On April 3 2016, just under 12 million documents were leaked from the Panamanian law firm Mossack Fonseca containing financial details on over 200,000 offshore companies. While the bulk of our nation’s media coverage was of David Cameron’s family investment fund – Blairmore Holdings – and the former Prime Minister of Iceland’s resignation, most news outlets underplayed the real significance of the investigation: the details of shell companies used to profit from criminal activity and how the lack of transparency in opaque jurisdictions such as the British Virgin Islands, Seychelles or Bahamas provides cover for organisations involved in people trafficking, narcotics, selling arms to despotic regimes and terrorism.
On Saturday, Tower Hamlets Liberal Democrats are moving a motion demanding that the UK calls time on the lack of progress in our overseas territories and sets a deadline for the implementation of centralised registers which make the beneficial ownership of companies available both to relevant authorities and to the public.
The UK has a strong record in this area: Vince Cable drove forward the development of legislation for Companies House to implement a register of Persons of Significant Control during the coalition and the register is now starting to be filled with statements of beneficial ownership. It is due for completion in June 2017.w
For me this is one of the most significant achievements of Liberal Democrats in government – and one that we sadly rarely talk about. The UK was the first country in the world to commit to implementing a register of beneficial ownership, with Denmark and Norway following closely behind, and Australia also announcing their intent to do so earlier this year.
David Cameron and Eric Pickles commendably maintained the anti-corruption trajectory into the current government, hosting a global Anti-Corruption Summit earlier this year. We were also pleased to read in the last week that consultations on extending corporate criminal liability for fraud and money laundering would continue – after being in some doubt – and that the proposed sell off of the Land Registry has been dropped for the time being.
Also particularly significant is the consultation on requiring public disclosure of details of the corporate control of overseas companies bidding for public contracts or purchasing land or property in the UK. The use of intransparent corporate structures to purchase high-value property or bid for public contracts is a very high risk indicator for bribery or money-laundering activity so we strongly support progress in this area.
Holding the rich and powerful to account, however, is not a line that we can expect the Conservative Party to pursue if left unchecked. More worryingly, the threat of an exit of the European Single Market could see British business chasing less reputable investments and a government trying to cut ‘red tape’ in order to make up for lost business.
The time is now for Liberal Democrats to hold the Tories’ feet to the fire on pushing through the reforms needed to tackle global corruption and white-collar crime, and to set ambitious next steps to ensure that our continued economic development is built on legitimate business, transparent government and a coherent and functional judicial framework. Too few members in the party (and of the public) appreciate the significance of the progress we made in this area during our time in government, but in opposition we should continue to carry the torch and ensure that Theresa May doesn’t start to quietly drop any measures already underway.
If you want to see the party push to ensure that the UK continues to lead on transparency and anti-corruption efforts, please support our motion on Saturday.
Policy motion F10: Tackling Corruption and Corporate Crime is in the Agenda on Saturday 17 September at 14.40.
* Ed Long is the chair of the Association of Lib Dem Engineers and Scientists and a local member of Tower Hamlets Lib Dems
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8 Comments
isnt there a problem in that a number of the overseas territories are self governing except in foreign affairs and defence – should the UK Govt be telling them what to do ?
Well said.
@Simon we effectively have already demanded that they do this, but no timescale has been given for a response, which is what we call for in the motion.
Non-compliance could be dealt with diplomatically (e.g. removal of privileges enjoyed as a result of being a UK territory) rather than directly (e.g. an Order in Council), though the latter is routinely used to ensure OTs are compliant with sanctions regimes.
We condemn opacity and tax avoidance, yet allow facilities for them in territories where the UK is sovereign. A modern, money-driven, version of Perfidious Albion.
We should be as strict on corporate tax evasion as we would be on an ordinary family.
@ed – thanks.
@Conor – corporate tax evasion is a criminal offence – what makes you think it isnt dealt with strictly ?
This is exactly what we should be doing.
I am glad this motion is being debated. In addition to the need for transparency concerning bank accounts and ownership of properties and companies, there is a wider need to hold transnational corporations accountable. Currently it is the nation state that is responsible for ensuring that their citizens are protected against corporate abuses human rights – child labour in mining, fires in sweatshops etc. Yet many transnationals based in the UK, EU and US continue to abuse human rights in developing countries. At the same time, the EU and states are conspiring to hand more power to transnationals through TTIP (thankfully that looks almost defeated) at CETA (which looks set to be introduced). This power stems from a new global legal system where corporates can sue governments in a world court staffed by corporate lawyers. All this while new research shows that 68 of the richest 100 entities in the world are businesses, and that the gap between transnational turnover and the GDP of the majority of nation states continues to grow.
After TTIP and CETA the case for regulation of transnationals is stronger than ever, to allow people – including victims of human rights abuses – to sue companies more effectively and for nation states to get redress too. The need for a business and human rights treaty is overwhelming, and will also help hold transnationals to account for environment destruction across borders, protect global natural resources and food security. The case of Deutsche Bank almost bankrupting Sri Lanka over mis-sold oil derivatives, and debt vultures pursuing poor and highly-indebted developing countries through courts in developed countries, makes it all the more important that we have a new treaty to regulate the worst excesses of transnationals and hold to account companies operating across borders.
Self-regulation has largely failed to make a difference. Next month sees the latest stage of a UN process to discuss transnational regulation. Unsurprisingly the UK and US are opposed to this idea, and many developing nations – and some rapidly developing ones – are in favour. Let’s hope progress is made.