Why does the government keep these havens open? There's an answer in Geraint Anderson's book Cityboy - a crude but gripping exposure by a former research analyst at a City bank. "Eighteen years out of power has made these jokers so paranoid about being viewed as old Labour that every time Cityboys and entrepreneurs asked for business-friendly reforms they rolled over and allowed tax and regulatory changes."
There is a standard British procedure for dealing with problems like this - by which I mean problems that generate bad publicity but which you don't want to address. You commission a review and you choose the right man to conduct it. Confronted with a vocal international campaign and a new US president determined to tackle this issue, the government has selected a man called Michael Foot (not the former Labour leader).
Until last year, Foot was the inspector of banks and trust companies for the Central Bank of the Bahamas in Bermuda, a British tax haven. Though the review was launched only a fortnight ago, he already seems to have decided what it will say. Speaking about tax havens to the magazine Accountancy Age, he claimed that they had been given a clean bill of health by the IMF, and observed, "I can't see where the regulation failure is supposed to be." The Tax Justice Network maintains that throughout his long career in Bermuda, at the Financial Services Authority and elsewhere, he has never raised any public concerns about systemic problems in the financial sector. The identity of the person the government appoints is an index to the outcome it desires. Foot sounds like just the man for the job.
Even as it was commissioning this review, Brown's government tried to undermine international efforts to address the problem. Teaming up with that revolting little monarchy Liechtenstein, the UK sought to strike out a paragraph from the Doha trade agreement that aimed to eradicate tax evasion. Thanks in part to British lobbying, the draft commitment was substantially weakened.
Were Britain to release its remaining colonies, they would quickly succumb to pressure from the Obama government and the European countries trying to stamp out international evasion and organised crime. We hold on to the Falkland Islands for their oil and fish. We hold on to the other territories for something far more valuable: secrecy.
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