The German investment giant poised to take over bus operator Stagecoach has paid virtually no corporation tax on two of its key UK assets, a Mail on Sunday investigation reveals.
DWS investments include Yorkshire Water – which paid no corporation tax last year and has been repeatedly criticized for pumping sewage from UK rivers.
The Frankfurt-based company was also a major shareholder in Peel Ports, which owns the Port of Liverpool and London Medway, but has paid less than £10m in tax in the last five years it was a investor.
New route: Stagecoach is targeted by financial powerhouse DWS
DWS is a financial powerhouse that manages €900bn (£750bn) in assets across the world and is majority owned by Deutsche Bank.
He is in pole position to take over Stagecoach and is battling British forklift operator National Express to seal a deal.
Stagecoach operates bus services in over 100 cities and towns across the country.
It is considered a key player in the Government’s upgrading strategy because it provides vital local access to services and jobs for those who do not have private transport. But revelations about tax payments on its other holdings and Yorkshire Water’s river pollution toll have raised concerns about the management of DWS.
Tax Research UK director Richard Murphy said: “Bus services are hugely important to those who depend on them. If DWS has been involved in dumping sewage into rivers, it is not a fit and proper company to operate buses.
He added: “Companies operating critical infrastructure in the UK should not have opaque structures that do not allow us to easily scrutinize their taxation and governance.” Water companies have been asking for massive tax incentives and regulator Ofwat has just allowed them.
George Turner, executive director of think tank TaxWatch, said: “If companies like these reduce their tax liabilities, there is less to invest in other services while Stagecoach still receives strong state support. for its local services.”
Stagecoach paid £17.8million in tax in 2019 – the last year before the pandemic devastated its finances.
DWS is co-owner of Yorkshire Water’s parent company, Kelda, which paid no tax last year while raking in £1.1billion in revenue. Scott Auty, managing director of the infrastructure arm of DWS, has served on the board of Yorkshire Water since 2017. During that time, Yorkshire Water has come under increasing scrutiny for water discharges. sewage in local rivers.
In January he was fined £233,000 for dumping sewage into a river in Bradford. The following month he paid £300,000 to the Yorkshire Wildlife Trust following a sewage spill in Leeds.
Just a week ago it came under fire from Ofwat who said it had “serious concerns” about Yorkshire Water’s sewage treatment works, alongside four of its competitors.
According to documents filed by DWS, Auty is one of a trio of directors on the board of a newly created vehicle set up to acquire Stagecoach.
Late last year, DWS sold its stake in Peel Ports, which generates over £100m in operating profit a year and is ultimately owned by a company in the Cayman Islands tax haven. Auty is also a director of investment firm Wharfedale Hong Kong, which paid no tax in 2020 and is controlled by a Jersey-based fund.
Earlier this year The Mail on Sunday revealed how water companies were paying huge fees for debt servicing and other financial instruments – wiping out profits and tax debts.
Rival bids: Sir Brian Souter, former Stagecoach boss, and his sister Dame Ann Gloag
Last year National Express revealed plans for a £1.9billion equity merger with Stagecoach. Sir Brian Souter, who co-founded the company in 1980 and grew it into a global group before stepping down in 2019, backed the deal with his 14.5% stake.
DWS then emerged with a cash offer of £595m, potentially derailing the National Express merger. The German bidder is expected to present the details of its offer within a few days.
DWS’ bid was backed by Souter’s sister, Dame Ann Gloag, and institutional shareholder Columbia Threadneedle. The board recommended DWS’s offer.
Sources close to DWS said the German company sees Stagecoach as an essential UK service producing reliable revenue similar to its existing utility assets.
National Express hopes to create a transport giant and plans to cut costs by cutting jobs, including at Stagecoach headquarters in Perth.
DWS sources said significant investment in the ports of Yorkshire Water and Peel had enabled it to offset tax debts.
A DWS spokesman said his companies pay “all taxes due”.
A spokesman for Yorkshire Water said it paid £148million in other taxes last year and invested £2.5billion over the past five years.
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