P.S. Bob

My concern about Bob Diamond’s financial plight is growing. As you know, the CEO of Barclays needed the bank to cover his tax liability incurred when he was forced to relocate to London to take up his duties as chief executive.

Well, that’s not quite the spin the bank is using to explain why it paid the U.K. tax authorities £5.7m on Bob’s behalf. As I explained in the previous post, I am really worried about the tax advice Bob has been getting. That is, if we can trust everything we are being told by Barclays.

Pondering more on Bob’s remuneration package and how he’s being employed by Barclays, it has now dawned on me that Bob is alarmed also about how he’s going to make do when he’s retired and no longer a master of the universe.

How do I arrive at that assumption? According to Barclays they don’t actually employ Bob; he’s just assigned to the bank and is, in fact, employed by a Delaware-based company called Gracechurch Services Corporation, admittedly a subsidiary of the bank. Gracechurch is just lending Bob to Barclays, which is awfully good of them.

The Guardian noted that this assignment agreement “appears overly complicated” but Barclays told the newspaper that it employs a number of its bankers this way to allow them to keep continuity of U.S. benefits, particularly for healthcare.

And that’s when it became clear to me. Bob is concerned about his old age. Well, aren’t we all with the ending of final salary pensions and the financial crash ruining our stock portfolios.

So, as I read it, being employed by a U.S.-based company allows Bob to do a couple of things: 1. Continue paying into U.S. social security and securing a waiver in the U.K. on paying national insurance contributions; and 2. Maintaining his Medicare contributions so that it will be there for him when he retires.

It is nice to know that a master of the universe is hedging his bets, so to speak. No doubt the outcry over the pension given to disgraced banker Fred Goodwin, formerly a “Sir” and top dog at the Royal Bank of Scotland, gave Bob pause for thought and convinced him that he might not have the wherewithal to afford great private health insurance when he’s retired. Yes, better to make sure you will definitely get a full pension from the Feds, about $22,000 at the moment, and be eligible for Medicare.

But even here I am not sure Bob is getting good advice, that is, if Barclays is telling the truth. You see, Bob is almost certainly vested in Medicare already – you only have to work for about ten years in the U.S. to reach that status. And, any payments into the U.K. national insurance program could be counted in as U.S. social security contributions, if he were short of the necessary when it comes to his Fed pension.

Barclays mentioning of health care benefits could mean also that Bob was worried about breaking continuity when it comes to private medical cover. Here an explanation is needed for the Brits. In the U.S. you don’t want any break in private health coverage. If there is a break of more than 60 days, when you come to apply to a new insurer for coverage, then they can write out pre-exisiting conditions.

One key aspect of the Obama health care reform would, of course, change that by stopping health care insurers from rejecting an applicant because of pre-existing conditions or refusing to cover those conditions. That will come into effect in January 2014, if the Supreme Court doesn’t strike down the health care reform.

But again the advice to Bob was wrong. Barclays could have gone to a U.S. insurer to secure international coverage for Bob that wouldn’t have broken continuity of coverage. Cigna offers such a policy. Also, Barclays could have gone to BUPA or PPP in the U.K.. Several of their policies are recognized by U.S. insurers and would not have jeopardized coverage continuity in the U.S..

Now, of course, I am basing all of this on taking Barclays at face value. Maybe there is more here than meets the eye – as with Bob’s tax situation.

That aside, Bob has managed to get from me lots of counsel for nothing. And I am not going to ask Bob for a salary or a bonus. But I was wondering if he could pay my taxes for me. They will just be a tiny fraction of what Bob got from Barclays

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