It is well known the the UK is the hub of the world's tax haven network. It's not just the City of London, of course. The branch offices in Jersey, Guernsey, the Isle of Man, Cayman, the BVI, Gibraltar, Bermuda and onwards, all create the web that has fuelled tax haven activity around the world. That web has also been key to the continual fight back of these places against the demand for transparency that might ensure that that the world's wealthiest people and corporations pay their proper taxes.
The same havens are, of course, also used as a threat to democratically elected governments. “Tax us and we'll leave” is the perpetual threat of the wealthy, not that many could face the tedium of living in these places. That they are populated by accountants, lawyers and bankers does not suggest that they are the global hubs of excitement.
They also have a feature in common. That, of course, is the Queen's head on their stamps. These days it is pretty much a signifier of having tax havens status. And now we know that is not by chance.
The Guardian is running stories this week suggesting that in the early 1970s the Queen did her very best to alter UK law to make sure that her financial secrecy was preserved. As they note (and such is the significance of the matter, the length of quote is appropriate):
The Queen lobbied the government to change proposed new legislation so that she could hide the true scale of her private wealth, according to documents unearthed by the Guardian in the National Archive.
The papers, which the Guardian is publishing this week, suggest that the constitutional process of Queen's consent, under which the monarch and her lawyers are given advance sight of bills coming into parliament, enabled her to keep shareholdings secret.
The agreement made under the Heath government in the early 1970s meant that her financial interests, believed to run into hundreds of millions of pounds, were hidden in a state-backed shell corporation.
I would add that it is not appropriate to dismiss this as an early 1970s story, and say ‘just move on'. The early 1970s were very much the time when many havens were establishing their activities, almost as if they knew that Thatcher would relax exchange controls and let the money flow unchecked toward them from 1980 onwards. I have written two books on this subject; this period was pivotal in the creation of the curse we still have.
And it does rather look like the Queen lent her support for secrecy, which was the real product they sell.
It was not without reason that in 2009 I had to provide a new definition of tax havens, rebranding them as secrecy jurisdictions, which is a term that has stuck in academic and other literature since then.
A secrecy jurisdiction is a place that creates legislation for the benefit of people not resident in that place that then provides a deliberate veil of legally enforced secrecy to disguise the identity of those taking advantage of that legislation.
The purpose of this definition was to target the real problem, name it, and at the same time provide the remedy, and it worked. Campaigns for automatic information exchange, country-by-country reporting and beneficial ownership registration all followed from that redefinition.
And now we know that the Queen was definitely on the side of secrecy.
And you wonder why London is the centre of a hub of tax havens with her head on their stamps? Wonder no more.
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The early seventies saw the Competition and Credit Control Act which relaxed controls on banking. House prices rise due to more available credit. I bought a house in 1970 for five thousand and sold it in 1973 for almost eleven thousand. The act was discontinued in 1973.
The Conservatives were out of office in 1974 and did not return until 1979. I may be wrong, but the CCC looks like the first offensive of Thatcherism
I think this must be about section 27 of the Companies Act 1976 – https://www.legislation.gov.uk/ukpga/1976/69/section/27/enacted – under which a listed company could give a notice to a shareholder requiring the shareholder to tell the company the capacity in which the shareholder holds any shares, and to disclose beneficial owners.
s.27(9) said “A person shall not be obliged to comply with a notice under this section if he is for the time being exempted by the Secretary of State from the operation of this section; but the Secretary of State shall not grant any such exemption except after consultation with the Governor of the Bank of England and unless satisfied that, having regard to any undertaking given by the person in question with respect to the shares held or to be held by him, there are special reasons why that person should not be subject to the obligations imposed by this section.”
That was rewritten in s.216(5) of the Companies Act 1981 – https://www.legislation.gov.uk/ukpga/1985/6/part/VI/enacted
And it appears to have been rewritten again in s.796 of the Companies Act 2006, which remains in force – https://www.legislation.gov.uk/ukpga/2006/46/section/796 That is in Part 22 (Information about interests in a company’s shares) of the 2006 Act, and separate from the PSC (“people with significant control”) regime introduced in 2015 as Part 21A of the 2006 Act.
I wonder how many exemptions have been granted under s.796 of the Companies Act 2006 and predecessor provisions, and how many remain in force.
Good question
And thanks
Hmm. There is some correspondence on this at https://www.whatdotheyknow.com/request/section_796_exemptions_companies
In short, “Mr Cross” asked the Bank of England under the Freedom of Information Act for information about the exemption of Bank of England Nominees Limited under s.796.
The Bank confirmed that BOEN was a wholly owned subsidiary of the bank (just like Bank of England Asset Purchase Facility Fund Limited) which had been incorporated in 1977 “as a nominee company to hold securities on behalf of certain customers”. (ahem … 1977 … silver jubilee year … certain special customers)
It was granted an exemption under s.27(9) of the Companies Act 1976, which eventually became s.796 of the Companies Act 2006.
There was statement in the House of Commons on 21 April 1977 by the Minister of State for Trade, Clinton Davies . See https://hansard.parliament.uk/Commons/1977-04-21/debates/444d1fd8-8354-4a66-b6ae-67ab85b26151/Shareholdings(Disclosure) So this was a special exemption for “Heads of State and their immediate family, Governments, official bodies controlled or closely related to Governments, and international organisations formed by Governments or official bodies” who would promise to be good and not “influence the affairs of the company in which shares are held”
And a link to a letter to Andrew Bailey confirming that the BOEN exemption had been disapplied with effect from 4 April 2011. http://www.publications.Darliament.uk/Da/ld201011/ld
Suspiciously soon after that, this answer to a parliamentary question (can’t find a working link to Hansard) indicates it was no longer exempt by April 2011, and also that no other exemption existed at that time. https://www.theyworkforyou.com/wrans/?id=2011-04-26a.11.3
Quite remarkable.
And how are the shares held now?
I wonder….
There are some interesting snippets of information about Bank of England Nominees Limited dating back to the 1980s and 1970s. As well as the Queen and other members of the British royal family, it seems to have been used by (among others) members of the Saudi and Kuwaiti royal families, and their state investment vehicles such as the Kuwait Investment Office. I’m sure there is more to discover here if someone had the time and inclination.
I am afraid neither are available
But such good company……
@ Ian Stevenson
Thanks for this information. So much for democracy when a parallel secretive state is allowed to operate. I note the role of the governor of the Bank of England in enabling this secretive state!
If only British voters would wake up to the fact they’re being “experimented” on by the super-rich in regard to how they can grow and keep their fortunes, the Queen’s fortune included!
This happened in 1975, under a Labour government and was reported on by the Guardian at the time.
So?
Times change
After all we’ve seen of the U.S. and Trump, here we have an inkling of the reality of the true nature of so-called British ‘democracy’.
I note you mention the Queens head on stamps but missed the most important thing. Her head is on our money. Having her grace our notes and coins is a very insidiously powerful way of giving gravitas to our money. But the public don’t realise this is fake soveriegnty. Our soveriegn not only presides over this grotesque tax evasion but over a system where the vast majority of “our money” (97% of all new money according to Positive Money) is bank “loans”.
http://positivemoney.org/wp-content/uploads/2013/05/M4-Base-Money-Graph.png
This unsustainable debt based monetary system is the key driver behind the inequality issue and the stock market and property bubbles. Only this week the Telegraph have reported the trillions of unfunded pensions, set to get much worse in a future where AI and increased mechanisation will mean less tax payers to actually pay this debt.
Look at the way the Scots refuse to have the Queen on their notes with the result that the Scots think its “their money” when it nothing of the sort. I hope they do go independant and issue debt free based currency and show what is possible.
MMT appears to be little more than a bankers charter by keeping the debt rolling ever higher. The last time I checked, the world debt was coming up to 300 trillion. We need a bigger discussion about where our capital in our supposedly capitalist system actually comes from. That includes discussing why private banks create and control most of money, decide who gets it first and who benefits from it. And why the when we believe that “price disovery” is a key principle of capitalism but which is totally disregarded when it comes to the price of money, resulting in the banking cartels pricce fixing interest rates and robbing savers of a decent return on their hard earned money. And why when capitalism means that when a business goes bust its tough luck, that the way capitalism works, but not when private banks (who are also key drivers of tax avoidance and evasion!), go bust and then get bailed out by the tax payer. (or as I prefer to call it socialism for the rich)
Finally we must address the true value of money, not only in finding a fair interest rate or return for savers and how better that money can be redeployed, especially with the disgusting possibility of negative interest rates, but also discuss the damage that money creates. The race for more GDP clearly leads to more environmental destruction. The ever rising debt to service the interest payments on the existing debt is the key real reason for “needing” higher GDP (and keep the banks afloat!), and unless that system changes fundamentally our demise is guaranteed.
Telegraph quote:
“Liabilities for Government-managed pensions, including the state and public sector pensions, grew from £5.3 trillion at the end of 2015 to £6.4 trillion at the end of 2018. A combination of unfunded pension promises plus rising costs of an ageing population for health and care means that future generations will be facing a hefty bill for the promises we are making today.”
https://archive.is/Gnqjh#selection-177.0-177.202
https://en.wikipedia.org/wiki/Price_discovery
Just to make it clear, Positive Money now reject their old positions and have embraced MMT
There is no such thing as debt free money
But Richard, is it not more correct to say Positive Money and MMT have SOME aligned ideas on reform. Your claim that they have after 10 years of their work, that they have rejected “their old positions and have embraced MMT” – can you link me to this huge policy change please?
You did not address the key points I raised. I could have raised many more, for starters MMT fails the “moral economy” test , something which is key to PM’s objectives. Perhaps that because MMT fails to address them?
Also, I am not aware of how MMT justifies private banks controlling our money supply and profiting from it, at our expense.
A crucial Brexit lie was that we were told we would control our money and get back our sovereignty. I believe there is no sovereignty when a country has to borrow is own money for its internal monetary needs and to have to finance interest payments on that debt, whilst simultaneously giving away the power to create money out of thin air to private banks.
https://en.wikipedia.org/wiki/Moral_economy
Quite simply, PM has given up the claim that there is such a thing as debt-free money, thankfully
And banks do not have free reign: they are regulated. The problem is with the regulation.