HOUSE OF COMMONSLONDON S'T1A OAA

The Rt Hon Lady Hodge MBE MPHouse of CommonsLondonSW1A OAA

22 November 2012

Dear Lady Hodge

Thank you for your letter of 20 November and its attachment which I have seenvia your Twitter account.

You appear to have misread my letter of 19 November. It made no "accusations"about your family company, Stemcor. In particular, it did not, contrary to whatyou allege, accuse Stemcor of "tax aaoidance"; neither did it allege that Stemcor"mnnipulates its profits to reduce its tax liabilities in thc UK.'. It made no suchaccusafions and I do not make them.

My letter is about you and not your company.

The purpose of my letter was to express real concern, which is shared by manyothers, including many of my constituents, about your role and office as Chair ofthe PAC and how, in the eyes of many, it conflicts with your position as ashareholder in (and thus owner and recipient of dividends from) yourmultinational family business, Stemcor.

It is unfortunate, and a matter of real worry, that you appear not even toacknowledge that concern.

In an official capacity as Chair of PAC, you have been a very outspoken critic ofthe tax arrangements of multinational companies which trade in the UK and thatyou have summoned to PAC., while at the same time you acknowledge thatthose activities are not illegal. In your statement in reaction to a Reuters reportabout Starbucks, for example, you expressed the opinion that "HMRC must take a

serious look into these allegntions agninst Stsrbucks, .. We simply cnnnot continue uith a

system thst allotus n company like Starbucks to get auay ruith paying no tax

whntsoeaer", In the same statement, you also announced that Starbucks "...hnd,.uriggled out of paying its fair share. It is just not right."

Your have also made outspoken criticisms of other multinational companies, andtheir representatives, that you have summoned to appear before your Committeeand have appeared reluctant to accept their explanations.

The concern I have expressed, and I note you have tried to characterise as anattack on your company (which it is not) and by making a veiled threat of legalproceedings against me, is that your shareholdings in Stemcor (both shares inyour own name, and shares held on trust for you) means that you are a part-owner of a multinational company which trades in the UK and, according toStemcor's own Annual Report and Accounts, (i) turned over f,2.1bi11ion in the UKbut (ii) paid as little as f157,000 in UK corporation tax while (iii) it engages/ nodoubt legally, in transfer pricing.

These basic characteristics of Stemcor - a multinational trading in the UK, highturnover and low incidence to corporation tax by virtue of being in an

international group, are shared by the very same companies you have criticisedin an official capacity on moral grounds, invoking the public interest to do so.

In order to remove concerns that you cannot be seen to be impartial in your roleas Chair of PAC, I now invite you to call representatives of Stemcor to appearbefore PAC and for them to be subject to the same line of moral questioning andanalysis that you have subjected other companies that do business in the UK, likeStarbucks, Amazort, Google and so on.

If you refuse to accept this invitation, the concern will grow that you are

applying one set of moral values and methodology to a sector of themultinational community of companies which trade in the UK which you are

inexplicably not willing to apply to your own family company. That will harmthe reputation of PAC and I have a duty to try to prevent that.

If you consider that Stemcor is so completely unlike the companies you havesingled out for criticism, then please explain, in detail and by reference toStemcor's corporate conduct, why you think that is so.

I am not reassured by your invitation that I rely on your company's own pressrelease dated 20 November 2012 about how it manages its international taxaffairs, when you have not been willing to rely on similar statements of othercompanies which have done the same thirg to justify their positions. In fact,youare asking me to take at face value a press release of your family company whenyou refuse to do the same for others you have singled out for criticism.

As I have said, this has nothing to do with the legality of Stemcor's taxarrangements. It has to do with public confidence in the very important work ofthe PAC in this area, and very real concern that you are, obviously in my view,not best placed to be chairing if given your and your family's involvement withStemcor.

Yours ever,

Priti PatelMember of Parliament for Witham

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