One of the things I never expected to do when I started campaigning on tax abuse was to help make television programmes. I am not sure how many I have done now, but tonight’s Panorama is something like the twentieth, and maybe the most significant/
Last week the IMF said Jersey was equal top in its ranking of FATF regulation compliance in the world.
Tonight that puff is blown apart. Jersey is shown to be rotten to the core.
Secret filming was done at just two locations to make this programme: Northern Rock, Guernsey and Lloyds, Jersey. I know. I was involved in planning it. The former offered the use of a shell corporation to get round the European Union Savings Tax Directive, the latter gloated about its abusive planning to help its customers evade tax, to which it stated it turned a blind eye.
How do I know both were willingly assisting tax evasion? Well, the European Union Savings Tax Directive official web site says:
In order to ensure the proper operation of the internal market and tackle the problem of tax evasion the savings tax Directive was adopted in June 2003.
The web site says the European Union Savings Tax Directive has a purpose — to stop evasion. It follows those who help people get round it help people evade tax. Northern Rock and Lloyds are doing that, in my opinion. And if these High Street names are, what happens elsewhere in the place?
Let me be candid: I love Jersey, and I hate corruption. Unfortunately far too many in Jersey are corrupt. Take this comment already on this blog from Jersey:
I doubt many people in Jersey's finance industry will be losing much sleep about this. The programme will only end up giving people ideas on how to reduce their tax. Good publicity for Lloyds actually and the Island.
It shows how warped the view is in the island: local people think tax evasion is good for it.
I don’t.
I’m delighted Dave Hartnett agreed to be on the programme and is as robust as many will see him to be.
I think the pretence is over: now we know what Jersey and Guernsey supply: secrecy that hides corruption. It’s time to blow it apart. This programme starts that process.
And never again will someone from the Crown Dependencies be able to brag about how clean they are: these interviews show that when a person walks in off the street, unknown, they are sold corruption. The pretence is over. The truth is out. Now let’s act.
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Richard,
I am happy to brag about how clean I am. What about you? Do you think you should be shut down on the basis that there are some bad accountants in England? Or would you regard it as unfair to be tarred with the same brush. Or would you say that I would “blow apart” the myth that Richard Murphy is law abiding and public spirited if I discovered an accountant in Norfolk who isn’t and therefore he must be tainted by association.
No, that’s not, thankfully, the world we live in. There is no evidence that Jersey is tainted as a jurisdiction. In fact, the IMF report shows the opposite, and was based on a much more in depth report than any TV programme. This is, at worst, a rogue event, and if the programme is correct, then I’d be quite happy for everyone involved to be thrown in prison, including the UK directors of Lloyds.
But bear in mind, there is just the chance that the person speaking was a salesman, full of huff and bluster (I understand he talks about what cars he owns, for example). The real test is whether a transaction would actually happen and if such a transaction would get past any bank’s take-on procedure, including compliance. If it would, close them down. Seriously.
Jersey neither wants nor needs that work, and if it is being carried out by a branch or subsidiary of a UK, government controlled bank, well, not only that bank but that government should answer for the damage it has caused to Jersey’s reputation.
But Richard, I wonder if you do love Jersey, and what it means to love any place. I can agree with you on one thing: nobody loves a place because of the work that goes on there. A place is a physical location and the spirit of the people. Jersey is very beautiful, and the spirit of the people? If you can still discern it, it is self-sufficient and independent.
Tomorrows chip paper Richard. You cannot tarnish 14,000 finance workers because of a few narrow minded employees at Lloyds like this.
You can rant away as much as you like but it will not change a thing, you know it, I know it and the UK Government knows it.
Mad
Your chosen moniker says it all
The BBC asked 2 banks and got 100% assistance in corruption
I am willing to wager it could have done 20 and come to the same result
It chose what should have been the 2 least likely targets after all
Your analysis just shows you’ll always excuse corruption – and you do
Richard
Matt
Wrong
The corruption at Lloyds is systemic
The corruption in Jersey is systemic
I do not tarnish 14,000 – I tarnish the boards of the banks, the Big 4 and others who set out to create this abuse – deliberately – and in the case of the auditors do not report it
And yes, I do think action will be taken
Richard
Well that’s that all proved then.
Just remember that Jersey came in at the top of the list what must be going on in the jurisdictions further down the list?
By the way, which firms or groups sponsor or support Tax Research financially? Just interested to know because I am sure you are a very impartial fella?
John
Unlike Jersey, which cannot be regulated because of the climate of fear and because the place is too small, regulation can take place in locations like the UK. Sure, it will fail, but that will be an error, not a systemic fault, which is what you have.
As for my funding – the Ford Foundation via Tax Justice Network and the TUC are my main funders. Others include the World Bank and journalism, including the BBC.
Richard
Having seen the clip on the news, it seems clear that if any wrongdoing was committed it was on behalf of a UK bank that is majority owned by the UK government. The individual concerned was clearly from the North of England. If the action is as recorded then it looks like a criminal offence occurred – after all, the Jersey law is quite clear that if one suspects that a client may be tax evading a suspicious report must be lodged.
Let’s look at it another way. If there was a UK civil servant or other employee of the state who committed a criminal offence in another jurisdiction in furtherance of the UK’s aim, would you ever blame that jurisdiction? If a British soldier tortures an Iraqi civilian is that Iraq’s fault? No, it is the fault of the UK and the soldier concerned.
But it is clear that if there is any “systemic” issue, it is with the UK. UK bank, UK owned, UK employee at fault. Yet another reason why Jersey should keep a distance from the endemically corrupt UK.
If you published views that were different to that of the Ford Foundation and the TUC would they stop your funding?
Irrelevant question
I would walk away if they tried
Richard
Mad
You are bonkers
You have no banks owned in jersey
You have no local finance expertise – it is imported
The answer is the corrupt go offshore
You’ve got them
No excuses will work – this bank, this island, this system is corrupt
2 banks, 2 failures
Not chance
Systemic corruption
End of story
Richard
The guy with his pants down is no one off. That patter is learned. Go to a banker’s pub in Guernsey and you get that polluting the atmosphere for hours on end. Always have done. Those that try and say that there are some ‘unscrupulous individuals amongst thousands of honests’ are nothing but sand-eaters or laughing pimps.
You can argue the legality all you like but it will make you look worse.
See those MPs.
Are you listening Barclays Bros?
All my eye and Betty Martin.
Good to know that GuernseyFinance has a ‘permanent base’ in Shanghai. What is she doing out there? Who pays her? Or the ferryman?
In Guernsey, we have to trust the OFC. It has made itself critical – like bacteria. We have to trust the powerful organisations that tweak the democratic process until it can’t remember what it’s for.
Trust – such a dirtied word.
Still, one thing in Guernsey’s favour is that it held on to the dithering processes in its government, despite heavy pressure from without. That may well have saved us from further submersion down to Jersey’s depths.
Unless that’s just a facade too. Everything else I’ve been categorically told has proved so. By very senior people.
That’s why the article in the local paper shrugging off evasion as normal without mentioning how illegal it actually is drew very few comments from the people I challenged.
There is no difference. This avoidance is no different to the UBS or the back-scratch-chums ‘brigade’ (and they really are a brigade, hats n all) or the Al Capones.
It is up to the finance industry to prove it has integrity. It is not for the questioning public to get ruined enough until some action is taken to investigate it.
You prove it, Rupert. Open your heart and give the experts some facts to defend yourself with, or else lobby hard for your colleagues to follow your example. Because your 99% assertions cannot still be at 99%, incovenient truth be told.
Just think of all those things that were legal and/or accepted by wider societies. The proponents of some of those are rightly vilified.
I hope some Guernsey politician doesn’t spout off some anti UK diatribe or accuse all and sundry of a ‘witch-hunt’.
Cue a sudden Royal visit.
That’ll be a month’s worth of local media attention, minimum (corgi).
To quote Mad Foetus – “This is, at worst, a rogue event,”.
If you genuinely believe this then you’re unbelievably naive.
People who sell any service or product will use much the same sales pitch all day, every day. They’re not going to randomly decide, on one day, to promote some dodgy idea. Even if they did, what are the chances of that being the same day a TV crew is covertly filming them?
This exposure is unquestionably appalling for the islands. As somebody who has steadfastly defended the islands against blanket attacks on our integrity, I feel sick to the stomach at what I have seen tonight.
I have claimed previously on this blog that the major banks, and particularly the UK high street banks, are the Achilles heel of the islands. The fiduciaries, the fund administrators, the lawyers and the accountants run responsible businesses but several of the retail banks, many of whom with decades of legacy business, risk ruining it for us all,
So what should happen next ? Clearly the JFSC and the GFSC need to immediately ask all banks and other financial institutions whether, upon reflection, they feel that there are STR reports that they should have previously filed, and to give them 3 months in which to file them. After that, they should be exposed to comprehensive inspection visits to ensure that they have complied. Any banks failing to co-operate should be closed down and criminal money laundering cases must be brought wherever appropriate for conspiracy to evade tax.
I have rarely felt so angry and let down, but deep down it was always likely that the retail banks would be the problem if indeed there was a problem.
Richard, I must take issue though with your comment that all of Jersey’s financial expertise is imported. That is simply utterly untrue. I know that you will find that not to be the case in either Jersey or Guernsey, where a huge percentage of professionally qualified finance professionals were locally born and/or locally educated.
These ho-hum tax-evasion schemes are tackled in page 12 of the the EU Commission’s Savings Tax Amendment proposal. These smug but not so bright as they think they are felon-assisting-thugs days are limited…
(4) In order to avoid the circumvention of Directive 2003/48/EC through the artificial channeling of an income payment via an economic operator established outside the Community, it should be made clear what are the responsibilities of Community economic operators when they are aware that an interest payment made to an operator established outside the territorial scope of Directive 2003/48/EC is made for the benefit of an individual, known by them to be a resident of another Member State and who can be considered their customer. In such circumstances, those economic operators should be considered to be acting as paying agents. This would also in particular help to prevent a possible misuse of the international network of financial institutions (branches, subsidiaries, associated or holding companies) to circumvent Directive 2003/48/EC.
(5) Experience has shown that greater clarity is necessary regarding the obligation to act as a paying agent upon receipt of an interest payment. In particular, the intermediate structures which are subject to that obligation should be identified clearly. Entities and
legal arrangements which, under the general rules for direct taxation applicable in the Member State where they have their place of effective management, are not taxed on their income or on the part of their income arising to non-resident beneficiaries, including savings interest or substantially equivalent income, should apply the provisions of Directive 2003/48/EC upon receipt by them of any interest payment from any upstream economic operator. A list of such entities and legal arrangements in each Member State should be included in an annex.
Richard,
This is some very poor journalism. As a Jersey finance worker, I can assure you that the money laundering regulations are taken very seriously, and this has been shown in the recent IMF report, which, as previously mentioned is much more in depth than your ‘investigation’.
To then insult the entire population is incredibly disrespectful.
In this instance is it worth me calling the entire UK finance industry corrupt due to the bearings bank scandals, and mosely?
Interesting
It’s interesting you won’t even give your identity – so dedicated are you to the abuse that secrecy provides
And let’s be clear about what you say: no one believes you. This is not a case of a ‘rotten apple’. This is systemic abuse.
Now clean your act up very, very fast by creating standards of openness not seen anywhere in the world or expect the retribution
Richard
I think Dan’s comment is absolutely to the point. These guys aren’t novices. They have done it all before, many times and got away with it. I’m sorry, mad, your hope that they wouldn’t have completed the transactions is wishful thinking.
@Richard Murphy
Richard,
You know that is an unfair attack on “interesting”. If he is an employee of a bank, he has probably signed some sort of undertaking not to comment on the bank’s business in his own name unless authorised to do so.
That isn’t to do with secrecy, but is simply good business practice carried out by most big businesses, and many public sector organisations.
Alex
I have no evidence to prove that is the acse
Nor do you
You, as ever, apologise for abuse
Richard
James,
I have to say, I was astonished that any bank anywhere would employ somebody so reminiscent of the used-car salesman type of the 1980s.
I also think it worth watching the programme again. The office the guy was operating from looked more like a stairwell. I think any fairminded person would agree that the programme was extremely biased and that all the facts have not yet come out. For example the first part of the programme spoke about a woman who had lost her house because her overdraft wasn’t extended. There was no mention of how big her overdraft was, how much warning she had been given etc.
The whole programme was ludicrously biased: bankers pulling tights over their heads and sniffing money etc.
Let’s have an investigation and throw the book at anyone who has done something wrong. Let’s find out who the salesman was, how senior he is and whether he had the authority to seal deals. My experience in banks in Jersey is that a large proportion of new potential clients are turned away at the compliance/risk stage before they are ever taken on.
But let’s open the books of Lloyds and see whether they have been systematically turning a blind eye to evasion. And if they have, it is in the interests of Jersey to throw the book at them, because the Island does not want this sort of low-grade high risk work.
But let’s not set ourselves up as judge and jury based on what was obviously a hatchet job.
Finally, I thought Richard came across very well.
Richard
The complete lack of knowledge that you have shown with regards to the Jersey financial system is quite incredible, especially given your then dictatorial approach which is not dissimilar to that of the right wing and often wrong Jon Gaunt.
Yes the ‘advice’ given by the employee was incorrect and totally unacceptable, however it is in no way representative of Jersey financial advisors as a whole.
Ultimately this is no different to a UK accountant telling his client to put as much through the company books as possible, or attempted IR35 avoidance; something which happens every day in the UK. Yes the amounts are different, but given the extent of such similar issues on the mainland, you would do better to concentrate on domestic problems; problems which if solved would increase your tax revenues considerably.
Once more though, I would refer you to cases such as Nick Leeson; there is and always will be corruption in the finance sector, whether it be on the mainland or abroad.
At the end of the day, if the UK government made sensible tax policies, instead of trying to satisfy the masses (50% higher earner tax anyone?) then you’ll be forever complaining about these matter because high earner will simply leave the country.
I would doubt whether “Interesting” knows that much about what goes on. Surely anyone who knows anything about banking can spell “Barings”?
It is self evident that despite the whiter then white image that Jersey has chosen to adopt there are still many loopholes and loose cannons in a system which ulimately is designed to move taxable income away from source.
Stalking the forums and when speaking of loose cannons will Mad Foetus still be permitted from sending his highly unusual text messages for much longer I wonder?
You obviously made your mind up about Jersey a long time ago, Panorama supplied cheap journalistic licence to a serious subject. Prima facie one individual cannot be conclusive evidence of systemic abuse. A serious Journalists paddling in the sea was rather reminiscent of ‘that’s life’.
@DAVID
Got to agree with you David. I was looking forward to a thought provoking intellectual journalistic view from Panorama…instead we got the Sweeney, girls and boys in suits with bowler hats, a reporter on a yacht sailing around the Channel Islands, a journalist trying to find a banker in a pub and of course the paddling around with a suitcase. Mind you I did like the hassling of Peter Mandelsohn! Poor old Peter at least he won’t have to put up with stuff like that this time next year!
Back to the programme…it was clear the Northern lad working at Lloyds was a salesman on a big commission who would have sold his granny for a quid if it meant the man with the money would put £4m into that fund. He will be sacked for that charade.
The Northern Rock meeting was a little strange though. There was absolutely no proof whatsoever that they provided any tax advice. We only had the interviewee’s word for it. Why couldn’t Panorama use their film evidence from this meeting? Maybe it didn’t quite come out the way they had hoped?
DAVID 24
I have witnessed the sales pitch of an extremely successful ‘wealth manager’, the language was worse because it was less crude, more ‘technical’. £120k on ‘entertainment’, the full senior staff dolled up to the max, and startling presentations highlighting just how much money they wouldn’t be helping their country of birth and the source of their treasures. These ‘dignataries’ were being courted by a number of big names.
Rupert, I know what you’re thinking, but for more than a decade I’ve sat and listened to what goes on. I’ve been privy to conversations that regulators wouldn’t want to hear, the internal wrangling over what’s ‘right’ and ‘wrong’, the mockery – constant mockery – for anyone that dares questions the growth goals. You may well have a very balanced and pragmatic approach, but I can tell you the guys that go out for the business have nothing deep on their minds.
They can be as cultured as they like but the bottom line is being able to boast about their techniques – loudly and in lurid detail.
It all amounts to one thing: robbing governments of income and robbing the hopes of the vulnerable and unfortunate.