The Panama Hat Dance

08 Apr 2016

Downing Street has issued a fourth clarification of David Cameron’s tax affairs, stating that he and his family would not benefit in future from any offshore funds, following continued questioning after his father was listed in the Panama Papers leak. Channel 4 News reported that Ian Cameron was a director and shareholder of Jersey-based Close International Equity Growth Fund, prompting further demands that Mr Cameron details whether he has benefitted in the past from tax havens.  If he has, that is perfectly OK, get over it!  Unless relevant to his Public Office, the Prime Minister’s father’s financial affairs are none of anybody else’s business.  The PM’s slimy handling of the Brexit debate does inspire doubt, but this selective press hysteria is out of order. Elsewhere, the FT points out that the Prime Minister lobbied EU members in 2013 to leave trusts outside a central registry recording the true ownership of shell companies. Meanwhile, the Treasury has issued a statement saying George Osborne and his wife had “no offshore interests at all” after the Chancellor walked away from questions during a television interview asking whether he benefits from offshore funds. A raft of celebrities, sports stars and other high-profile figures have also been exposed in the Panama Papers, including the Duchess of York, Dominique Strauss-Khan, Simon Cowell, Heather Mills, Paul Burrell, Sir Mark Thatcher and Sir Nick Faldo. There is no suggestion of illegal behaviour by any of those mentioned, so it is not clear why they are being mentioned, other than that nobody wants gossip about people they’ve never heard of.

In a letter to the FT, James Anderson of PAM Insight, Switzerland, says it is ironic that the US is home to the ICIJ and also ranks as the world's fastest growing offshore tax haven. In a separate letter, Anthony Travers, Chairman of the Cayman Islands Stock Exchange, says US transparency standards should be raised to the level of those in the British Overseas Territories. Guernsey treasury minister Gavin St. Pier has said that Guernsey is not a tax haven, but instead a "low tax jurisdiction" that plays a vital role in international capital markets for those with legitimate business. Finally, Kimberley Durrant, the UK Representative for the Government of Bermuda, points out that in Bermuda disclosure standards exceeded those of the UK itself and central registers of beneficial ownership are held and continuously updated.

David Cameron has said a public register that identifies the beneficial or "significant" owners of UK companies will be introduced in June, bringing in “a new era of corporate transparency in Britain” (he isn’t quite right, that law came into effect earlier in the week, however the registers must by complete by 30th June).  That said, lawyers and accountants have warned that the register will be ineffective as provisions within the legislation would not apply to overseas companies operating in the UK through a branch and the register will not be independently checked.  If accounting standards require that companies disclose who they are ultimately controlled by, that solves the problem, all we need is a tiny amount of joined-up thinking. Enforcing existing rules may not be as newsworthy as making new laws, but it is simpler, cheaper, and more effective.   We are paying our regulators far too much for the results they are achieving!

Transparency and accountability are worthy liberal principles, suggests the FT's David Allen Green, as are privacy and the ability to obtain confidential legal advice. Elsewhere, the Telegraph’s Juliet Samuel points out that doing business offshore is not a crime. Rather, it is in many cases vital to the smooth operation of global business.