Andrew Mitchell is a former International Development Secretary, and is MP for Sutton Coldfield.
Under the Conservative-led Government of 2010-15, Britain won renewed respect by clamping down on corruption and championing transparency. David Cameron declared that “sunlight is the best disinfectant” and Britain led the way at the International G8 Summit by ushering in a new era of intolerance towards corruption, money laundering, tax avoidance and evasion. Tomorrow, Members of Parliament have an historic opportunity to take a big step forward in eliminating this from Britain’s overseas territories.
A strong cross-party alliance of influential backbench MPs is putting forward an amendment to a money laundering bill that would make our UK overseas territories – the notorious tax havens such as the British Virgin Isles and Cayman Islands – develop open, public registers of beneficial ownership.
Public registers would help us know who owns what and where the money is flowing. That transparency is vital in the fight against money laundering and tax avoidance by crooks, kleptocrats and terrorist gangs.The National Crime Agency reckons that £90 billion is laundered through Britain each year – that represents four per cent of our GDP. Our secretive tax havens are central to this.
And be in no doubt that this is indeed filthy lucre. Under the cloak of secrecy, money made from modern-day slavery, from the sex trade; from money stolen from the African people by corrupt politicians, evil dictators and warlords – much of all this is washed through these secretive havens and given the veneer of respectability in large parts of the British Union flag. Once the media and charities spotlight is focused on this nefarious activity, it will be forced into ever-more disreputable havens. But as with the fight to defeat malaria, we will narrow the footprint and more easily eradicate this scourge.
For instance, there are 85,000 properties owned in the UK by companies that are incorporated in our tax havens. Half of these are in just two London boroughs – Westminster, and Kensington and Chelsea. Two out of every five of these homes were acquired with Russian money, bought through shell companies in our tax havens. In many cases, the buyers simply wanted to bring dirty money into the legitimate system.
Research by Global Witness found that £68 billion flowed out of Russia through our overseas territories in the nine years to 2016, with the British Virgin Isles topping the list. In amongst those billions is money obtained from the proceeds of crime and suspected corruption. It is part of a way in which British territories are unwittingly assisting Russian illegal behaviour.
All the leaks from the Panama papers to the Paradise papers, from TV and radio programmes to articles in every newspaper, all tell the same story. Secrecy breeds wrongdoing. Transparency is central to exposing bad behaviour and preventing it.
Cameron understood this when he promised to rip aside the “shroud of secrecy” in 2013. He showed real leadership in the global fight against money laundering and tax avoidance. We now want to enact what he promised five years ago. Theresa May has made clear that she wants to clamp down on dirty money and tackle the facilitators of tax avoidance and evasion.
If the Government mean what it says they should accept our proposal for public registers– not resist it. Of course, Britain must support the overseas territories to develop alternative economic activities. We would rather the tax havens came willingly to the table. And we are particularly mindful that the terrible damage done by the hurricanes last year has made life very difficult for our Commonwealth cousins in the Caribbean. That is why we have suggested that the registers should only become available at the end of 2020.
But Britain and the tax havens will never stay rich on dirty money. Global Britain must lead the global fight against tax avoidance and money laundering. We can’t carry on sheltering dirty money. We need to see where it is, root it out and thus show the leadership that has made Britain respected around the world for its principled stand on these issues.