Tuesday, February 7

This scandal is not only about the greed of MPs, it is also about “British” overseas territories | Oliver Bullough


GRAMEoffrey Cox often has more important things to do than vote in the House of Commons, but one debate he attended was in 2018, when MPs discussed forcing Britain’s overseas territories to open their corporate records, the databases that reveal the real people behind the shell companies.

The proposal was controversial. Establishing an offshore entity is not illegal in itself, but the secrecy offered is attractive to tax evaders, fraudsters, and money launderers. For one thing, if passed, it could expose the secrets of thousands of companies and thereby deter sinners from routing their businesses through Britain’s high seas archipelago in the future. On the other hand, this would imply that London would impose its will on the people to whom it had made the promise to self-government, and therefore be an act of neocolonial arrogance. Cox knew which side he was on.

“We are breaking that promise that we made to them, and it is beneath the dignity of this Parliament to end that promise and that promise in good faith,” he said.

In the end, the amendment was passed, but this argument – that Britain needs to respect the autonomy of its overseas territories and therefore tolerate whatever egregious scandals they allow – keeps resurfacing. If this week’s scandal, in which Cox was revealed to have won £ 150,000 defending the British Virgin Islands government in an investigation into allegations of systemic corruption, cronyism, jury intimidation and misuse of public funds, has proven anything, however, it is how completely false that position is.

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By the argument, the islands are autonomous jurisdictions and therefore too foreign for Cox or any other MP to legislate. Yet at the same time, when it comes to legal proceedings, it is easy for a qualified UK lawyer like Cox to act in the courts of the islands as if they were part of the UK. Like some strange quantum particle, our overseas territories are British and non-British at the same time, depending on what your intentions are. They are autonomous when they serve the interests of their clients and those clients’ servers (for example, when they provide anonymity or tax-free businesses); but not when it is not (for example, when British police officers are brought in to investigate what these shell companies are doing). In recent decades, these shell companies have provided a convenient way for wealthy people to minimize their taxes and for kleptocrats to hide their theft, and there’s no reason the rest of us should put up with it.

This disastrous situation happened accidentally, as the colonies freed themselves from London’s control in the years after World War II: they gained more and more self-government, in more areas of their internal affairs, until they became independent. The process is not over yet: in much of the Caribbean, the Queen remains the head of state and the privy council is the last court of appeal, (Barbados finally become a republic at the end of this month). Problems have arisen, however, where the process has stalled, as it has in the British Virgin Islands, the Cayman Islands, Anguilla, the Turks and Caicos Islands, Gibraltar and elsewhere, which have stopped midway. They are autonomous and non-autonomous at the same time, to the great benefit of wealthy individuals and corporations, as well as their facilitators.

Those benefits come at the expense of people elsewhere, including here in the UK. In the 1990s, British sportsbooks were strictly regulated and heavily taxed because gambling was recognized as an addictive activity with real potential to cause social harm. It was Gibraltar who gave the bookies a means to destroy the system and supercharge their winnings. By relying on our loyal little naval base at the mouth of the Mediterranean, they were able to accept bets in pounds, on British sporting events, from British gamblers, and yet avoid British laws and taxes. In a desperate attempt to recover tax revenue, the government removed the regulation of gambling, giving us the explosion in betting and addiction with which we are living now.

The Cayman Islands are still British just because Jamaica didn’t want them. The governor, who stayed behind to rule a place whose main industry was turtle fishing, encouraged offshore activity in the 1960s in an attempt to create some kind of economy, and now they are one of the largest international financial centers in the world. The islands are not taxed for the UK as they are not part of the UK, however UK lawyers and accountants are free to work there for UK companies, and money is moved around the city of London with even greater freedom. Cox has also worked there. In 2014, successfully defended the former prime minister of the islands against corruption charges, including the suggestion that the politician’s withdrawal of $ 50,000 on a government credit card at casinos in the Bahamas and the United States was illegal (he denied the allegations).

We have become accustomed to this situation, in which money and its servants can travel freely between widely dispersed parts of the Queen’s domain, but the law cannot follow them. However, to understand its absurdity, one has only to imagine the clamor if the situation were reversed: if British parliamentarians could legislate for our overseas territories and police officers could operate in them without hindrance, but lawyers could not argue in Your courts and money could not move freely to pay legal fees. The situation we have now is as peculiar as that. We don’t complain just because we’re used to it.

The situation is not inevitable (France also has a few remaining colonies, but they are administered as parts of France, and representatives return to parliament in Paris), and it only persists because it is very profitable for many well-connected people. The rest of us, however, the citizens of countries that lose tax revenue, or whose rulers loot their treasuries, or whose drug cartels launder their money, have lost far more than those people earn. We don’t have to put up with it.

There have been some improvements over the years. That 2018 amendment was passed and is supposed to be implemented one of these years; UK police officers already have access to jurisdictions’ corporate records in a way that they did not previously have. However, the essential dynamics do not change. The last rosy bits of the former British Empire have been transformed into a machine that benefits the rich and powerful at the expense of the rest of us.

It’s time for Britain’s remaining colonies to make up their mind. If you want to be independent, you can do so with our blessing and our help, but you must move on. However, if you want to be British, you have to take the responsibilities that come with it, not just the rights.


www.theguardian.com

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