G20 countries agree to exchange tax information to stamp out evasion

Meeting of G20 finance ministers in Australia endorses plan to automatically exchange information on a reciprocal basis by end of 2018

theguardian.com, Bridie Jabour, Sunday 21 September 2014

International Monetary Fund (IMF) managing director Christine Lagarde and
 Australia’s treasurer Joe Hockey before the main meeting of the G20 finance
ministers. Photograph: Reuters

G20 countries have agreed to start automatically exchanging tax information in an effort to erode global tax evasion.

The communique from the finance ministers’ meeting in Australia at the weekend endorsed a plan to automatically exchange the information on a reciprocal basis by the end of 2018.

The ministers called on all financial centres to make the commitment by the time of the global forum meeting in Berlin at the end of October and to support efforts to monitor global implementation of the new standard.

“We support further coordination and collaboration by our tax authorities on their compliance activities on entities and individuals involved in cross-border tax arrangements,” the communique said.

The meeting in Cairns also discussed the potential impact on the global economy of the Ebola outbreak in west Africa. The Australian treasurer, Joe Hockey, confirmed the economic risks of the outbreak had been discussed.

The International Monetary Fund has estimated measures put in place by the group will expand the global economy by 1.8%, just shy of the target of 2%.

“Of course there are events that could derail [the growth targets],” Hockey told reporters on Sunday. “We need to be ambitious, we need to give people hope that tomorrow and the years beyond are going to be better than today. We have to.

“As global finance ministers it is easy to be caught in the slipstream of negativity, to be caught in the slipstream of looking at a glass as being half full, or rather half empty. The views vary but the bottomline is we can’t be pessimistic about the future.”

The agreement on measures to lift growth was 90% complete but by the time the G20 leaders met in Brisbane in November there would be ‘concrete outcomes’, he said.

Hockey said the president of the World Bank, Jim Yong-kim, made “significant” contributions to the discussion about Ebola.

“There was a discussion about a number of other geopolitical risks as well. Having said that, we believe that the fundamentals of the world economy are good and we are trying to use the levers that we have to make them better,” Hockey said.

If the 1.8% growth rate is achieved it would add $2 trillion to the world’s economy within four years.

The managing director of the IMF, Christine Lagarde, said the two areas key to reaching a 2% target were the labour market and infrastructure. She said the 1.8% was taking the G20 “very close” to its objective.

“Is that to say mission accomplished? No. Clearly because there will be more needed – from 1.8 to 2% is a bit of a journey,” she said.

Related Articles:

OECD proposes curbs to corporate tax avoidance

G20 finance chiefs aim to 'change destiny of global economy'

Delegates prepare to hear the opening remarks at the G20 Finance Ministers

 and Central Bank Governors Meeting in Cairns on September 20, 2014

(AFP Photo/William West)

India's jet-set tycoons crash to earth

Yahoo – AFP, Aditya Phatak, 21 Sep 2014

Force India-Mercedes Team Principal Vijay Mallya watches the big screen during a

 practice session of Formula One's Indian Grand Prix, at the Buddh International circuit

in Greater Noida, on October 28, 2011 (AFP Photo/Prakash Singh)

They were famed for their jet-set lifestyles and the names of their companies were emblazoned on airplanes, Formula One cars and the shirtfronts of cricket teams.

But now the debt-laden empires of three of India's best-known tycoons -- Vijay Mallya, Subrata Roy and T. Venkattram Reddy -- are crumbling before their eyes, downfalls that observers say stem from a climate of weak regulation and deference to conspicuous wealth.

"All too often, the banks are dazzled by the halo of personal fortunes," said Vishwas Utagi, a veteran campaigner for banking regulation.

India's Sahara group's chairman Subrata Roy (C),

 surrounded by bodyguards, leaves the Securities

 and Exchange Board of India head office in

 Mumbai, on April 10, 2013 (AFP Photo/

Punit Paranjpe)

Some of India's most successful businesses, such as the family-run Tata and Reliance conglomerates, have been led for years by men with little appetite for publicity and who prefer to operate in the shadows.

But Kingfisher boss Mallya and Sahara supremo Roy came to epitomise a new breed of tycoon, unafraid of trumpeting their achievements when they started making a name for themselves in the early 2000s.

Mallya -- the self-styled "King of Good Times" -- became something of an icon as he turned the United Breweries Group which he inherited from his father into one of the world's largest spirit makers.

As his core business flourished, Mallya branched out by launching the Kingfisher airline, named after his company's best-known beer. His profile rose further when he acquired a stake in the Force India F1 team and ownership of the Royal Challengers Bangalore cricket team.

Selling hotels for bail

But as the Indian economy began to slow sharply at the turn of the decade, with the aviation industry becoming one of the sectors to be worst hit, Mallya's fortunes nosedived too.

After selling the liquor business to Diageo in a bid to shore up his airline, Mallya looked on helplessly as Kingfisher continued to haemorrhagecash. The airline never took to the skies again after a pilots' strike over unpaid wages in 2012.

Having run out of patience over Mallya's failure to clear debts said to be in excess of $60 million, the United Bank of India this month declared him a "wilful defaulter", making it nigh impossible to access fresh loans.

While Mallya is fighting to keep his properties from creditors, Roy is trying to sell his portfolio of luxury hotels -- including New York's Plaza Hotel and the Grosvenor House in London -- to raise the $1.6 billion he needs to secure bail from Delhi's Tihar Prison.

While he has several media interests, including a Hindi TV channel and newspaper, Roy's profile was heightened by his co-ownership with Mallya of Force India and involvement in cricket.

T. Venkattram Reddy, seen during Farnborough

 Air Show, in England, on July 19, 2006 (AFP

Photo/Leon Neal)

As well as sponsoring the national side, Sahara set up a Pune-based franchise to enter the glitzy Indian Premier League (IPL).

The team's expulsion from the IPL at the end of last year's tournament in a dispute over finances hinted that all was not well.

Things dramatically worsened in March when Roy was detained after failing to meet a demand by regulators to pay back millions of small savers the $3.2 billion that Sahara raised via an illegal bond scheme.

Palatial splendour

While Roy owns homes modelled on the White House and Buckingham Palace, Reddy's penchant is for luxury cars with a fleet which reportedly included a Rolls Royce Phantom.

He also couldn't resist the glamour of the IPL, buying the Deccan Chargers franchise before it went bust in 2012.

While Roy's fortune was self-made, Reddy and his brother T. Vinayak Ravi Reddy inherited the ownership of the Deccan Chronicle from their father.

The Hyderabad newspaper's prestige enabled them to draw loans for riskier ventures including a chain of bookstores and a chartered jet company.

Even if the cricket team is no longer sucking money, the Reddys are struggling to keep the wolf from the door and lenders have already seized several of their properties.

Tamal Bandyopadhyay, author of a book on Sahara, said a weak regulatory framework enabled tycoons to build up debts that should never have been allowed.

The back of the Grosvenor House hotel in London, pictured on September 30,

2003 (AFP Photo/Joshua Roberts)

"Mallya is a case of over-stretching and over-leveraging, while Roy is the case of exploiting regulatory arbitrage or the loopholes in regulation," Bandyopadhyay told AFP.

Utagi, a retired bank worker who is vice president of the All India Bank Employees' Association, said there were too many "pliable people" in the industry who face little comeback if money they lend is not repaid.

"When it comes to credit appraisals for corporates, the rules are more often honoured in the breach than the observance," he said.

Bandyopadhyay said the ambitions of Indian tycoons were rarely held in check as they were "surrounded by sycophants".

"That makes it very difficult for them to stay in touch with reality," he added.

Related Article:

Anti-corruption forces China's banks to review big client credibility

Drugmaker GSK fined $490 mn in China graft probe

Yahoo – AFP, Felicia Sonmez, 19 Sep 2014

A GlaxoSmithKline (GSK) employee enters their office headquarters
in Shanghai on July 1, 2013

Beijing (AFP) - A Chinese court on Friday fined British drugmaker GlaxoSmithKline 3.0 billion yuan ($490 million) following a nearly year-long bribery probe, the company said.

The firm's former head of China operations, Mark Reilly who would be deported, and four other ex-officials were given suspended sentences of between two and four years in prison, the official Xinhua news agency said.

The fine levied by the Changsha Intermediate People's Court after a closed hearing in central Hunan province was the largest ever handed down by a Chinese court, according to Xinhua.

GlaxoSmithKline global headquarters in

 west London on July 29, 2013 (AFP Photo/

Ben Stansall)

It equals the precise amount that China's ministry of public security said last year had been funnelled between GSK and travel agencies since 2007.

Police allege that GSK took kickbacks from travel agencies to organise conferences that never took place.

The company also "resorted to bribery to boost sales of its medical products and sought benefits in an unfair manner," the court said in a statement, according to Xinhua.

"GSK bribed, in various forms, people working in medical institutions across the country, and the amount of money involved was huge. Five senior executives actively organized, pushed forward and implemented sales with bribery," the court statement added.

The firm said in a statement that the court had found it guilty of "bribing non-government personnel".

'Clear breach' of governance

In an apology posted on its website, GSK said that the illegal activities of the firm's China arm "are a clear breach of GSK plc's governance and compliance procedures; and are wholly contrary to the values and standards we expect from our employees".

The firm "must work hard to regain the trust of the Chinese people", it added.

According to Xinhua, Reilly was given three years in prison but will receive a four-year reprieve and be "expelled" from China. It did not provide further details.

Three other GSK officials -- former human resources director Zhang Guowei, former vice president Liang Hong and former legal affairs director Zhao Hongyan -- received sentences and reprieves of two to three years, Xinhua said.

The firm's former general manager for business development, Huang Hong, was found guilty of "bribing and receiving bribes" and received a sentence of three years, which will be suspended for four years, according to Xinhua.

The court decided to reduce the jail sentences for the five "since they confessed the facts truthfully and were considered to have given themselves up," Xinhua reported.

After being detained by Chinese authorities last year, Huang was quoted in state media as saying that GSK had set up a special team to handle important clients which had an annual "relations" budget of nearly 10 million yuan ($1.6 million).

Sales growth targets set by the firm as high as 25 percent put pressure on employees, Xinhua quoted Huang as saying.

Neither the statement nor the apology mentioned the sentencing of Reilly or other officials.

Peter Humphrey (2nd left) at the Number One People's Intermediate Court

in Shanghai on August 8, 2014 (AFP Photo/People's Intermediate Court)

The verdict comes more than a year after Chinese police first accused Reilly of ordering employees to bribe hospitals, doctors and health institutions to gain billions of dollars in revenue.

China's healthcare sector is widely considered to be riddled with graft, partly the result of an opaque tendering system for drugs, and also due to doctors' low salaries.

GSK is the most high-profile target of wide-ranging Chinese inquiries into foreign pharmaceutical firms, as Beijing also mounts probes into overseas companies in sectors ranging from cars to baby milk.

The investigations come against the backdrop of an anti-graft campaign backed by President Xi Jinping to root out official corruption.

Reilly is not the only non-Chinese national to have been ensnared in the probe.

Last month, a Shanghai court sentenced British investigator Peter Humphrey and his American wife Yu Yingzeng to two-and-a-half years in jail for breaching privacy laws.

The investigators had been hired by GSK to investigate the source of a lurid sex tape of Reilly shortly before the probe went public.

Related Article:

GlaxoSmithKline ex-boss to be deported back to UK from China

OECD proposes curbs to corporate tax avoidance

The Organization for Economic Cooperation and Development has proposed draft laws to stop companies from avoiding billions of dollars in taxes. All OECD members and G20 members have already expressed their support.

Deutsche Welle, 16 Sep 2014

International efforts to curb corporate tax avoidance got a boost Tuesday as the OECD proposed changes to global tax laws that would block companies from shifting profits into tax havens.

The draft proposals have been agreed upon by all members of the OECD and G20, so most industrialized countries are on board, but they have yet to be ratified into law.

The OECD said the measures would mostly affect leading technology companies such as Amazon and Google, which have been scrutinized for taking advantage of tax treaties that allow them to protect some profits from being taxed at all.

Both companies maintain that they abide by tax law and pay all the taxes they owe.

Corporate tax avoidance has received increased attention since the financial crisis and governments across the world have sought to close legal tax loopholes for businesses.

Traditionally, the OECD's work on international tax regulations has focused on ensuring that companies are not taxed twice. Now it's focus has shifted.

"We are putting an end to double non-taxation," said the OECD's head of tax, Pascal Saint-Amans.

There is, however, criticism from some quarters. Anti-poverty charity ActionAid, for instance, criticized the plans saying some of the measures agreed upon would be too costly for developing countries to implement.

cjc/sri (Reuters, AFP)

Offshore Secrets

Related Articles:

Gary Barlow apologises over tax affairs
Swiss complete tax-dodge payments to Britain, Austria
UK tax inspectors collect record £23.9bn

France nets 1.8 billion euros in anti-tax-fraud drive

Amnesty for foreign bank accounts nets €450m for the treasury

Hoeness alleged tax liability soars to 23.7 million euros

German feminist Alice Schwarzer admits to Swiss account, then goes on offensive

Illicit savers admit to stashing away €552m, minister says

Hundreds confess to tax office about secret foreign savings accounts

US slaps Credit Suisse with $2.6 billion fine for aiding tax evaders

Swiss company agrees to pay $4.4m fine for helping US tax dodgers

OECD proposes curbs to corporate tax avoidance - New

US to add Taiwan to list of states complying with new tax evasion act June

Singapore and US reach tax evasion deal

Switzerland, Singapore join clampdown on bank secrecy

Offshore tax evaders targeted with new ad campaign of warnings

New asset declaration rules linked to China's anti-graft efforts

The Netherlands and US agree tax information exchange

Cayman Islands and Costa Rica agree to share bank account details with US Liechtenstein ends banking secrecy, accepts OECD tax rules

G20 to share tax information by 2015

China joins anti-tax evasion convention

Dutch polish tax image, to 'update' treaties with 23 poor countries

G20 backs plan to stop global tax avoidance and evasion

G8 leaders agree tax evasion measures

Indonesia Welcomes Tax Haven Transparency

British PM strikes 'tax havens' deal ahead of G8

Andorra to introduce income tax for first time

Swiss strike bank deal with US over tax evasion

Singapore Boosts Measures Against Global Tax Cheats

Bermuda and UK territories sign anti-tax evasion deal

Austria to loosen bank secrecy laws within weeks

Luxembourg to ease the secrecy surrounding its banks

Australia to force multinationals to disclose tax arrangements

HMRC in offshore tax evasion crackdown after receiving fresh data

G20 urges global community to end banking secrecy

Major EU countries to tackle tax havens

France's President Hollande: Eradicate tax havens

Dutch MPs call for action on tax havens, plan should be ready by summer

EU deal to tackle mining corruption

French ministers to declare assets publicly

-----------------------------------------------------------------------------------------

China Offshore Secrets

New US taxact will help China anti-graft campaign

Asian logging companies 'use British islands for tax dodging'

Wealthy in China need new tax haven as Switzerland U-turns on banking privacy

Offshore tax-dodging piece shows anti-Chinese bias: report

Chinese oil giants make use of offshore shell companies in Caribbean

China's cash haven in the British Virgin islands – the key points

China's princelings storing riches in Caribbean offshore haven

EU Offshore Secrets

Offshore tax dealings: celebrities and sportsmen in leaked Jersey files

EU launches investigation into Apple, Starbucks and Fiat tax deals

Swiss bank accused of helping clients evade US taxes

Gibraltar tries to lure London hedge fund bosses with promise of low taxes

Dutch savers have €1.1bn in Luxemburg and Austria: tax office

Dutch finance ministry denies Starbucks tax secrecy claims

100 of UK's richest people concealing billions in offshore tax havens

The 'who's who' of European tax havens

Accountancy firms 'use knowledge of Treasury to help rich avoid tax' – MPs

The nation at the heart of the offshore scandal: Britain

Leaks reveal secrets of the rich who hide cash offshore

KPMG Nederland overhauls partner bonuses, supervisory board

DutchNews, Friday 12 September 2014

KPMG

Accountancy group KPMG is overhauling its remuneration strategy for partners and boosting the independence of its supervisory board following a string of scandals.

The aim is to ‘win back the trust of stakeholders’, the company said in a news release on Friday. The plan was approved by partners at a closed meeting on Thursday.

In the new set up, partners’ remuneration will be linked to 'the realisation of quality requirements, the motivation of employees and client satisfaction'. Profit shares will be spread out over several years and can be reversed if problems come to light.

The current bonus system is being scrapped and individual partners will only be rewarded for ‘exceptional performance’. The management board will no longer be eligible for profit sharing. They, instead, will have a fixed salary with a performance-related bonus of up to 10%.

Future

KPMG is also looking for new external candidates for its supervisory board, which is currently made up of partners. Chairman Jan Hommen said the company 'wants to take major steps right now, leave the past behind and build on a new future. For our clients, for society and for our own people.'

KPMG Nederland has been hit by a string of scandals in recent months, culminating the resignation of chairman Jurgen van Breukelen in May.

Van Breukelen had been in the firing line over possible tax fraud in connection with the company's new headquarters in Amstelveen, bribery allegations and a string of other issues at client companies.

Chairman Van Breukelen KPMG resigns. (NOS/ANP)

Related Articles:

KPMG Nederland chairman resigns after string of scandals

KPMG in Holland again under investigation, this time for tax fraud

Accountants KPMG fined for role in Ballast Nedam bribery case

KPMG fined nearly €900,000 for procedural shortcomings

Ex-KPMG senior partner to plead guilty to insider trading

Koch brothers sought say in academic hiring in return for university donation

• Florida university receives $1.5m from rightwing billionaires

• Kochs wanted appointment of ultra-rightwing economics faculty

theguardian.com, Ed Pilkington in New York, Friday 12 September 2014

David Koch, above, and his brother Charles donated to 163 colleges
and univerisites in 2012. Photograph: Phelan M Ebenhack/AP

The billionaire Koch brothers attempted to wield political influence over appointments and teaching at a major US university in exchange for donations, newly published documents reveal.

Internal emails and memos from the economics department of Florida State University (FSU) open a window into the kind of direct pressure the Kochs seek to exert over academic institutions in return for their largesse. The 16 pages of documents, obtained by the Center for Public Integrity, show that the energy tycoons demanded through their grant-giving arm, the Charles Koch Foundation, a role in faculty appointments and an emphasis on teaching that was in tune with their radical political views.

Charles and David Koch are major funders of the Tea Party and other ultra-rightwing movements that oppose government intervention and advocate for an unregulated free market.

A memo drawn up by the then chair of the FSU economics department, Bruce Benson, set out the Kochs’ terms for funding, noting that “the proposal is … not to just give us money to hire anyone we want and fund any graduate student that we choose. There are constraints.”

A section of the memo headlined “Constrained hiring” says: “As we all know, there are no free lunches. Everything comes with costs. In this case, the money for faculty lines and graduate students is coming from a group of funding organisations with strong libertarian views. These organisations have an explicit agenda.

“They want to expose students to what they believe are vital concepts about the benefits of the market and the dangers of government failure, and they want to support and mentor students who share their views. Therefore, they are trying to convince us to hire faculty who will provide exposure and mentoring. If we are not willing to hire such faculty, they are not willing to fund us.”

The documents date back to 2007, when the Koch deal was first being negotiated with FSU. Among the other demands made by the foundation was that Benson, a free-market libertarian who shares many of the Kochs’ beliefs, must have his term as chair of the economics department extended for three years as a requirement of the donation.

Dave Levinthal, the centre’s senior political reporter, who broke the story , said: “The documents give a blueprint of what the Kochs wanted and if ultimately they didn’t get everything they demanded it still gives a rare view into their intentions. They were saying ‘We want this, this and that, and if you don’t do it, we are not going to give you any money’.”

The Koch’s financial gift was finalised in 2009 at the sum of $1.5m (£920,000) to be spread over six years – a drop in the ocean for the brothers who own the second largest privately owned company in the US and are valued at $36bn each. The university says that as of April this year it had received $1m.

Under the initial deal with the Kochs, they had direct input into the appointment of faculty members in the economics department through a three-person advisory board set up specifically to liaise with the Charles Koch Foundation over hiring. The terms of the donation have been a running sore within FSU,prompting considerable internal opposition.

In the face of widespread criticism, the university authorities in 2013 revised the terms of the Koch funding to weaken the brothers’ grip on appointments. A statement from the university released earlier this year said that “the decision was made to eliminate any role whatsoever of the advisory group in the hiring of tenure-track faculty members in the department of economics”.

Benson did not immediately reply to questions from the Guardian. But he told the Center for Public Integrity that the documents had been intended for internal use and were written at “early stages of discussion” over the Koch grant, well before it was finalised in 2008.

Florida State University is not the only academic institution that the Kochs have financial relationships with. According to the CPI, the brothers dispensed $13m in 2012 to 163 colleges and universities.

David Koch, chairman of the Americans for Prosperity Foundation, funds some

of the largest dark money networks. (AP Photo/Phelan M. Ebenhack, File) | AP

Related Article:

Dark Money Groups Are Funded By Dark Money Groups That Fund Dark Money Groups That Fund...

EU moves to crack down on banks dodging bonus cap

EU commissioner warns of further action against banks paying shares and allowances as UK sets out its case against cap

theguardian.com, Jennifer Rankin, Monday 8 September 2014

The EU has warned it will crack down on banks dodging the bonus cap via
allowances and share handouts. Photograph: Toby Melville/Reuters

Banks seeking to circumvent the EU's cap on bonuses for top staff could face further action from European regulators, a senior official has warned.

Michel Barnier, a vice-president of the European commission, with responsibility for financial services, said there could be "a coordinated policy response" to banks that dodge the EU bonus cap by paying allowances to their top staff.

The warning comes as the UK government sets out its case on Monday against the EU bonus cap in Europe's highest court.

The EU limited bankers' bonuses to one year's salary, or twice that amount with shareholders' approval, as part of a broader package of reforms aimed at encouraging banks to behave more responsibly, following widespread public anger at bailed-out banks paying lavish bonuses.

In response to the EU clampdown, which came into effect this year, several banks decided to pay their top executives allowances in cash or shares, instead of a bonus. Stuart Gulliver, the chief executive of HSBC, gets an additional £32,000 a week in allowances in top of his £1.2m salary. Bailed-out banks Lloyds Banking Group and Royal Bank of Scotland have awarded their top executives shares, while Barclays are among other banks with similar schemes.

In a letter to the European Banking Authority, which monitors the industry, Barnier said: "I would like to underline my strong concerns with regard to continuing reports of the use of these allowances. It is important to show a collective pro-active stance on this important matter and address the claims made that the spirit – if not the letter – of union law is being disregarded."

The European Banking Authority launched an investigation into allowance payments in June and was due to report at the end of the year, to allow regulators to take action ahead of next year's pay-setting round at the banks.

But Barnier is now urging them to speed up their work. "I would therefore be very grateful if you could share with us the results of your work on this issue as soon as possible and at the latest by the end of September, in order to ensure that we can address any concerns in a timely manner through a coordinated policy response."

Barnier can propose amendments to the law, but any substantial re-working would be seen through by his successor, who has yet to be named. Barnier's successor is expected to take office on 1 November, under a European commission headed by former Luxembourg prime minister Jean-Claude Juncker.

After being outvoted 26 to one on the EU bankers' bonus cap in 2013, the UK launched a legal challenge at the European court of justice.

A Treasury spokesman said the cap had been "rushed through without a proper impact assessment" and "could undermine financial stability by leading to higher fixed costs at banks".

The UK government will make its case today at a hearing in Luxembourg, but the ECJ is not expected to make a ruling until the end of the year at the earliest.

Dozens of fast-food protesters arrested while striking against low wages

Protesters in more than 100 US cities conduct sit-ins and marches outside restaurants to call for a $15 minimum wage

Fast-food protests continue across US – live updates

theguardian.com, Dominic Rushe and Lauren Gambino in New York, 4 September 2014

Protesters demanding higher wages and unionization for fast food workers march
on Thursday in New York. Photograph: Andrew Burton/Getty Images

Police arrested dozens of people on Thursday during a series of strikes across the US over low wages at fast-food companies including McDonald’s, Burger King and KFC.

Protesters in more than 100 cities including Chicago, New York and Detroit conducted sit-ins and marches outside fast-food restaurants calling for a $15 minimum wage and better benefits for workers. Many fast-food jobs pay just more than the federal minimum wage of $7.25 an hour.

By lunchtime unconfirmed reports said police had arrested 43 people in Detroit, 19 in New York City, 23 in Chicago, 10 in Little Rock, Arkansas, and 10 in Las Vegas. Protests were just starting in California and organisers expected hundreds would be arrested by the end of the day.

Thursday’s strikes were the seventh in a series that began as a local protest in New York two years ago. Each strike has been progressively bigger and organisers credit the movement with focussing the debate on low wage workers and reinvigorating president Barack Obama’s attempts to increase the federal minimum wage.

The latest protests mark a departure from previous efforts with protesters, many of whom were transported to the event by union backers, deliberately getting themselves arrested. So far there have been no reports of injuries.

A worker is detained by police during a protest outside a McDonald’s
restaurant in Philadelphia. Photograph: Matt Rourke/AP

Despite strong opposition from Republicans and business lobby groups, there have been some significant moves to raise wages. Seattle recently increased its minimum wage to $15 and there are proposals of a rise to $13 in New York, Los Angeles and Chicago.

Jeanina Jenkins, a McDonald’s worker from St Louis, Missouri, told the Guardian that $15 an hour would change her life. Jenkins, 21, lives at home with her mother and earns $7.97 an hour. “If I made $15 an hour I’d go back to university and study nursing,” she said.

The latest strike is being backed by the Service Employees International Union, (SEIU) which represents about 2 million workers across the US, mainly in healthcare, public services and property services including janitors and security officers.

The union has been moving to unionise more fast-food workers, but at the moment the process can only be conducted piecemeal, because workers are technically employed by individual franchise-holders, not the bigger chains.

But SEIU won a major victory last month when the National Labor Relations Board ruled that McDonald’s could be held jointly liable for employment and wage violations by its franchise operators. The move, which is being heavily contested, could force fast food firms to negotiate on wages and allow SEIU to unionise restaurants on a larger scale.

Police arrest demonstrators who were protesting for an increase in wages
in Chicago, Illinois. Photograph: Scott Olson/Getty Images

Arun Ivatury, campaign strategist for National Employment Law Project, said: “We talk a lot about responsibility in this country but corporations have to take responsibility too. I am confident that we are now at a moment of change.”

The National Restaurant Association, the largest trade body representing the industry, dismissed the strike actions as a PR stunt, saying it was a “multi-million dollar campaign” funded by unions. “The activities have proven to be orchestrated union PR events where the vast majority of participants are activists and paid demonstrators. This is nothing more than labor groups’ self-interested attempts to boost their dwindling membership by targeting restaurant employees,” the NRA said in a statement.

Obama has been pushing for an increase in the federal minimum wage to $10.10 but has faced stiff opposition from Republican opponents and business lobby groups who argue a wage hike would kill job creation.

Speaking at a Labor Day rally in Milwaukee on Monday, Obama said: “If I were busting my butt in the service industry and wanted an honest day’s pay for an honest day’s work, I’d join a union ... I’d want a union looking out for me and if I cared about these things I’d also want more Democrats looking out for me.”

Related Article:

McDonald's Faces 'Millennial' Challenge