As job losses and offshoring disputes hit traditionally sleepy Lapland, our northern Europe correspondent asks, is Father Christmas PLC on the rocks?

It all started early in 2004 when the first job losses were announced in the Grotto. Out of a workforce of 10,000 mainly elves (there is a small minority of trolls traditionally employed to do the heavy work) some 2,000 redundancy notices were handed out in early February this year.

anagement said that a ‘difficult final quarter of 2003 and the wrong sort of snow’ had ‘forced their hands’ in announcing the job losses.

Predictably, the elves were not happy and threatened industrial action. The main board of Claus Inc. forestalled industrial action with a mass hand out of sticks of stripy rock shaped like walking sticks, but the writing was on the wall.

As June came around, it became apparent that Claus PLC was facing further industrial trouble. But this time among a previously loyal workforce: the reindeers. Bigger nose bags were offered, as were rub-downs from a team of specially imported Fillipino hobbits, but to no avail.

One of the reindeers, a Mr Blitzen, was quoted as saying that “working conditions are pretty bad right now. All twelve of us think that Claus has been focusing too much on placating the remaining elves and, frankly, doesn’t care who else he upsets.” Rumours abounded that many of the reindeer wives had been prescribed turnips – a well-known ungulate anti-depressant.

By September it became apparent to the Grotto management that the Elven job losses had been too swingeing, and a fall-off in production of Bratz Dolls was seriously damaging revenues. A number of leading City banks began threatening to call in their credit lines. Rumours began circulating that S Claus Inc was using illicit offshore structures set up in the tiny island of Veratanu to keep revenues from shoddily made wooden train sets away from the Lap tax authorities.

Pretty soon, the OECD’s Offshore Scrutiny Commission got in on the act and set up a sub committee to look into the matter. Their report is expected to be critical and will hit the chimneys in the New Year.

But what of the 2,000 redundant elves whose dismissal sparked this trouble off? Despite the initial setback, the signs are that the elves are resilient. According to the UK Gnome Office a large number of work permits were issued to “individuals of Elvish extraction” to work largely in legal services in London. But the Tory Spokesman on Elvish Affairs expressed concern that the National Elf Service ‘might find itself overstretched because of the influx’.

The Elves appeared to be successful elsewhere as well. In late October Elven Bank International (Channel Islands) set up in St Peter Port offering trade finance and trust incorporation to “trolls, hobbits, elves and otherworlders engaged in offshore finance: for all your ethereal needs”.

Similar financial institutions have been reported in St Hellier, Douglas – and as far afield as Vanuatu and the Cayman Islands. Curiously, a number of customers have reported difficulty in getting confirmation of newly opened accounts. One told us that on returning to where he remembered the brass plate to have been on Gibraltar high street “it was just gone. Vanished. And I never got my Russian bearer bonds back neither.”

Darker signs like this do not appear to be isolated. In October, Interpol arrested what their press statement said were “a number of unusually small men” in St Petersburg in what appeared to be a sting operation to smash a fly agaric mushroom-smuggling ring. A spokesman for Interpol said that the trail ‘went cold’ on the border of Lapland and that ‘investigations are ongoing, but we don’t hold out much hope – the mushroom temptation is too strong for the elves’.

But where now for Santa Claus? It has been a turbulent year. His offshoring operations look solid enough. Plants in Indonesia and Slovakia are reportedly thriving, and a spokesman told us that the “through-put” in the call centre in Delhi was showing strong growth. But signs of cash-flow problems remain. In what was seen as a desperate measure, Mr Claus released a Christmas single in December called “It’s a hip-hop Christmas, my Ho Ho Ho.”

No elves were harmed in the writing of this article.