Campaigners give onshore and offshore secrecy jurisdictions the red light

We have just blogged a press release from Christian Aid looking entitled Moment of truth for Britain’s tax havens as they attempt to shake off their shameful status, to mark the start of the British Overseas Territories' Joint Ministerial Council (JMC) meeting which starts today, bringing together UK ministers and political leaders from the UK Overseas Territories. This is potentially an important meeting for the world as a whole, since the Overseas Territories include some of the world's most important secrecy jurisdictions - and, as our Financial Secrecy Index project makes clear - Britain is the most important single player in the offshore secrecy system: in significant part because of its Overseas Territories.

Now, complementing this press release, here is a pointer to an important new report jointly written by Global Witness and Christian Aid, entitled Company Ownership: which places are the most and least transparent. Among many other things, it notes:

"What’s needed is clear: the names of the ultimate, ‘beneficial’ owners of companies, trusts and other corporate vehicles need to be made public. It is only by putting this information in the public domain that tax inspectors and others will be able to easily access this information; that businesses will be able to know who they are doing business with; and that citizens will be able to know who owns the companies that provide their services and extract their resources."

And they go on to note that in this context, distinctions sometimes made between 'onshore', 'offshore' and 'midshore' are largely meaningless: 'onshore’ is in no way synonymous with transparency; and by contrast some supposedly ‘offshore’ places are considering opening up. Two countries - the UK and France - have said they will create public registers of beneficial ownership, and a number of others are consulting on the possibility. This is grounds for optimism: but there is a very long way to go.

The press release follows:

Campaigners give onshore and offshore secrecy jurisdictions the red light

Some of the world’s most infamous secrecy jurisdictions, such as the British Virgin Islands and Jersey are considering becoming more transparent, whereas several G8 countries lag behind, said campaigners today.  A new report, [1] published by Global Witness and Christian Aid today on the eve of a meeting between the UK government and the heads of the Overseas Territories, grades each of the G8 countries and the UK’s tax havens as to how easy it is to find out the names of the ‘beneficial owners’ of companies – the people who ultimately own and control them.

“Tax dodgers, child traffickers, corrupt politicians and other money launderers all rely on the use of anonymous shell companies to hide their identity,” said Rosie Sharpe, Senior Campaigner at Global Witness.  “To tackle this sort of financial crime, the names of the beneficial owners of companies need to be made public for all to see.”

Abuses of anonymous shell companies have received high-level political attention recently.  At the G8 summit in June 2013 all the G8 countries as well as the UK’s Crown Dependencies and Overseas Territories produced plans to tackle hidden company ownership.  Some are better than others.  Those places that promise more transparency deserve recognition, whereas the places that have not yet embraced this move towards greater transparency deserve exposure.

Only the UK and France have been awarded the top grade of ‘green’ as they have committed to make beneficial ownership information public.  The other results, however, do not divide into ‘onshore’ countries getting good marks and ‘offshore’ jurisdictions getting poor marks.  Quite a few of the tax havens are running, or have committed to run, consultations on whether to make beneficial ownership information public, including the British Virgin Islands, Cayman Islands and Jersey.  Half of the G8 countries – Germany, Canada, Russia and Japan – however, get the lowest grade, a ‘red’.  The US – which is the most popular jurisdiction of choice for the corrupt [3] – gets the second lowest grade, an ‘orange’, for having committed to push legislation that would create private registries.  The administration now needs to see through this commitment.

“Thinking about making company ownership transparent and actually doing it are of course two very different things.  Once the consultations are concluded, we will be adjusting the grades accordingly – up if they promise to make company ownership information public, down if not. Our hope is to see a race to the top.  Without this, companies will continue to be used to evade taxes and steal money from some of the poorest people on the planet,” said Joseph Stead, Senior Economic Justice Advisor at Christian Aid.

/Ends

For interviews or further information, contact:
Anthea Lawson, Global Witness, on alawson@globalwitness.org or +44 20 7492 5882 or +44 7872 620 855
Rachel Baird, Christian Aid, on rbaird@christian-aid.org or 0207 523 2446.
Notes to editors:

[1]  On 25 and 26 November 2013 there is a meeting of the ‘Joint Ministerial Council’ taking place in London – an annual meeting of all the leaders of the Overseas Territories, plus UK ministers. https://www.gov.uk/government/topical-events/overseas-territories-joint-ministerial-council.

[2]  Company Ownership: which places are the most and least transparent can be downloaded for free from the link below, or at www.christianaid.org.uk

[3]  A report by the World Bank’s Stolen Asset Recovery Initiative looked at more than 200 cases of grand corruption.  In 70% of the cases, a company was used to facilitate the crime, and the most popular jurisdiction to incorporate those companies was the US, followed by the British Virgin Islands.

Company Ownership: which places are the most and least transparent (PDF)

It is a most useful report, focusing on a very important aspect of financial secrecy. As they note:

"Company ownership transparency is just one aspect of the financial transparency that is necessary for citizens to be able to hold companies and governments to account, albeit an important one. Good performance on beneficial ownership doesn’t necessarily mean good performance on other issues; for a wider look at financial transparency across different jurisdictions, see the Tax Justice Network’s Financial Secrecy Index."

Update 2014: for information on the Mechanics of Secrecy, see here.