They Will Always Choose The One Per Cent

Diane Abbott writes: 

Today, with considerable fanfare, David Cameron hosts the UK Anti-Corruption Summit. 

Like the professional public relations man he is, Cameron has an unerring eye for issues that will detoxify the Tory brand. 

Once it was “hug a hoody” now Cameron has set himself up as a fearless fighter against corruption. 

His summit will be attended, in his words, by some of the world’s most “fantastically corrupt” countries. But our prime minister might consider adding Britain to his list. 

Because the UK heads the world’s biggest financial secrecy network. 

It has sovereignty in over a third of tax havens worldwide and over half of the companies named in the Panama Leaks scandal used a single UK tax haven, the British Virgin Islands. 

A World Bank analysis of corruption cases worldwide found that British tax havens dominate. 

Cameron’s attempt to persuade the overseas territories and Crown dependencies to open up their registries to the overstretched HMRC and the UK law enforcement is neither transparent, nor a sufficient deterrent. 

Only making the registers completely accessible to the public will be effective. 

Tax justice has become a crucial issue in development. 

Because the aid the Department for International Development gives to bolster developing nations’ tax takes is nothing when compared with the untaxed corporate profits that haemorrhage out of poor countries’ economies offshore into UK jurisdictions. 

Over 300 economists have written to Cameron arguing that tax havens have no economic benefit and that Britain’s “deliberate choice” to operate them “fuels corruption”. 

By refusing to implement the deterrent of making registers of beneficial ownership of UK tax havens public, Mr Cameron ensures that Britain continues to facilitate international tax avoidance, corruption and crime. 

If Cameron was serious about cleaning up the tax havens he would set a timetable of two or three years to make every single British Overseas Territory set up registers of beneficial ownership which are completely accessible to the public. 

The biggest irony of the refusal by Britain and other Western nations to open up their havens, is that by doing so they would bring in billions onshore. This would be a boon for global public finances. 

But it appears that we are stuck. 

Too many of the rich and powerful, that could open up the tax havens, are too busy making personal use of the financial secrecy they have on offer. 

Given its relationship with the rich and powerful, a Tory government hosting an anti-corruption summit is like putting the fox in charge of the chicken coop. 

Corruption, and related governance issues, are a serious challenge to fighting global poverty. 

At today’s summit the US Secretary of State John Kerry said that corruption tears at the very fabric of a society. 

And corruption takes many forms.

Londoners know that too many high value properties in areas like Knightsbridge are being bought by people overseas through anonymous shell companies, using plundered or laundered cash, hollowing out communities and helping drive up house prices for everybody else. 

On a recent trip to Ghana I heard about bloated public sector payrolls which include tens of thousands of non-existent “ghost workers”.

At the summit today the Afghan President Ashraf Ghani said that financial corruption is an “enabler of political violence”.

Also today Swiss Foreign Minister Didier Burkhalter pointed out there is over £100m a day leaving developing countries due to corruption.

And we know that much of those millions are being laundered through tax havens, including the British Overseas territories and crown dependencies.

Cameron has made a lot of fuss about corruption and money laundering. But his measures are half hearted. 

He is an a position to insist that the British Overseas Territories and Crown dependencies comply with best practise, but he refuses to do so. 

Some Tory politicians pretend to be concerned about the populations of territories like the British Virgin Islands, if the UK closes them down as tax havens. 

However the truth is that ordinary people who live in these places get very little out of the money laundering and tax avoidance. 

These industries are driven by highly paid expatriates. 

And the financial benefits accrue to: big accountancy firms; bankers; lawyers; estate agents and the global super wealthy.

Corruption is, indeed, a cancer as Cameron said at his summit. 

But he has proved unable to stand up to the financial services industry and take decisive action.

In the end for this Tory government, when they have to choose sides between the one per cent and the rest of us, they will always choose the one per cent.