The Tories and tax havens

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As the FT has noted:

It’s normal practice in Parliamentary debates to declare any interests which could be relevant. During a debate on tax avoidance yesterday, Baroness Hooper - a Tory peer - made sure she mentioned her interest as vice-chairman of the Overseas Territories All-Party Parliamentary Group.

What she didn’t mention is that she is also paid by Barclays (as chair of the advisory committee for Barclays European Infrastructure Fund).

This happened during the same debate that Lord Oakeshott used to disclose the whereabouts of leaked Barclays documents.

Baroness Hooper, undeterred by her lack of disclosure, waded in to defend tax havens, saying (amongst more besides):

There is no doubt that successive governments have encouraged the overseas territories to be self-sufficient. A number of them have developed highly efficient and successful financial services, based on international best practice…

Today I am trying to redress the balance [in this debate]. I will refer to the British Virgin Islands as a case study.

The financial services sector of the British Virgin Islands is founded on five pillars: robust regulation, intergovernmental collaboration, effective enforcement, transparency and high levels of expertise…

I emphasise in addition that there are no secrecy laws. The industry has developed and diversified, particularly over the past 20 years, to include specialist sectors such as mutual funds, insurance—both risk and captive—professional services provided by fiduciary and insolvency practitioners, and legal and accountancy services provided by globally recognised firms established in the jurisdiction

As a result, financial services now account for more than half the GDP of the BVI, immeasurably raising the standard of living for all inhabitants…

Reputation is everything in financial services. The BVI has long recognised this and I maintain that the same goes for most of the overseas territories…

The United Kingdom needs to remember that it gets a great deal of value and advantage out of jurisdictions such as the BVI. Funds and business flow from the UK here, they flow from here back to the UK…

I believe that there is a real danger in targeting a specific group of countries…Apart from anything else, it would drive the business to other, possibly less well regulated and open centres. ..

It would be very wrong if, in a knee-jerk reaction to the current financial crisis, those overseas territories that operate financial services were to be deprived of the independence that they have now earned.

The poor peer is sadly deluded or misinformed. Alternatively she is suffering from the MEGO principle so commonly found amongst offshore apologists - ‘My Eyes Glaze Over’ in the the face of the facts.

Let’s face facts. It was in 2007 that the BVI boasted more than 800,000 registered companies. Now it’s just over 400,000. You’d think that was amazing — a massive reduction in business or an enormous tightening up of abuse. It’s neither. As BVI officials admitted to me last year — they had lost control of their register and had no idea how many companies were really on it. All they’ve done is purge it of the ones they can no longer contact.

So much for Baroness Hooper’s “robust regulation”. These people can’t even collect the regulation fees due to them from BVI companies, let alone regulate them.

And this does not mean the companies have gone — it just means they can’t find them.

Every other claim collapses after this one — it is perfectly apparent that the BVI is badit country — quite unable to regulate and quite unable to cooperate with any other government to information exchange.

No wonder it is so extensively used by the Chinese for what is called round tripping — the process of repackaging illicit Chinese money offshore for inward investment back into China to secure illegal tax reliefs. And I really can’t see the BVI acting in serious cooperation with the Chinese to stop this.

Sorry Baroness Hooper — you’re just plain straight forward wrong — and the simplest of enquiries on your aprt would have shown that. But you have shown us where the Tories are on this issue — which is on the wrong side.