British overseas territories in talks to keep tax haven secrecy

UK plan to impose public registers of share ownership sparked protests and calls for constitutional separation

Leaders of British overseas territories are to hold two days of showdown talks with ministers in an attempt to reverse the UK government’s decision to end secrecy for offshore tax havens.

An unexpected vote by MPs at the beginning of May to impose public registers of share ownership in all the BOTs has triggered angry resistance including street protests, boycotts of the Queen’s birthday celebrations, and even demands for constitutional separation.

The disagreements have the potential to create the biggest constitutional crisis between London and the territories for decades, which an apologetic 35-minute phone call from Theresa May and visits to some of the BOTs by the Foreign Office minister Lord Ahmad has so far failed to soothe.

The territories, which include the British Virgin Islands (BVI), Bermuda, Cayman Islands and Turks and Caicos Islands, fear an end to tax secrecy will undermine the financial services industries on which local economies depend since privacy-seeking investors will simply move their portfolios to other secretive regimes.

They also claim the Commons vote infringes the constitutional right of the islands to oversee their own domestic legislation. More than 1,000 people marched in the BVI to protest against the enforced change in the law.

After the Panama Papers exposed widespread money-laundering, MPs ignored government pleas and backed an amendment to the sanctions and anti-money laundering bill to require BOTs to set up public registers of beneficial ownership by the end of 2020.

1) Millions of pounds from the Queen’s private estate has been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families.

2) Prince Charles’s estate made a big profit on a stake in his friend’s offshore firm.

3) Extensive offshore dealings by Donald Trump’s cabinet members, advisers and donors, including substantial payments from a firm co-owned by Vladimir Putin’s son-in-law to the shipping group of the US commerce secretary, Wilbur Ross.

4) Twitter and Facebook received hundreds of millions of dollars in investments that can be traced back to Russian state financial institutions.

5) The tax-avoiding Cayman Islands trust managed by the Canadian prime minister Justin Trudeau’s chief moneyman.

6) The Formula One champion Lewis Hamilton avoided taxes on a £17m jet using an Isle of Man scheme.

7) A previously unknown $450m offshore trust that has sheltered the wealth of Lord Ashcroft.

8) Oxford and Cambridge and top US universities invested offshore, with some of the money going into fossil fuel industries.

9) The man managing Angola’s sovereign wealth fund invested it in projects he stood to profit from.

10) Apple secretly moved parts of its empire to Jersey after a row over its tax affairs.

11) How the sportswear giant Nike stays one step ahead of the taxman.

12) The billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts.

13) Offshore cash helped fund Steve Bannon's attacks on Hillary Clinton.

14) The secret loan and alliance used by the London-listed multinational Glencore in its efforts to secure lucrative mining rights in the Democratic Republic of the Congo.

15) The complex offshore webs used by two Russian billionaires to buy stakes in Arsenal and Everton football clubs.

16) Stars of the BBC hit sitcom Mrs Brown's Boys used a web of offshore companies to avoid tax.

17) British celebrities including Gary Lineker used an arrangement that let them avoid tax when selling homes in Barbados.

18) Prominent Brexit campaigners have put money offshore.

19) An ex-minister who defended tax avoidance has a Bahamas trust fund.

20) The Dukes of Westminster pumped millions into secretive offshore firms.

21) A tax haven lobby group boasted of 'superb penetration' at the top of the UK government before a G8 summit that was expected to bring in greater offshore transparency.

22) The law firm at the centre of the Paradise Papers leak was criticised for 'persistent failures' on terrorist financing and money laundering rules.

23) Seven Republican super-donors keep money in tax havens. 

24) A top Democratic donor built up a vast $8bn private wealth fund in Bermuda.

25) The schemes used to avoid tax on UK property deals.

26) The celebrities, from Harvey Weinstein to Shakira, with offshore interests.

27) How a private equity firm tried to extract £890m from a struggling care home operator by making it take out a costly loan.

28) Trump’s close ally Robert Kraft, the New England Patriots owner, is the longtime owner of an offshore firm.

29) One of the world’s biggest touts used an offshore firm to avoid tax on profits from reselling Adele and Ed Sheeran tickets.

Andrew Mitchell, the former Conservative international development secretary and a leading MP behind the rebellion, was unrepentant, saying on Tuesday: “The overseas territories share our queen, they travel under our flag and they must also share our values.”

He intends, with the former chair of the public accounts committee Margaret Hodge, to press crown dependencies including Jersey and the Isle of Man to accept the same regime as the BOTs.

Treasury ministers had been desperate to exclude the jurisdictions, already in the process of reluctantly establishing registers that could be accessed on request by law enforcement bodies, from the legislation passed last month – but the move only fuelled the anger of the overseas territories.

The BVI delegation to London, one of the groups from the BOTs, is being led by its pro-independence deputy premier, Dr Kedrick Pickering, and has hired the law firm Withers and instructed counsel to prepare a legal challenge on the basis that the UK parliament has overreached itself.

Hussein Haeri, partner and head of Withers’ public international law team, said: ‘We are confident that there are constitutional grounds for challenging the imposition of a public register of the beneficial ownership of companies and human rights issues raised by public access to the register.

“The BVI’s consistent position is that it will not introduce public registers unless and until they become a global standard.”

The Cayman Islands is considering whether to join the action or to instruct a different firm of lawyers. Its premier, Alden McLaughlin, said he would try to change the islands’ constitutional relationship with the UK, describing the Commons vote as “reminiscent of the worst injustices of a bygone era of colonial despotism”.

He added: “We want to remove that ability for the UK to be able to randomly legislate for us.”

“This matter extends well beyond the issue of beneficial ownership registers or the broader financial services sector.

“If the UK feels emboldened by what it has just done and believes it can do it any time it doesn’t like something here or it wants to impose something on us, it is not just the financial services industry at risk but our very existence.”

David Burt, the premier of Bermuda, has already warned May that he will not implement the laws, saying: “This country does not recognise the right of the United Kingdom parliament to legislate on matters which are internal affairs reserved to Bermuda under its constitution.”

He said that in his call with May he had reiterated Bermuda’s position that it would implement a public register of beneficial ownership only when that was a global standard.

The meetings with UK ministers this week were also due to discuss the consequences of Brexit for the territories, and UK government aid to relieve the impact of last year’s hurricanes.

Contributor

Patrick Wintour Diplomatic editor

The GuardianTramp

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