The undesirable association between Tory donors and offshore has been well noted in the past. I am delighted that the Daily Mail (unlikely as it may seem) has decided to keep the issue alive — concentrating on what it calls “The shady City past and friendship with Air Miles Andy of new Tory treasurer”. Yes, that is Prince Andrew they’re referring to whilst the new Tory Treasurer is David Rowland, said to be worth £730 million, and the new favourite offshore donor to David Cameron.
Rowland, about whom the Mail makes serious allegations, takes secrecy to the extreme. He lives in Guernsey (a secrecy jurisdiction par excellence, of course) from where he donated £2.7 million to the Tories in the run up to the general election. He won’t have his picture taken or published and he also runs a bank in Luxembourg — which was raided by fraud detectives in February, although there is, the Mail says, no suggestion of wrong doing despite which the Mail seems quite happy to report other matters that, if certainly not wrong doing, seem less than desirable business activity, if the Mail is right. And as they say:
One concerned Tory grandee told us: 'Usually the Treasurer would have to demonstrate a long tradition of supporting the party. Yet this man has been giving us money for only 12 months.
'The Treasurer has to be a charismatic figure who can persuade a room full of 400 people to hand over large sums of money.'
Yet David Rowland is so paranoid about his privacy he won't even have his photograph taken. In the past, Prince Andrew has clearly enjoyed Mr Rowland's hospitality.
Now it is the Tories who are benefiting from his largesse.
Which poses the extremely awkward question: Why isn't he ready to pose in a publicity picture as the party's new Treasurer - a post, which by its very definition, needs its incumbent to be whiter than white?
No wonder the Tories are queuing up to support offshore. It seems like they need it rather badly.
The rest of us should be asking why they want to associate with tax haven funding.
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Richard
You appear to have not noticed the announcement last week that Guernsey was adopting automatic exchange of information in 2011. With all the criticism by you of the Crown Dependencies, I’m surprised that you have posted yet on such a major development. No such announcement yet from Jersey.
@Rupert
So sorry
I took a week long holiday
And candidly – it’s a such a small step it’s hardly worth noting
It will simply promote the abusive use of trusts and companies and no doubt enrich you in the process
But it will not achieve significant reform
To impress me you have to do a great deal more than that
So get real and create real transparency – the Plan B you reject – and then I’ll believe you don’t live off the proceeds of crime
Until then you can present no evidence to support the case that that is just what you do
Richard
What are you talking about ? Have you had too much sun on your holiday ?
How on earth can automatic exchange of information “simply promote the abuse of trusts and companies” ? I must be missing something but how do you possibly manage to draw that conclusion from the very same development that you’ve been demanding for ages ? Are you saying that you were wrong then ?
Your “Plan B” is unresearched and unworkable. It has zero chance of ever seeing the light of day. Furthermore, why is it now necessary ? There is zero demand for it except from yourself.
Its clear that you are solely interested in killing off the Crown Dependencies, even if they adopt what you’ve been demanding, so you are moving your goalposts again. At least allow the effect of automatic exchange of information to prove you right before you unilaterally decide that its not enough.
@Rupert
Come on – you don’t go to Northumberland for sun!
My points are simple and if you do not understand them I do not believe you
1) You should have done this in 2005, so why celebrate now
2) You know this in formation exchange can be avoided with great ease by setting up a company or trust – as Northern Rock Guernsey advised BBC Panorama to do
This is not unilateral in formation exchange – this is simply complying with the basic requirements of the European Union Savings Tax Directive – so stop the bullshit and accept what we all know – that this is only being done because of a) 35% withholding rates b) international pressure c) you know you can abuse it
Richard
The only thing we can agree on is that you certainly don’t go to Nortumberland for sun.
1) Why “should we have done this in 2005” ? The EU, initiated by the UK Government, offered an alternative which was acceptable to them. We took what was then deemed to be the preferred option (although personally I think we should have gone for automatic exchange then). If the option offered by the EU and the UK was not meant to be accepted, then it very simply shouldn’t have been offered by them as an option.
2) Do you seriously think that the States of Guernsey is not aware of the proposed immiment extension to the scope of the EUSTD to catch the type of arrangements to which you refer ? Of course they are. The decision has been made because Guernsey does not expect to lose much existing business because not much of the type of business that you think is here is actually (still) here…it left several years ago. If you were a tax evader from within the EU would you really keep your money in Guernsey these days ? You’d be truly mad to do so. Try Singapore to find such illegal funds.
Yes, its complying with the provisions of the EUSTD. That’s what we are meant to be complying with isn’t it ? To give away any more information than is required by law would be a clear breach of the duty of confidentiality owed to clients.
(a) There is no doubt that 35% withholding taxes would be a factor, but again I would refer you to Singapore where such money almost certainly fled a while ago. No withholding taxes at all there.
(b) Of course its in response to international pressure to become a modern acceptable international finance centre. Of course the industry has changed massively (and for the better) over the past 10 years. Nobody is denying that, are they ?
(c) I don’t anticipate the abuse which you predict. If you think that the rather questionable “evidence” of Northern Rock in the Panorama documentary was either (i) solid, or (ii) the norm across the Guernsey finance industry, then you are 100% wrong on both counts. It would be hardly be a solid business plan for any organisation to rely on the use of companies or trusts to defeat the EUSTD, knowing that it will be closed in a couple of years, would it ?
You are only seeing what you want to see. Sorry to disappoint you but the widespread tax evasion that you are so convinced is here simply isn’t. It might well still be in Jersey, that place really close to your heart. The “bullshit” is in your belief that the two islands are the same.
@Rupert
To use your numbering:
1) An excuse for continued abuse – you need not have availed yourselves of this
2) Glad you agree abuse was widespread not long ago. It as denied then. You still deny it now. nothing has changed then.
Why is giving more info a breach of duty to clients. Guernsey has no clients. Its so called financial services entities have. It can require of them what it wishes.
a) Of course it’s a factor – it’s an admission that to date evasion has worked through the CI
b) You’ve ceased to be murderers, I agree. you’re now just man-slaughterers. People are still dying.
c) One bank was visited in Guernsey. It advised on evasion. 100% compliance. No chance.
I am seeing reality.
You excuse abuse.
And I love your condemnation of Jersey. They’d say the same of you. Of the delight of the prisoner’s dilemma
Richard
1. Why should any jurisdiction affected or influenced by the EU not have accepted one of the options offered by the EU in its efforts to create a level playing field ? It was clearly an option which the EU was happy to offer. If was fully acceptable to the EU. It is only you who seems to think that it wasn’t acceptable, but you aren’t the EU.
2. Where did I say it was “widespread” years ago ? I said it existed years ago. Of course it did. But what’s that got to do with the industry today ? What went on in the 70s and 80s all over the offshore world bears no resemblance to today, especially in what are today deemed to be the better-regulated and more responsible jurisdictions.
a) Of course there used to be evasion. Who has said that there wasn’t ? The key difference is that you are incapable of recognising the difference between 1970 to the 1990s and 2010. You can’t clean up something which has already cleaned itself up!
b) A ridiculous statement.
c) I thought you were an accountant and an economist…so one is a valid statistical sample is it ? You’re completely undermining your credibility with such a statement. So using your analogy every single Muslim must be a terrorist and every single British MP is a fraudster and every single Catholic priest is a paedophile ? Come off it Richard. A statistical sample of one is not worthy of any conclusions. And I saw that documentary and I noted a transcript of what was said. Your conclusion of what was said bears little resemblance to the facts.
You aren’t “seeing reality” at all. You are seeing what was there 15-20 years ago and your blinkers won’t let you see the reality of what’s actually there today.
I do not “excuse abuse”. I merely fight for recognition of today’s reality. Today is 2010. There is no merit whatsoever in you harking on about what may have gone on 15-20 years ago. Its irrelevant.
And I did not “condemn” Jersey. I said that the situation “might” be different in Jersey. That’s the place that you traditionally focus your hatred on and where you seem to know more about what may or may not go on.
@Rupert
1. Already covered
2. You agreed it happened pre 2005
a. You repeat it happened – I say the secrecy still lets it happen – and that’s why you keep it. there is no other reason
b. People are still dying – see Christian Aid reports – and you facilitate it
c. I am both – and I know that one bank was visited and one act of promotion of evasion occurred – as in Jersey too – and it could have been any bank with the same outcome
That is the reality
People work in her CI because they believe in abusing tax systems. There is no other reason bar that and the abuse of other regulation secrecy allows for CI finance. All of it is absuive
Why shouldn’t I want to end abuse?
All reasonable people do
And that abuse is happening now
Get rid of all secrecy and I’ll believe it has gone
Until then it is clear you have something to hide – and that is the continuing abuse you support
Richard
1. We clearly agree to disagree.
2. You say I agreed it happened pre-2005. I have not said that it was still happening around 2005. The 1970s and 1980s were “pre-2005” were they not ? 2005 is only relevant because you said that we should have adopted automatic exchange in 2005. (I agree that we should have done, but for different reasons from yours. I agree that not doing so suggests we may have had something to hide, whereas I know that the reason for the decision taken was to ensure a level playing field with EU finance centres – I still feel that was a mistake).
a) Yes it happened, but you and I will never agree on the right to privacy where the law is being complied with. Abolishing lawful privacy has minimal support from anybody outside of your circle.
b) No we don’t facilitate it. Our laws COULD facilitate it if they were being abused. Who says that they currently are? Where’s your evidence? My car could do 120mph so I could be facilitating death by reckless driving – but I choose to instead comply with the law so its not relevant.
c) It could have been but it wasn’t – and having got a “strike” with the first sample test you deem it fit to stop at that. So the first person tested for cancer in a village proves positive – there’s clearly a problem and the village must be rife with it – ridiculous. And what was broadcast re. Northern Rock did NOT constitute “promotion of evasion” – I suggest you read the transcript again. Your version of “reality” bears no resemblance to what an accountant or economist should base conclusions on. Statistical samples of one are completely discredited – hardly a “trend”.
Well, I work in the CI and I do not believe in “abusing tax systems”. I believe in full compliance with the tax laws. But I accept that the laws are the laws and I don’t bleat that the laws are wrong. There are democratic processes available to change laws you know. To say that there are not other reasons to use the CI other than “tax abuse” is nonsense. Lawful tax planning with full compliance by definition is not “abusive”. If the law changes then it would or could be. But it hasn’t been, so it isn’t.
There is nothing wrong with you wanting to end “abuse”. Its your definition of “abuse” which I don’t accept. Your definition of “abuse” differs from the fact of what the law deems to be “abuse”.
There is no reason to “get rid of all secrecy” if such secrecy is being used properly, with full tax compliance. Tell me who would the winner be if we completely opened our records, proved to you and everyone else that we were tax-compliant, and all clients have disappeared to other jurisdictions which continue to respect the right to lawful privacy? Why on earth would any jurisdiction go down that route – as per your Plan B? It would be economic suicide, and the government of the jurisdiction would be totally negligent for throwing away fully legitimate business and ruining the lives of its residents in the process. A totally different scenario if the jurisdiction was facilitating actual widespread “abuse”, i.e. tax evasion, but that’s not the case and you know it – you just want to see the Crown Dependencies closed down altogether, out of principle, no matter how clean we have all become.
c)
@Rupert
I can’t be bothered to reply again
I maintain you are wrong
Richard
That’s your right as its your blog, but I maintain that you are trying to attempt to use a sledgehammer to crack nuts which are already cracked and don’t need cracking. Those nuts needed cracking over a decade ago and duly have been, albeit perhaps not as quickly as you would have liked. I would suggest that your efforts would now be better directed at Switzerland, Singapore and another handful of jurisdictions who continue to stick two fingers up to the way tax compliance is heading, rather than on continuing to attack those who have already cleaned themselves up. if you look at Guernsey’s efforts and progress over the past 5 years you will see a jurisdiction acting responsibly, moving forward and looking to reshape its finance industry in accordance with international demands. You will also find a jurisdiction which respects international tax compliance principles, but which forms a different view to you on the acceptably of legitimate tax avoidance. That just comes down to differences of opinion re socialist views, and has nothing to do with legality or illegality.
@Rupert
Guernsey has improved – I agree. But it has a tremendous way to go. Because others are worse |(and they are) does not exonerate you, even if you think it does.
As for your reference to socialism – what a silly boy you are. Upholding property rights – the property right of governments – is about enforcing the rule of law – not socialism.
You really will have to try harder to argue your case if that is the depth you are sinking to.
Richard,
Are you a socialist?
L.
@Lester Piggott
Define a socialist please
I think you’ll find I’m a social democrat – mainstream politics, of course
Richard
I don’t think for one moment that being better than others exonerates us. However I don’t think that we have anywhere near as far to go as you suggest. The legacy retail banking industry is almost certainly the biggest problem area but automatic exchange of information should sort out any remaining issues.
I clearly haven’t understood your second paragraph although I understand the rather unnecessary insult perfectly clearly. If clients are tax compliant through lawful tax planning then they are tax compliant and there is no unlawful tax leakage – period. What rule of law is not being enforced? If countries introduce specific anti-avoidance legislation and/or exchange control rules to counter tax leakage, then previously lawful tax planning almost certainly becomes unlawful – and the offshore jurisdiction needs to comply with that. You go on about the use of trusts and companies for lawful tax and succession planning purposes being “abusive”, but if such usage is lawful then its nothing to do with the law, but only about ideologies and beliefs, which is something entirely different.
To revert to basics – what is wrong with an international finance centre operating responsibly to ensure that (a) its regulated businesses operate in a tax compliant manner based on the laws which exist, (b) it has extensive regulatory compliance procesures in place, (c) it is very heavily regulated by an effective local regulator, (d) it willingly and actually exchanges tax information under all relevant procedures, and (e) operates very effectively Proceeds of Crime policing procedures? If this is all in place, as it is, why do you, or indeed anybody else, feel that you should have a right to access any further information?
@Rupert
As I said in Plan B (just please substitute Guernsey for Jersey)
“There is a more important issue though, which goes to the core of Jersey’s plans and suggests why there will remain considerable doubt about the good faith of Jersey in offering any scheme to the EU. This is that Jersey has not ever really acted as a good neighbour to any other jurisdiction, anywhere, with regard to tax. That is because of the combination of a number of factors.
The first is that Jersey persists in the view that a company incorporated in Jersey is not resident in the island even if its directors are located there, its registered office is there and all its book-keeping and other administrative functions are located there. This practice is contrary to any normal state law on tax residence, a point which Jersey persistently ignores. But there is more to it than that. Jersey maintains this is possible because despite all these indicators of residence it claims that if the substance of the transactions of the company, which prima facie appears resident in Jersey, are actually elsewhere then it is really tax resident in that other place where that substance occurs. There are however two obvious conditions that must be satisfied for this to be true.
The first is that Jersey satisfies itself that the company is indeed declaring itself resident in that other place and is paying tax there. However, Jersey never asks that question. Jersey does not say as it should:
• This company claims not to be “here” so it must be “somewhere” else, so let’s find out where that “somewhere” is and make sure they know about it before agreeing they’re not “here”.
Instead it says:
• This company claims not to be “here” so let’s take their word for it and just assume they are “elsewhere” even though we have no clue where that “elsewhere” might be.
This is the first fundamental flaw at the heart of Jersey’s corporate tax system.
The second is that Jersey makes sure that it is as hard as possible for the other place that is “elsewhere” but unknown to the Jersey authorities to secure the information they need to tax a Jersey company that undertakes the substance of its transactions in their territory, meaning it should be taxed there.
Jersey ensures that this near insurmountable obstacle, which will persist unchanged in the era of Tax Information Exchange Agreements because of the massive information hurdles they place in the path of an enquiring tax authority, still exists, and it does so deliberately. That is what makes Jersey a secrecy jurisdiction. Secrecy jurisdictions are places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.
In the case of Jersey the obstacles are:
1. The fact that company beneficial ownership is not on public record;
2. The real directors of the company who control its operations in that other place where it really undertakes its trades are almost never on public record;
3. The accounts of a Jersey company are not on public record;
4. Jersey has deliberately created a scenario where a non-resident company never has to submit its accounts to the Jersey authorities so no record of them is ever in its possession;
5. Because those accounts are never submitted to the Jersey authorities it never has to ask about them;
6. Indeed, it never has to check that the company has such accounts at all;
7. And finally, it has deliberately given up seeking information on beneficial ownership of companies, ever.
This means that Jersey is a perfect jurisdiction from which a trade may be pursued in another country by a Jersey registered company without that other country ever knowing about it and with Jersey denying all knowledge and responsibility for that fact.
This is the deliberate abuse which the Jersey corporate tax system is designed to facilitate and which none of the proposed changes overcome, and which many make worse. Unless this flaw is removed there remains real risk that Jersey will remain a pariah ion the international stage and will not attract new business. ”
The essence is simply this – your laughably titled IFC is deliberately and solely designed to undermine the law of other jurisdictions -a dn you deliberately deny them the chance to find out that he abuse is going on
Sure I can take your word for it that it is not
And I have no reason whatsoever to trust you – because you promote the abuse
Of course we have the right to access data – the abuse you promote is taking place in our countries and you deny us data on it