London fintech CEO under investigation over taxes

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28th June 2022

Bite-sized business news from the UK and beyond

Good morning Last week The Economist’s Intelligence Unit released its annual list of the world’s most liveable cities ranking them on a variety of factors, including health care, crime rates and access to green space. Overall, Europe dominated the list, with six places in the top 10 and Vienna topping the rankings. Manchester was the UK’s highest placed city at #28, five places above London.

Today's stories

London fintech CEO under investigation over taxes
G7 pledge $600bn to counter Chinese influence

FINTECH
London fintech CEO under investigation over taxes

What happened?
Yesterday the Financial Conduct Authority announced it was launching an investigation into Kristo Kaarmann, the founder and CEO of payments firm Wise, over his failure to pay taxes. The probe by the City watchdog comes after Kaarmann was fined £366,000 by HMRC for not meeting his tax obligations.

It’s a fall from grace for the founder of a London tech darling
Founded in London in 2011, Wise (formerly known as TransferWise) is known for its cheap app-based money transfers across different currencies and has 10 million users.

A year ago the company debuted on the London stock market with a valuation of over £8bn making it the UK’s biggest ever tech float. As a result the company’s founders Estonians Kristo Kaarmann and Taavet Hinrikus, who own almost 30% of Wise, became billionaires, at least on paper.

The listing was seen as a win for the UK government and the City which desperately wants to make London the place to be for fast-growing tech companies going from private to public. Between 2015 and 2020 less than 5% of global public market debuts were done in the capital compared to 40% in New York.

But Kaarmann failed to keep up with his taxes
Last September the tax authorities named and shamed Kaarmann on a list of people that deliberately defaulted on their taxes. He failed to pay over £720,000 in taxes for the 2017-18 tax year.

Wise said it had since launched its own internal investigation and was taking action to remedy the situation including getting professional tax advisers to manage Kaarmann’s personal tax matters.

Zooming out: The FCA’s probe could rule that Kaarmann is not a ‘fit and proper person’ meaning that it could decide that he is no longer suitable to do his job as Wise’s CEO.

Other stories to keep you in the loop

Post Office workers to strike over pay
Families to be paid to use less electricity under plan to avoid power blackouts
British taxpayers take stake in sex party planning firm
Sainsbury's pressed to pay more to subcontracted workers
British fintech Kroo gets full banking licence
Russia defaults on debt for first time since 1998

GLOBAL ECONOMY
G7 pledge $600bn to counter China

What happened?
On Sunday, leaders of the seven major industrialised countries, aka the G7, agreed at a summit in Germany to raise $600bn to fund infrastructure projects in developing countries over the next five years.

It’s all part of a plan to challenge China’s own, similar efforts in the developing world
In 2013, China launched what it calls The Belt and Road Initiative, a global infrastructure strategy designed to increase China’s global reach and influence.

The investment scheme involves projects in more than 100 countries aimed at creating a modern version of the ancient Silk Road trade route from Asia to Europe.

The West, namely the G7, are concerned it will leave China’s autocratic state with too much influence on developing nations.

The US will headline the project with a $200bn contribution that will include direct government aid and private investments — the G7 as a whole including the UK, plus private investors, will make $600bn in investments by 2027.

The fund is actually a revamped version of a project first unveiled at the G7 summit in Cornwall last year. Back then it was known as the Build Back Better World but it faltered from a lack of progress, and the project was relaunched in Germany over the weekend.

The infrastructure projects will focus on climate, information technology and health systems
The first batch of projects include a solar project in Angola, vaccine manufacturing facility in Senegal and a submarine internet cable that will run from Singapore to France.

Stat of the day

According to a Daily Mail investigation the UK is the fraud capital of the world with £3bn in losses a year

Interesting links from around the web

5 expert-approved ways to set financial boundaries with your friends
Founder tips on how to be successful
Learn some useful foreign words that have no English equivalent

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London fintech CEO under investigation over taxes

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