The Turks & Caicos is not a bad apple

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The Guardian has reported that:

The government yesterday revealed extraordinary plans to seize control of a Caribbean tax haven after a report warned there was a "high probability" that the Turks and Caicos Islands are a centre of systematic corruption.

The Foreign Office said that parts of the constitution of the British overseas territory would need to be suspended "including those relating to ministerial government and the House of Assembly, initially for two years".

Let’s be clear what this proves: the UK thinks it has the right to take over the government of the British Overseas Territories. I suggest the same is true of the Crown Dependencies as well. Let’s stop forever the nonsense we often hear that these places are independent. They are not. For all practical purposes they are parts of the UK with above averagely powerful councils.

Let’s top too, as it will happen, any claim that the Turks & Caicos is a bad apple. This is the standard argument rolled out whenever anything goes wrong. Enron, Parmalat, RBS even, all bad apples whilst the system was fine. Wrong. Each is indicative of serious underlying systemic failure.

The report from the senior judge appointed to investigate the islands makes this clear. It calls for:

changes to be made in company law on the islands, including one that says "all corporate bodies and those acting for others in a trustee or nominee capacity should be required to disclose the true beneficial ownership of or interests involved in to any public body required or seeking to exercise due diligence in contemplation of the grant of crown land". The inquiry also called for a strengthening of corporate law and heavier sanctions for breaches of it.

Again, this is not a problem peculiar to the Turks & Caicos. Add Jersey, Guernsey, the Isle of Man, Cayman, BVI and more to the list for which this could be demanded— and they are just the ones we control. The failure is systemic: the abuse that arises as a result are common to all. The reality is that the disclosure should be for all interests, universally. There is no reason why the Crown should be better protected than the rest of us.

The reality is this: these places are run for the benefit of the international financial services industry, which uses the power of money to corrupt (ethically, even if not always criminally) those with power within them. The secrecy they provide permits this. But that secrecy is deliberate. It is designed to do just this, at cost to the rest of the world.

The Turks & Caicos may be worse than average right now, but the impact of these places is consistent. Their sole purpose is to facilitate corruption, ethical or criminal. Of course Gordon Brown can take over Turks & Caicos, but in doing so he demonstrates that he has the power to do so elsewhere as well — to quite literally fulfil his promise to outlaw at least some of the world’s tax havens. The secrecy is the same in all these places.

I’m not worried about their tax rates. I am not trying to close legitimate business. The fact is I know there will not be low tax rates and almost no legitimate business left if the secrecy goes. But that’s the point: these places fuel corruption. It’s not just that one is corrupt. That’s why we demand action.


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