The
Government announces that it now does not intend to keep its promise to demand
greater transparency over the issue of beneficial ownership of offshore corporations.
This
is not altogether surprising, because when it comes to implementing procedures
which might impact adversely on their sleazy friends in the banking sector,
this government has been proving itself to be remarkably limp-wristed, even by
the standards of Tory administrations.
In
my last blog, I demonstrated how the City of London was lobbying to relax the
rules which deal with the implications of the rules dealing with politically
exposed persons, in order to remove unwanted barriers to the free-flow of
foreign capital into the City of London’s coffers.
I
made the point that since the Tory victory in the last general election, the
City and its supporters were working hard to water down the implications of the
perfectly sensible laws which exist to prevent and forestall dirty money from
finding a safe haven in British banks.
We
have strong laws designed to stop foreign criminals and particularly foreign
corrupt politicians, senior military personnel, and other persons who have held
elevated roles in public life, during the course of which they have enriched
themselves beyond the dreams of avarice, from enjoying the proceeds of their
crimes. That money has to go somewhere, and the banks in London want it to come
here, if you please, from where, our organised mafia bankers will make sure it
finds its way into the world’s offshore fantasy finance facilities, thus
preventing it from being identified, sequestered and restored to its rightful
owners.
British
bankers don’t give a flying fig for the rights and wrongs of the actions of
foreign dictators, they just love their money very much indeed.
Last
year, global money laundering had become an issue of major importance for the
world’s leading nations. It was especially concerned with issues of global tax
evasion as Governments were looking for ways to recoup the enormous sums of
money they believed they were owed by tax evaders.
David
Cameron likes to be seen to be a ‘leader’ in political debate, he likes to be
seen to be driving the discussion, as opposed to tamely following the agenda.
At the end of October, 2013, he was able to announce that Britain was to pledge
public access to a tax evasion-busting database.
He was
set to announce that he would make public a new database of company ownership
details designed to expose international money laundering and tax evasion
schemes.
The plan
advanced Cameron's efforts to push money laundering and tax evasion to the top
of the global agenda, and followed up on a debate at a summit of eight of the
world's wealthiest states (G8) earlier in June 2003..
The idea
of a "beneficial ownership register" would go beyond the existing
registration of corporations and shareholders by untangling deliberately opaque
ownership structures to help tax authorities track down those who were using
low-tax regimes overseas to illegally reduce their tax bills.
By making
the data public, a decision taken after a consultation with businesses and
pressure groups during previous months, the government hoped to allow wider
scrutiny and put more pressure on firms and individuals seeking to hide wealth
and profits.
"For
too long a small minority have hidden their business dealings behind a
complicated web of shell companies - and this cloak of secrecy has fuelled all
manners of questionable practice and downright illegality," Cameron was to
say at a conference in London later in the day.
"It's
better for us all to have an open system which everyone has access to - the
more eyes that look at this information, the more accurate it will be."
Cameron would
urge other countries to follow suit.
Campaigners
said that by making the first move, Britain had set a welcome precedent for
others.
"This
sets such an important global principle... You have to have someone who makes a
stand on principle and then gets the world to follow. In this case it's the
UK," said Gavin Hayman of the anti-corruption group Global Witness.
Efforts
to improve transparency in the European Union were currently being debated, and
recent legislative proposals in the United States could tackle company
ownership disclosure. Hayman said neither was expected to quickly follow
Britain's lead.
Cameron's
efforts to clamp down on tax evasion had been complicated by the fact that
Britain was seen as a market leader in providing access to offshore tax havens
in former British colonies.
"We've
found the UK has been one of the pillars of financial secrecy in the past so
this is quite a significant shift," Hayman said.
"Using
the corporate veil to obscure underlying ownership brings the corporate sector
into disrepute and creates significant opportunities for wrongdoing or criminal
activity," said Roger Barker, spokesman for the Institute of Directors.
"Significant
practical challenges remain in order to ensure that any register of beneficial
ownership is accurate and robust, but we support government efforts to begin
this process."
We could
be forgiven for thinking that this was a move that was intended to be followed
through.
But how naive
that view has proven to be.
It was
announced this last week that the UK government appears to have relaxed its
pressure on the Cayman Islands to create a register of company ownership,
despite David Cameron’s plea last year for overseas territories to do so in the
interests of tax transparency.
The prime
minister promised to introduce a public register of beneficial ownership in the
UK and wrote to the overseas territories last year urging them to consider
doing the same, arguing that public access to a central list is “vital to
meeting the urgent challenges of illicit finance and tax evasion”.
However,
the Cayman Islands is one of several offshore territories – including the British
Virgin Islands and Bermuda – that are refusing to implement the idea after
consultation.
Despite
further pressure from the Foreign Office and Treasury earlier this year, the
position of the Cayman Islands now seems to have been accepted by Grant Shapps,
a Foreign Office minister.
On a
visit last week, Shapps said he believed the aims of helping tax authorities
could be achieved within the Cayman Islands’ existing systems and argued
“there’s more than one way to skin a cat”.
But these
are just weasel words from Mr Weasel himself. There are more;
“Now, in
terms of beneficial ownership the principle’s really straight forward. There
needs to be, certainly for law enforcement agencies and bodies, the ability to
find out who owns what in a transparent way, and not only for that information
to be quickly and efficiently available so a single request could go in and the
information can be provided,” Shapps said.
Well,
this does not accord with Cameron’s original basis for requiring registers of
interests to be maintained. He had said;
“...But
dealing with tax evasion is not just about exchanging information. It is also
about improving the quality and accuracy of that information. Put simply, that
means we need to know who really controls each and every company. This goes
right to the heart of Britain’s G8 commitment to knock down the walls of company
secrecy...These (proposals) will need to provide for fully resourced and
properly managed centralised registries that are freely available to law
enforcement and tax authorities, and contain full and accurate details on the
true ownership and control of every company...”
Under the
Cayman Islands plan, there would be no government-held register, but corporate
service providers would have to make available on company ownership to law
enforcement agencies within 24 hours of a request being made.
Shapps
himself observed that the Treasury had only ever expected overseas territories
to set out timetables for either central registries “or similarly effective
systems” by November 2015.
A
spokeswoman for the Foreign Office insisted the position of the British
government had not changed.
“As Mr
Shapps set out during his visit to the Cayman Islands, our objective is to
ensure law enforcement and tax authorities are able to access company
beneficial ownership information without restriction,” the spokeswoman said.
“This
will ensure relevant authorities can quickly identify all companies that a
particular beneficial owner has a stake in, without needing to submit multiple
and repeated requests.”
As always
happens, a tame civil servant in the Foreign Office has trotted out some
bromide seeking to put a gloss on the reality, which is the offshore sectors
have told Cameron to go and take a running poke at a rolling doughnut!
But yet
again, the devil has successfully hidden himself behind the detail.
Those of
us who deal professionally with the issue of global money laundering know only
too well how much of the success of the global ball of hot and dirty money is
facilitated by the off-shore secrecy facilities offered by little Islands like
the Caymans.
Why else
does every crook, tax evader, conman and money launderer want to have access to
these and similar jurisdictions.
Their own
Governments know only too well that if their corporate registries are required
to provide transparent lists of corporate beneficial ownership, then the
islands will be forced back, very quickly, into penury.
The City
of London, which is the equivalent of spaghetti junction for most of the world’s
offshore entities, also knows that without access to that global network of
funny money secrecy, a lot of their dubious business schemes would not succeed.
So,
pressure has had to be brought on David Cameron and his ministers, to find a
way to save face and give in gracefully, and little Grant Shapps has been
deputed to trot out to Cayman and go through the motions of looking good about
the new proposals, which are a huge embarrassment for David Cameron.
Yet
another perfectly sensible provision to help forestall international money
laundering has been dismantled, and the City of London can go on running its
nefarious schemes.
But how naive
that view has proven to be.
It was
announced this last week that the UK government appears to have relaxed its
pressure on the Cayman Islands to create a register of company ownership,
despite David Cameron’s plea last year for overseas territories to do so in the
interests of tax transparency.
The prime
minister promised to introduce a public register of beneficial ownership in the
UK and wrote to the overseas territories last year urging them to consider
doing the same, arguing that public access to a central list is “vital to
meeting the urgent challenges of illicit finance and tax evasion”.
However,
the Cayman Islands is one of several offshore territories – including the British
Virgin Islands and Bermuda – that are refusing to implement the idea after
consultation.
Despite
further pressure from the Foreign Office and Treasury earlier this year, the
position of the Cayman Islands now seems to have been accepted by Grant Shapps,
a Foreign Office minister.
On a
visit last week, Shapps said he believed the aims of helping tax authorities
could be achieved within the Cayman Islands’ existing systems and argued
“there’s more than one way to skin a cat”.
But these
are just weasel words from Mr Weasel himself. There are more;
“Now, in
terms of beneficial ownership the principle’s really straight forward. There
needs to be, certainly for law enforcement agencies and bodies, the ability to
find out who owns what in a transparent way, and not only for that information
to be quickly and efficiently available so a single request could go in and the
information can be provided,” Shapps said.
Well,
this does not accord with Cameron’s original basis for requiring registers of
interests to be maintained. He had said;
“...But
dealing with tax evasion is not just about exchanging information. It is also
about improving the quality and accuracy of that information. Put simply, that
means we need to know who really controls each and every company. This goes
right to the heart of Britain’s G8 commitment to knock down the walls of company
secrecy...These (proposals) will need to provide for fully resourced and
properly managed centralised registries that are freely available to law
enforcement and tax authorities, and contain full and accurate details on the
true ownership and control of every company...”
Under the
Cayman Islands plan, there would be no government-held register, but corporate
service providers would have to make available on company ownership to law
enforcement agencies within 24 hours of a request being made.
Shapps
himself observed that the Treasury had only ever expected overseas territories
to set out timetables for either central registries “or similarly effective
systems” by November 2015.
A
spokeswoman for the Foreign Office insisted the position of the British
government had not changed.
“As Mr
Shapps set out during his visit to the Cayman Islands, our objective is to
ensure law enforcement and tax authorities are able to access company
beneficial ownership information without restriction,” the spokeswoman said.
“This
will ensure relevant authorities can quickly identify all companies that a
particular beneficial owner has a stake in, without needing to submit multiple
and repeated requests.”
As always
happens, a tame civil servant in the Foreign Office has trotted out some
bromide seeking to put a gloss on the reality, which is the offshore sectors
have told Cameron to go and take a running poke at a rolling doughnut!
But yet
again, the devil has successfully hidden himself behind the detail.
Those of
us who deal professionally with the issue of global money laundering know only
too well how much of the success of the global ball of hot and dirty money is
facilitated by the off-shore secrecy facilities offered by little Islands like
the Caymans.
Why else
does every crook, tax evader, conman and money launderer want to have access to
these and similar jurisdictions.
Their own
Governments know only too well that if their corporate registries are required
to provide transparent lists of corporate beneficial ownership, then the
islands will be forced back, very quickly, into penury.
The City
of London, which is the equivalent of spaghetti junction for most of the world’s
offshore entities, also knows that without access to that global network of
funny money secrecy, a lot of their dubious business schemes would not succeed.
So,
pressure has had to be brought on David Cameron and his ministers, to find a
way to save face and give in gracefully, and little Grant Shapps has been
deputed to trot out to Cayman and go through the motions of looking good about
the new proposals, which are a huge embarrassment for David Cameron.
Yet
another perfectly sensible provision to help forestall international money
laundering has been dismantled, and the City of London can go on running its
nefarious schemes.
