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Question 20/21

You have received the following email from Peter Sorchi, CEO:
From: Peter Sorchi, Chief Executive Officer
To: Senior Finance Manager
Fwd: Tax avoidance article
Hi,
I am forwarding you an email from a journalist. It came in via our press office, who passed it up the management chain and it ended up in my inbox.
Some of the basic facts stated in the draft article are correct:
* We do have arrangements in place with leading tax advisers for referrals of potential clients. We pay a commission for all such referrals, which the tax adviser is required to disclose to the client.
* Barry Crauder has been one of our largest clients for many years. He owns significant forested land and we manage that in return for our usual fee.
* We do not offer tax advice, or promote forestry as a tax-efficient investment. We simply offer a forestry management service as a paid service.
I would like you to address the following issues and I need your reply as a matter of some urgency.
Could we be accused of behaving unethically with respect to this aspect of our forestry management service?
Please draft a response that we can submit to Sonia Jones. Please also give an explanation for the Board as to how you will address the fact that the draft newspaper article clearly makes us appear to be unethical. We will consider your draft and related comments at a meeting this afternoon, before submitting anything.
Peter
To: Press Office, Wodd
From: Sonia Jones, reporter, Daily Gazette
Re: Tax avoidance article
I am seeking a response from Wodd concerning the activities of the celebrity Barry Crauder. We have established that Mr Crauder has been investing heavily in forestry in order to avoid paying tax on the considerable wealth that he has amassed from his show business career.
We believe that a significant part of this story is the relationship between forestry companies such as Wodd and professional tax advisers. When researching this story I posed as a wealthy investor and approached several firms that specialise in offering tax avoidance advice to high net worth individuals. Four of the firms whom I approached recommended a forestry scheme and specifically recommended Wodd to manage it for me. I believe that Wodd has a close relationship with these firms and possibly others.
I have attached a draft of my story. I have sufficient evidence to support every fact stated. I am writing in order to give Wodd the opportunity to respond if it wishes to do so, although the story will run regardless. I will require your comment within 48 hours, otherwise, I will run the story as it stands.
Sonia Jones
Chief reporter, Daily Gazette

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