is a good skier who knew Méribel well and who skied there often.

"Speed is not a particularly important element of the inquiry for us nor for the decisions we will make at the conclusion of the inquiry."

Colonel Benoït Vinnermann, of the local gendarme investigation team, said Schumacher was "going at a normal speed for this type of terrain".

Schumacher remains in a medically induced coma in hospital at Grenoble, where his condition is described as critical, but stable.

UK MPs censure DfID over decision to end aid to India and South Africa

Department for International Development accused of political expediency and ignoring recommended review procedures

The decision of UK development secretary Justine Greening to end bilateral aid to India and South Africa has come under scrutiny. Photograph: Marisol Grandon/DfID

The UK's decision to end bilateral aid to India and South Africa by 2015 was "neither methodical nor transparent, but related to short-term political pressures", a group of MPs has said.

Justine Greening, the international development secretary, announced in November 2012 that Britain would end direct aid to India in 2015. Six months later, she said Britain's development programme in South Africa would also come to an end in 2015, a decision that drew a rebuke from the South African government.

The move to phase out aid to these countries, defined by the World Bank as middle-income economies, followed a review by the Department for International Development (DfID) of its multilateral and bilateral aid programmes in 2010 that resulted in Britain curtailing its bilateral aid programmes to 27 out of 43 countries. The number rose to 28 when South Sudan became independent in 2011.

In justifying the move to end aid to India and South Africa, Greening told the International Development Committee that if Britain's development spending was to continue having the biggest possible impact, it should focus on countries that "have higher incidences [of poverty], less capability and generally bleaker prospects for the poor".

By way of example of continuing aid to a middle-income country, Greening cited Pakistan as having less capacity to address extreme poverty than India. She also said it was in clear British interests to ensure stability in Pakistan. The committee, however, questioned whether DfID spending in Pakistan would achieve desired goals.

"We recommend that, in any future bilateral aid review, DfID spending reflect what it is able to achieve in increasing security. Large sums should not be spent just in the hope of increasing and stability, but be based on what it is possible to deliver," said the committee report on Wednesday.

Pakistan is the largest recipient of British aid. DfID plans to increase bilateral aid to Pakistan to £446m in 2014-15, from £267m in 2012-13, but the development committee said in a report last year that aid should only be increased if the Pakistani government made greater efforts to increase tax revenues.

The committee accepted the rationale for sending aid to some middle-income countries and not others, but expressed concerns about the timing of the decisions on India and South Africa.

"We do not dispute that the bilateral aid review was a robust process," the report says, "but the secretary has not convinced us that the announcements to end bilateral programmes in India and South Africa were in accordance with the principles and process established by the bilateral aid review (BAR). They were made just 18 months and two years respectively after the publication of the BAR country summaries and appear ad hoc. We reiterate our recent recommendation: decisions to end a bilateral aid programme or to start a new one should be made only following a bilateral aid review, except in exceptional cases such as South Sudan."

The UK's aid programme to South Africa is worth £19m a year. Support has recently focused on supporting businesses and reducing the maternal mortality rate. Pretoria reacted angrily when DfID announced its decision to phase out aid, describing it as a unilateral announcement that was tantamount to redefining the relationship. In May, Pravin Gordhan, the South African finance minister, said during a visit to London that the decision looked like "there was an intention to demonstrate some kind of fiscal probity using South African assistance as a political tool".

The UK has ringfenced the aid budget, which is set to increase to£11.9bn this year in line with its commitment to meet the 0.7% of gross national income aid target. The decision to protect the aid budget at a time of austerity is unpopular with Tory backbenchers and the rightwing press.

Sir Malcolm Bruce, chairman of the committee, said the decisions on South Africa and India had "come out of the blue" and appeared to be a quick response to media pressure.

"There was a lack of process on the decisions," he said. "Both were told that aid levels would continue for five years, but then DfID decided not to follow that through … funding to 2015 is falling at a faster rate than previously agreed."

Jim Murphy, Labour's international development spokesman, said: "This report shows that ministers have failed to make strategic decisions about how UK aid is best spent. The result is that South Africa is understandably offended. This was a decision that had little to do with Southern African poverty and much more to do with David Cameron's clumsy attempts to deal with political problems at home."

Greening's decision to end aid to India – which came to £300m in 2012 – was criticised by the Institute for Public Policy Research thinktank as a move designed to placate Tory backbenchers instead of combating poverty.

A DfID spokesman said: "The decisions to close our aid programmes in South Africa and India are right and the committee does not disagree with this. These decisions clearly follow on from the government's own aid review published in 2011 which identified both countries as on the path to transition. As countries successfully develop DfID will continue to ensure that our aid remains targeted on the poorest countries where support is most needed."

Austerity and optimism: development books to look out for in 2014

An appraisal of the economist Jeffrey Sachs, an analysis of austerity, and a celebration of emerging economies are among the themes that promise to keep readers busy this year

Development books to look out for this year include We the Peoples: A UN for the 21st Century; Expulsions: Brutality and Complexity in the Global Economy; and Jeffrey Sachs: The Strange Case of Dr Shock and Mr Aid

Jeffrey Sachs: The Strange Case of Dr Shock and Mr Aid

With a title like this, and a front cover depicting a composite Dr Jekyll and Mr Hyde-style image of the subject of this book, I'm not expecting subtleties in Japhy Wilson's Jeffrey Sachs: The Strange Case of Dr Shock and Mr Aid. Due to be published by Verso in July, the book promises "an investigation of Sach's schizophrenic career, and the worldwide havoc he has caused". It traces the economist's career from an advocate of shock therapy in the 1980s and 90s to development guru and friend to the stars in the 2000s. Following on the heels of Nina Munk's book on Sachs, The Idealist, published in 2013, this could be another bruising year for the director of Columbia's Earth Institute. Liz Ford

The Tyranny of Experts: Economists, Dictators and the Forgotten Rights of the Poor

The latest book from William Easterly, the New York University economist and sharp-tongued commentator on the hubris and failures of many development aid programmes, The Tyranny of Experts promises to trace the history of the fight against global poverty and reveal how expert-led efforts have too often done more harm than good. Subtitled "Economists, dictators and the forgotten rights of the poor", and due to be published in March by Basic Civitas Books, the study argues for a new model of development based not on technical fixes and expert solutions but rights and freedoms for those otherwise marginalised. Claire Provost

The Upside of Down: Why the Rise of the Rest is Good for the West

A new year, and a new dose of optimism from the Centre for Global Development's Charles Kenny. In 2011, the ebullient economist gave us Getting Better, a "relentlessly cheerful polemic" celebrating an era of unprecedented human development – though criticised by some readers for glossing over issues of environmental degradation. In 2014, the subject of his affection is not development aid but how the rise of emerging economies such as those in Asia is good for everybody. Sold as an antidote to prophecies of American decline, The Upside of Down, due to be published on 30 January, promises a "highly optimistic look at America's future in a wealthier world". CP

Expulsions: Brutality and Complexity in the Global Economy

Well-trodden ideas of poverty and injustice cannot fully explain the nature and consequences of today's social, economic and environmental challenges, argues Saskia Sassen, the Columbia University sociologist. Her latest book, scheduled for May publication, promises to examine a variety of issues – from soaring income inequality to the destruction of land and water bodies – in terms of "expulsions", looking at how the sheer complexity of the global economy is making it harder to trace lines of responsibility for the displacements, evictions and eradications it produces. CP

We the Peoples: A UN for the 21st Century

As secretary-general of the UN, Kofi Annan played a crucial role in launching the millennium development goals, and he retains an interest in development through various bodies. He serves as chairman of theAlliance for a Green Revolution in Africa and the Africa Progress Panel, the latter of which has argued for stronger action on illicit financial flows and for greater transparency and accountability in mining. This book of key speeches during his time at the UN, to be published in April, covers subjects from development, health, and climate change to the prevention of genocide and the ideal of diversity, and provides an insight into how his ideas and priorities were incubated. Mark Tran

Against Austerity: How We Can Fix the Crisis They Made

Fed up with austerity and puzzled at why so little has changed in the world economic order? Richard Seymour, the British Marxist writer and activist who runs the blog Lenin's Tomb, offers this analysis of how austerity is just one part of a wider elite plan to radically re-engineer society and everyday life in the interests of profit, consumerism and speculative finance. It's an argument others on the left, such as Susan George, have made, so Seymour's book – which will hit bookshelves in March – is the latest addition to the oeuvre. Seymour argues that it is possible to forge a new collective resistance and come up with alternatives to the current system. MT

The Violence of Development: Resource Depletion, Environmental Crises and Human Rights Abuses in Central America

The title of Martin Mowforth's forthcoming book, which will be published by Pluto Press in March, speaks volumes about his view of the subject. He argues that "development" in Central America is a failure. In his view, despite billions of dollars of development funding and positive indicators of economic growth, poverty remains entrenched and violence endemic. To back up his thesis, Mowforth, who lectures at the University of Plymouth, draws on development project case studies and many interviews with a range of people in Central America, including nuns, politicians, NGO representatives, trade unionists, indigenous leaders and human rights defenders. MT

Voicing Demands: Feminist Activism in Transitional Contexts

Another in the Zed Books series on Feminisms and Development,Voicing Demands examines the strategies feminist activists have employed to negotiate, organise and use their collective voice to effect change in the global south over the past two decades. Published in January, the book is edited by Sohela Nazneen and Maheen Sultan, both associated with the BRAC Development Institute in Bangladesh, and draws on essays on countries including Bangladesh, Brazil, Palestine, Egypt, Ghana and South Africa. Another Zed book to watch, which is published in March, is Feminisms, Empowerment and Development: Changing Women's Lives, edited by Andrea Cornwall and Jenny Edwards. LF

Global Democracy and the World Social Forums

The World Social Forum was established in 2001 as a counter to the dominant narrative of globalisation coming from the World Economic Forum. The two could not be further apart – not just in message, but in structure and organisation. The WSF I attended in Senegal in 2011 was a chaotic, loud affair, but it was real, passionate and – coinciding with Mubarak's resignation in Egypt – optimistic that the world could change. The second edition of this book is published by Paradigm in May, and will offer first-hand experiences of the forum's meetings, explain why it was founded and explore its continuing relevance. LF

Some TECH AND FACTS

Taiwan has become the first country in the world to offer free wifi connectivity to its citizens and all its foreign tourists.




Chicago's deep freeze -25°C (-13°F) captured from a plane




A new species of peacock spider has been discovered on Western Australia's south coast. The brightly coloured spiders are famous for their animated dancing when aroused (see link below). The new species, Maratus avibus, is a little over 4mm in length.

Apple, Samsung CEOs agree to mediation over patent dispute

Chief executives for the two smartphone giants will meet in person by February 19 to try to resolve the companies' latest legal fight.

The chief executives of Apple and Samsung have agreed to meet with a mediator to try to resolve some of the companies' ongoing legal patent disputes.

Executives from the two companies met Monday to discuss settlement opportunities, attorneys for the tech giants reported Wednesday in a filing with the US District Court for Northern California. The discussions were in response to a federal judge's order that the two companies hold settlement talks before a new patent infringement trial is scheduled to begin in March.

The mediation will take place by February 19 with an unidentified mediator who has "experience mediating high profile disputes," the companies said in their filing. In addition to the chief executives, three to four in-house lawyers will attend the mediation; no outside counsel will be in attendance, according to the filing.

In November, before jury election began in a separate patent infringement lawsuit Apple filed against Samsung, US District Court Judge Lucy Koh told both parties that she would like them to try to reach a settlement and that she would prefer the companies' CEOs participate in the talks. She prefaced the request by saying to the attorneys for Apple and Samsung that "you don't have to laugh at me, but even my chambers laughs at me when I mention settlement."CNET has contacted Apple and Samsung for comment and will update this report when we learn more.

At the time, the parties agreed to submit a proposal by Wednesday.

However, previous attempts between the two companies to talk out their dispute have proven unfruitful. A court-mandated discussion between Apple CEO Tim Cook and Samsung CEO Kwon Oh Hyun in August 2012 failed to break the deadlock between the two companies.

MARCA INTERVIEW WITH FEYENOORD COACH, RONALD KOEMAN

"Guardiola's Barça was the most complete team I've seen"

• "I don't think our victory at Wembley was the beginning of it all; Johan Cruyff's philosophy was the beginning, looking for attacking players using wingers", he said.

Ronald Koeman is in Marbella with his team, Feyenoord, to escape the harsh northern European winter. One of the figureheads of the '90s Barcelona Dream Team, he can speak with authority on the club as it was, and is today.

"I don't think our victory at Wembley was the beginning of it all; Johan Cruyff's philosophy was the beginning, looking for attacking players using wingers. That type of football did pave the way for what came later. But Guardiola's Barça was an improvement on our Dream Team", Koeman believes.

"I don't enjoy watching this Barça quite as much. Although I don't think it's changed that much. Each coach adds his own touch. But I have to admit that Guardiola's Barça played the most complete football I've ever seen", he said.

"Pep's Barça consistently maintained its level of excellence. It always played well. We had very good games, highs and lows. But they always played well", the Dutch coach commented.

"Much of the credit has to go to two or three players, Messi being the first. If you have Messi, Iniesta and Xavi... But Messi decides a lot of matches by himself, like Ronaldo at Real Madrid. As a coach, that's the best thing that can happen. Having players that alter the result by themselves", said Koeman. "I used to be obsessed with coaching Barça, but I'm not now. I know that if it happens, it'll be because I'm doing a good job", he concluded.