Jersey joins London to flog offshore secrecy to the Chinese
Jersey's offshore financial industry is intimately linked to the City of London. To all intents and purposes it is a satellite of the City, providing laxer regulation and deeper secrecy than can be provided within the UK itself. The island authorities openly promote Jersey as a conduit for financial flows into the City.
It therefore comes as no surprise that Jersey piggy-backs along with the City of London's Mayor to promote its tax haven facilities to Chinese wealth-holders. For the record, however, its worth noting that China ranks top on the list of countries suffering from illicit cross-border financial flows. In January of this year our colleagues at Global Financial Integrity (GFI) assessed the magnitude of illicit outflows from China at US$2.18 million million (you might want to re-read that to allow the scale to sink in) between 2000 and 2008.
According to GFI:
"Mainland China’s massive outflows were predominantly the result of trade mispricing – a common practice whereby multinational corporations manipulate figures on commerce and earnings to minimise tax liabilities. A popular means of tax evasion for companies, trade mispricing is the driving force behind most of the illicit capital exiting developing countries." [Raymond Baker writing in the Financial Times]
Trade mispricing is precisely the type of activity that multinational companies prefer to route through elaborate structures created in secrecy jurisdictions like Jersey. Now you might understand why little Jersey wants to get in on the act.
** The Lord Mayor of London represents the political interests of the City of London Corporation - which covers the geographical area known as The Square Mile. Nicholas Shaxson's excellent book Treasure Islands explores the extraordinary political status of the Corporation, which is the world's most powerful, but arguably least understood, lobbying organisation.