My great-grandfather created a firm which, under the management of his two sons and then grandsons, became the second-largest business of its kind in the world ("Banks will be forced to reveal fatcat bonuses", The Herald, December 7).

For almost three-quarters of a century it gave employment to many hundreds of people in central Scotland. The business was profitable and the two sons enjoyed a very comfortable, yet not excessive, lifestyle. They paid their taxes and, as far as I know, it never crossed their minds to live abroad in order to avoid that.

One year the two brothers decided that the company, although well able to afford it, would not pay a dividend. They argued that, as a private company, those receiving the dividend were the family and, as the family would not go short if it wasn't paid, it would be better if the money was retained within the business. The Inland Revenue objected, pointing out that if no dividend was declared then the Revenue would be denied the tax which would otherwise result. The Revenue lost the argument in the courts and the funds benefited the business.

The Inland Revenue should start applying a variation of this judgment: if a public company would benefit by not paying excessive salaries to the senior management, and the latter's families would be unlikely to suffer a drop in lifestyle as a result of the loss of income, then the Revenue should, from time to time, require those executives to re-invest the excessive portion in the business that employs them.

Ian HC Stein,

8 Ochlochy Park, Dunblane.

Ian Bell makes some interesting points when we writes on how futile it is to attempt to use austerity to cut a budget deficit ("Can the Chancellor take us through the final frontier?", The Herald, December 7). To my knowledge the only clear example of harsh austerity working in the manner so many governments seem to believe it will is Canada in the mid 1990s, and that was done in the context of a strong global economy and nevertheless it still left unpleasant social consequences.

All other successful deficit reductions have involved raising revenue or restructuring debt (that is to say partial or even full default). The latter option is not particularly appealing for obvious reasons and is very much a last resort, so the priority must be to increase revenue. As tax rises are not going to help economic growth in the current climate they should be kept to a minimum and largely targeted at those not contributing to the real economy. The priority must be to achieve the economic growth necessary to bring in increased revenue.

To this end efforts to reduce the deficit must be postponed and governments must borrow to maintain and to increase spending in areas that promote economic growth: social welfare in the short run and capital investment in the medium to long term. If the bond markets will not lend at reasonable interest rates to accommodate this, then the Bank of England and the European Central Bank should increase the money supply to allow this, if necessary by lending directly to governments at low interest rates. During a time of recession, this will not be inflationary provided the amount that is lent in this manner is kept under control.

Such a policy will not, in the short run, reduce Government debt, but in the long run h it will. It is by these policies, not the self-defeating ones currently pursued that the deficit will be eliminated and Government debt paid down.

Iain Paterson,

6 Methven Avenue, Bearsden.

I NOTE with interest your report about HSBC being fined ("£10m fine for bank's mis-sold bonds to elderly", The Herald, December 6).

Any commission or bonuses awarded to individual bankers as a result of their inappropriate advice should be retrieved. This would give a signal to that sector that they will not benefit personally from their inappropriate actions. If these bankers advise that they were acting under instruction, their managers should have their bonuses retracted for not managing properly, and the trail could be followed all the way up to the chief executive.

If these purveyors of poor quality advice want to leave the country because they are not rewarded for failure, I suggest we let them go to wreak their havoc elsewhere.

Peter Moore,

3 Bellevue Road, Ayr.

Just before the 2010 General Election, the UK Labour Government passed a ground-breaking law to clip the wings of predatory vulture funds. The UK law enforces internationally-agreed relief for the most impoverished countries. Unfortunately, due to a technicality, this law did not apply to Jersey.

Vulture capitalists run vulture funds to make profit out of debt. Vulture capitalists make a killing by feeding off other people's misfortune. The UK brought in a law to stop vulture funds using British courts to prey on developing countries. However this law doesn't yet apply to Jersey.

The Democratic Republic of the Congo (DRC) should be one of Africa's richest countries; however, it has suffered from decades of ravaging war and civil war. It has a mineral wealth estimated to be around £15 trillion. There are huge deposits of cobalt, diamonds, gold, copper, oil and 80% of the world's supplies of coltan ore – a valuable mineral used in computers and mobile phones. Despite this fabulous wealth, 100 women a week are still dying in childbirth and 16,000 children under the age of five die every year. One in three children in the DRC will never get anything more than primary education.

One of the reasons the country has been unable to recover is that it is being pursued, by international debt speculators, known as vulture fund capitalists, through offshore tax havens such as Jersey, for debts that were run up during 30 years of war and civil war.

Vulture fund capitalists operate by buying up a country's debt when it is in a state of chaos. When the country has stabilised, vulture funds return to demand millions of dollars in interest repayments and fees on the original debt.

Right now the vulture fund FG Hemisphere is using Jersey's courts to claim $100m from the Democratic Republic of Congo. It bought this debt for just $3.3m. Jersey's new Chief Minister shouldn't turn a blind eye to this; he should extend the UK's anti-vulture fund law.

The European Union should also follow the UK Labour Government example and introduce a law to outlaw vulture funds operating in the European Union and force creditors to take part in debt write-downs and stop the vultures scavenging off other people's hard luck.

You can see them overhead, the vultures are beginning to circle Greece and Ireland.

David Martin,

Labour MEP,

Midlothian Innovation Centre

Pentlandfield,

Roslin.