The UK’s overseas territories face renewed pressure to abandon corporate secrecy after 80 MPs joined forces to demand greater financial transparency from offshore havens.
The cross-party group is backing an amendment to the government’s criminal finances bill on Tuesday that would force Britain’s 14 overseas territories to introduce public registers revealing the true owners of locally registered companies.
The move is expected to face fierce opposition from the handful of the UK’s overseas territories – including the British Virgin Islands, Turks and Caicos Islands and Anguilla – that have become some of the world’s most active secrecy havens.
Earlier this year, the Panama Papers scandal laid bare how offshore corporate secrecy regularly attracts illicit money flows linked to terrorism, corruption, money laundering, tax evasion, drugs and fraud. Some estimates have suggested as much as $32tn (£26tn) of the world’s wealth has been hidden offshore.
The MPs’ proposal, which is being tabled on the last day before parliament breaks for Christmas, would effectively give all overseas territories until 2020 to introduce public registers.
Earlier this year, many overseas territories refused to buckle under intense pressure from then UK prime minister David Cameron, who called for them to introduce registers.
The MPs’ amendment is to be tabled by Labour’s Dame Margaret Hodge, former chair of parliament’s public accounts committee. It has won backing from a wide cross-party base of backbench MPs, including including Andrew Mitchell, the Conservative former international development secretary, and Nigel Dodds, the Democratic Unionist party’s Westminster leader.
About 80 MPs – among them Greens, Liberal Democrats, Plaid Cymru, SNP and SDLP politicians – are due to add their voice to the amendment proposal. If such levels of support hold, it is expected to put intense pressure on the home secretary, Amber Rudd, to add her backing.
Such a move could spark angry reactions from many overseas jurisdictions and could even provoke local politicians to call for a severing of ties with the UK. Many territories may question why the amendment does not extend to the UK’s crown dependencies, include as Jersey, Guernsey and the Isle of Man.
It is extremely rare for the UK to use its special powers – known as “order in council” edicts – to impose laws on overseas territories. “Of course political parties have shied away from using these powers. They can seem somewhat colonial,” said Hodge. “But I think there are overwhelming moral arguments at stake here.
“The Conservatives used them to outlaw capital punishment; Labour used them to get rid of laws against homosexuality. Now we are facing another big moral issue ... Over half of the corporate entities exposed by the Panama papers were registered in the BVI, a British overseas territory.
“The UK is at the centre of a global web of tax havens which are costing UK taxpayers and developing countries huge sums of money.”
There are at least seven Tories supporting the amendment, led by Mitchell, who is calling on Theresa May’s government not to let the momentum for reform, built up by Cameron, fade away. “I hope this amendment will help the UK government to persuade the overseas territories to adopt the same level of transparency as the UK,” he said. “This is so important for people in developing countries who are losing out due to tax dodging.”
Sally Copley, the head of campaigns for Oxfam, the anti-poverty charity, said a number of developing world charities were backing the move. “These tax transparency standards are essential to hold the overseas territories accountable for their policies’ impact on other countries – especially the poorest, which are hardest hit and have the most to lose from tax dodging,” she said.
