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British Overseas Territories In Talks To Keep Tax Haven Secrecy

Leaders of British overseas territories are to hold two days of showdown talks with ministers in an attempt to reverse the UK government’s decision to end secrecy for offshore tax havens.

An unexpected vote by MPs at the beginning of May to impose public registers of share ownership in all the BOTs has triggered angry resistance including street protests, boycotts of the Queen’s birthday celebrations, and even demands for constitutional separation.

The disagreements have the potential to create the biggest constitutional crisis between London and the territories for decades, which an apologetic 35-minute phone call from Theresa May and visits to some of the BOTs by the Foreign Office minister Lord Ahmad has so far failed to soothe.

The territories, which include the British Virgin Islands (BVI), Bermuda, Cayman Islands and Turks and Caicos Islands, fear an end to tax secrecy will undermine the financial services industries on which local economies depend since privacy-seeking investors will simply move their portfolios to other secretive regimes.

They also claim the Commons vote infringes the constitutional right of the islands to oversee their own domestic legislation. More than 1,000 people marched in the BVI to protest against the enforced change in the law.

After the Panama Papers exposed widespread money-laundering, MPs ignored government pleas and backed an amendment to the sanctions and anti-money laundering bill to require BOTs to set up public registers of beneficial ownership by the end of 2020.

Andrew Mitchell, the former Conservative international development secretary and a leading MP behind the rebellion, was unrepentant, saying on Tuesday: “The overseas territories share our queen, they travel under our flag and they must also share our values.”

He intends, with the former chair of the public accounts committee Margaret Hodge, to press crown dependencies including Jersey and the Isle of Man to accept the same regime as the BOTs.

Treasury ministers had been desperate to exclude the jurisdictions, already in the process of reluctantly establishing registers that could be accessed on request by law enforcement bodies, from the legislation passed last month – but the move only fuelled the anger of the overseas territories.

The BVI delegation to London, one of the groups from the BOTs, is being led by its pro-independence deputy premier, Dr Kedrick Pickering, and has hired the law firm Withers and instructed counsel to prepare a legal challenge on the basis that the UK parliament has overreached itself.

Hussein Haeri, partner and head of Withers’ public international law team, said: ‘We are confident that there are constitutional grounds for challenging the imposition of a public register of the beneficial ownership of companies and human rights issues raised by public access to the register.

“The BVI’s consistent position is that it will not introduce public registers unless and until they become a global standard.”

The Cayman Islands are considering whether to join the action or to instruct a different firm of lawyers. Its premier, Alden McLaughlin, said he would try to change the islands’ constitutional relationship with the UK, describing the Commons vote as “reminiscent of the worst injustices of a bygone era of colonial despotism”.

He added: “We want to remove that ability for the UK to be able to randomly legislate for us.”

“This matter extends well beyond the issue of beneficial ownership registers or the broader financial services sector.

“If the UK feels emboldened by what it has just done and believes it can do it any time it doesn’t like something here or it wants to impose something on us, it is not just the financial services industry at risk but our very existence.”

David Burt, the premier of Bermuda, has already warned May that he will not implement the laws, saying: “This country does not recognise the right of the United Kingdom parliament to legislate on matters which are internal affairs reserved to Bermuda under its constitution.”

He said that in his call with May he had reiterated Bermuda’s position that it would implement a public register of beneficial ownership only when that was a global standard.

The meetings with UK ministers this week were also due to discuss the consequences of Brexit for the territories, and UK government aid to relieve the impact of last year’s hurricanes.

This story originally appeared in The Guardian. Image courtesy of Alamy.

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