Monday, August 08, 2011

Signs of transparency from Jersey? Er....

From The Nation, in Kenya (hat tip: David McNair):
Jersey has opened negotiations with Kenya over the sharing of a fortune stashed in its banks by two Kenyans it accuses of corruption and money laundering. Some Sh900 million, which the British tax haven accuses former Cabinet minister Chris Okemo and former Kenya Power managing director Samuel Gichuru of corruptly obtaining, is on the table.
And, according to British High Commissioner Rob Macaire:
I can confirm that the Solicitor-General of Jersey, Mr Howard Sharp, is in Nairobi this week, assisting relevant Kenyan authorities in relation to the extradition of Messrs Okemo and Gichuru.
And the article continues:
"The little tax haven island says it would like the extradition case against Mr Gichuru and Mr Okemo given priority because the charges the two face are serious.

“This was not a case of one or two companies trying to gain competitive advantage. The allegation is that Mr Gichuru demanded payments from all companies wanting to do business in Kenya,” the Jersey authorities claim."
We should give credit where it is due - if it is due. Is this a sign that Jersey is becoming willing to tackle corrupt money than before? Well, the international environment certainly has changed, and Jersey certainly pays more attention to reputational risk than it did, say, a few years ago.

So was it Jersey that initiated this probe? They found a bunch of dirty African money, and decided they didn't like it? That tax havens are not just responding out of fear of powerful countries like the United States, but are willing to help African countries tax their own citizens?

Well, that would be delightful tale to tell. Unfortunately, it doesn't seem quite as simple as this. According to Charles Abugre:
"The architects of this extradition request is the United States of America who are acting under what is called the Foreign Corrupt Practices Act (FCPA) of 1977."
OK - it's Jersey responding to U.S. pressure again, it seems. Not Jersey necessarily turning over a new leaf.
"What precipitated this particular action was that Alcatel, a US registered company, felt compelled by the evidence against it in a Florida Court in December 2010, to initiate a plea-bargain in order to reduce its fine and reputational damage. In this plea bargain Alcatel admitted to having bribed foreign officials in a number of countries including Kenya."
For those who are interested, Abugre's article contains many, many interesting details, including on something we've blogged before (in an article worth reading in its own right): an exceedingly murky telecommunications structure that involves a paper trail leading to Guernsey, Jersey, Antigua and Anguilla. Abugre also looks at re-invoicing via Mauritius and Dubai, and much, much more. He provides an interesting summary of the case:
"Jersey is not doing this by choice is it? Jersey is doing the minimum necessary to save its own scalp. It is compelled to action by the United States lest it is black-listed for promoting money laundering and by the OECD bilateral information exchange agreement compelling it to provide tax and savings related information to its member countries upon request."
Well, that seems to settle the matter. And, a postcript from his, with the emphasis as in the original:
"We need to keep in mind the implications of the illicit money. It thrives on inequality and perpetuates inequality; it enriches a few and keep the majority in desperate poverty and without jobs; it kills."
Fresh signs of transparency from Jersey? We won't be giving them the benefit of the doubt at this stage.

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