The eyes of officials from Britain’s overseas territories, executives of companies based in such jurisdictions and anti-tax haven campaigners will be focused on the British House of Commons today, where a key – and highly controversial – debate over whether beneficial ownership registers in such jurisdictions should be fully open to the public is set to take place.
Although some of these “BOTs” maintain beneficial ownership registers that they share with government authorities from other jurisdictions on request, most draw the line at making such registers completely open to public view, citing privacy and personal security concerns.
Representatives from the British Overseas Territories have been saying for months that they would strongly resist what they regard as interference in their affairs.
The passions on both sides of the debate were displayed this morning on the BBC’s Radio 4 news programme, Today, when Labour MP Dame Margaret Hodge explained the reasons behind her amendment to the so-called Sanctions and Anti-Money-Laundering Bill, which called for full public disclosure of beneficial ownership of companies registered in the British overseas territories.
Her views were strongly challenged by Lorna Smith, executive director of British Virgin Islands Finance – leaving Radio 4 presenter John Humphrys to invite Hodge and Smith to continue their debate off-air, once their allotted time was up.
Asked by Humphrys why she was “so exorcised” by the issue, Hodge explained that “Britain sits at the hub of the largest network of secretive organisations in the world, and that is our Overseas Territories, the tax havens”, and that “secrecy breeds wrong-doing”.
“Transparency is a power tool, John, and if we could just open the registers of beneficial ownership, showing who knows what, and where the money flows, I think at a stroke we would start to destroy that criminal activity that takes place,” Hodge added.
She went on to note that “half the entities that were mentioned in the Panama Papers were of companies located in the British Virgin Isles” and that “85,000 properties here in the UK are owned by companies that are located in our tax havens”, the owners of which companies aren’t known, but which a recent study of a representative sample of which had suggested four out of 10 were owned by Russian entities.
The BVI’s Smith retorted that Hodge’s claims were “totally false”, and that the British Virgin Islands – “as Dame Margaret Hodge very well knows” – had been “deemed largely compliant by the [Organisation for Economic Cooperation and Development], the Financial Action Task Force, and all of the [other] international organisations”, thus putting it “in the same league as the United Kingdom and the United States”.
The BVI’s concern about the possible insistance that it make its beneficial ownership register public, Smith added, was that the requirement would represent a “constitutional infringement” which would also “smack of colonialism”, and that it would be taking place against the backdrop of the fact that the jurisdiction was “doing nothing wrong”.
A similar point was made last week by Jersey chief minister Ian Gorst in a comment last week to Jersey’s local newspaper, the Jersey Evening Post, in which he said the UK legislation would be “unconstitutional” and that a public register of beneficial ownership could not be forced on the island without its consent.
If the legislation, including the public ownership amendment, is approved, it “would see the 20,000 properties owned by Jersey-registered companies and entities across England and Wales – worth hundreds of millions [of pounds] – forced to reveal the identities of those ultimately benefiting from them, within the next 12 months,” another Jersey news website, Bailiwick Express, noted.
Nevertheless, UK media this morning reported that the move, as one put it, “to make offshore tax havens more transparent” was all but certain, as a result of a commitment on the part of 20 Tory MPs to support Hodge’s amendment.
To read and download the Sanctions and Anti-Money Laundering Bill on the Houses of Parliament’s website, click here.