I attended the first hearing of the Treasury Select Committee on Offshore Financial Centres this morning. It was to this committee that we submitted Tax Havens: Creating Turmoil.
The session started well when John McFall, the committee chairman, quoting from Creating Turmoil, as referred to in the Observer on Sunday, asked the panel their first question, which was:
Is it true, as one submission to this Committee has argued, that tax havens are not able to regulate that banks and other organisations that operate within their Offshore Financial Centres?
There was just one problem. No one answered his question. And so it went on all morning. John McFall was quoted as saying before this started that:
We've seen the issue of structured investment vehicles in Northern Rock's demise and questions arising in relation to financial stability. We're looking for fairness in the taxation system.
John Cullinane of Deloittes and John Whiting of PWC represented the profession in the first session of the hearing, . John Chown joined them, but only, it seemed, to dispense right wing political dogma. His sole role appeared to be the promotion of tax competition. All three of them, plus private bankers from Citi and HSBC, who made up the second panel, appeared to have as their only aim the usual politician's task of not answering the question they were given. As one member of the Select Committee said to me afterwards, "rarely has this committee obtained so little information or heard such dull presentations". As Andy Love MP had to eventually say:
Are you being complacent Mr Whiting?
John McFall was only a little more kind when he asked the panel in despair (with words something like this):
Are you telling us we're wasting our time, that all is well and there is nothing to discuss?
So this lot would have had you believe.
But that, of course, is wholly consistent with the evidence I have submitted. Since these people dominate the OFCs and in turn have captured tax havens it is natural that they will say all is well in them, that regulation is working well, that market pressure will keep everyone in line, that what happened in Liechtenstein was unusual, that no other private banker has ever heard of anyone doing anything of the sort UBS are known to have done, and more. And let me assure you: that's exactly what they did say.
There's just one problem with that though. As most committee members know, as I know, and the world at large knows, that's not true. They didn't help their cause.