‘We’ve nothing to hide’
Thursday 29th January 2009, 2:29PM GMT.
GUERNSEY has nothing to hide with its offshore finance activities, according to the Treasury minister.
The TUC is calling on the UK Government to force banks in which it has shares to reveal what it calls their tax haven activities.
This comes after a TUC analysis of company reports and returns, which found that the big name banks such as Lloyds TSB, RBS, HSBC and Barclays have subsidiaries in tax havens.
Guernsey was the fifth most popular tax haven, according to the report, with 68 subsidiaries.
Jersey was second, with 170.
It also said that taxpayers’ money was spent propping up Britain’s banks, even in areas that avoid certain taxes, such as the Channel Islands.
However, speaking yesterday, Charles Parkinson (pictured) said the island had nothing to fear.
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Ok, this is how it is, by value, i.e. the pound:
Channel Islands investments = 10%
Offshore ‘legitimate’ investments (hidden behind a business name) = 25%
Offshore tax evasion = 50%
Offshore illegal investments = 15%
The amount of money invested by illicit organisations is incredible. I am unable to divulge the estimated amount of illegal or immoral investment due to my legal obligations, however I can state that the figure accounts for well over 20% of the money invested in Guernsey’s offshore financial institutions.
As for ‘legitimate’ banking such as TSB, Lloyds, Barclays etc, the companies in Guernsey are subsidiaries and as such are not bound by the same laws as the UK – this means that by conducting ‘creative’ transfers of investments the big banks are able to make a substantial return on their investments…..
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Richard
Those figures are utter and complete garbage.
“I am unable to divulge the estimated amount of illegal or immoral investment due to my legal obligations”. If you are going to make such bizarre, irresponsible and wildly inaccurate claims then you are going to have to do a lot better than that.
There are many of us working at a very senior level in the finance industry who will simply not be able to relate to those figures as we all know what business our own organisations undertake, which then begs the question of exactly who is left to be doing all that illegal business ! Totally impossible.
Sorry but you are way off beam with that statement and you simply cannot get away with saying it in a manner which suggests that you know it to be true.
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David
I could say that we, the forum reading public, only have your word on it. Because of the secrecy enshrouding the industry you would be unable to prove your facts, the same as you disbelieve Richard’s. You may know how your business runs, but do you know how the businesses, on whose behalf you invest their ‘mitigated’ savings, are run? Just because you have photo ID of the director, a utility bill, and a database search on the legitimate front they are presenting, doesn’t mean that the cash he’s funneling through isn’t sourced from illicit processes. And frankly you wouldn’t care. As long as the papers are in order.
Until there is total transparency, the assumptions will always be that there is something to hide. I reckon there’s lots to hide. The alternative is just too far fetched.
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Fast Robert
The answer is yes I do, and I know many, many others in the industry who do. And yes I would care if I found it to be illicit – very deeply, so don’t even dare go down that road.
I really don’t know what kind of tin-pot financial services outfit you must work for, but if your comments are based on your own knowledge then you are in the wrong organisation.
The sheer ignorance of how financial services businesses are run on this island is astonishing. The malicious assumptions that you and Richard Murphy and others make for your own sociological or idealogical purposes are simply way off track.
The picture being painted by you and Richard is one which I and many others at the coalface of the industry simply don’t recognise. And its not wilful blindness. You paint a picture which is more like the industry was 20 years ago when standards were very different. But not today. Yes there are bound to be a few rotten apples in there, of course there are, but the two of you are maliciously painting Guernsey to be rotten to the core and something that it isn’t.
And yes – I know your common tactic (a standard Murphy ploy as well) is to say “well how do we know whether its true or not because of the lack of transparency ?”. Individuals and companies (except public companies) have a right to privacy (and I’m not talking about abusing that right to privacy to unlawfully evade tax). Transparency undermines all of that. Which onshore juridictions have transparency re. companies, trusts, bank accounts etc ? The USA ? The UK ? Germany ? France ? NONE OF THEM !! Why ? Because there is a basic right to privacy.
Why should every prying journalist or nosey parker be able to obtain private financial information ? As long as people who use offshore finance centres operate within the law and do not unlawfully evade tax, why should anybody else be able to access their private information ? With the high level of tax information already passing from Guernsey and Jersey to the UK and who knows where else from there, why on earth would tax evaders pin their faith in hiding money in Guernsey ? Surely its the last place they would choose. Switzerland, Singapore, Panama, Bahamas maybe, but they would be made to hide it here in this day and age.
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@Richard
Your legal obligations are to report any illegal activities otherwise you are also commiting a crime.
You probably have a confidentiality agreement, but i’m pretty sure that money laundering and other legislation take precident over that.
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Richard
If you intend to turn whistleblower on the local finance industry, you will need to do a better job than an effectively anonymous post citing statistics that for all we know have been plucked out of thin air.
If you really want your post to be taken seriously, giving us your source would be a good place to start.
Your identity wouldn’t be a bad idea either, unless of course your “legal obligations” prevent it – in which case why would you take the risk posting on a public forum at all? Incidentally, what “legal obligations” could you possibly have not to report the vast number of illegal operations you seem to know so much about to the appropriate authorities?
Fast Robert’s point that such “facts” cannot be dis/proven is spot on. The industry is not transparant so such statistics can neither be confirmed nor denied. Nevertheless, if you expect anyone to believe these statistics without giving either your identity or your source, you must think us incredibly naive.
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Take a look at the following link
http://www.taxresearch.org.uk/Blog/2009/01/30/my-delicious-bookmarks-for-january-29th-through-january-30th/#comments
This is the blog run by one Richard Murphy. He may or may not be the contributor to today’s 6.06am posting. Judging by the fact that he chose to publish the link to this blog, its only fair that we reciprocate.
His agenda is very clear for all to see. He has a passionate dislike of the Channel Islands and of offshore finance havens and is on a one-man mission to close us all down by spreading his untrue propaganda. He uses sly tactics (just like Fast Robert) to enable him to make any comment that he chooses, hiding behind “transparency” as his weapon, challenging us all to disprove everything. Very clever but it wears thin.
And yes, I am the same “David” that he chooses not to debate anything with whenever he is losing a battle, although whenever he is winning a debate he runs with it ad nauseum.
I am not saying that he is always wrong. I accept that he does regularly make points which may be unpopular but which have foundation and he is right to raise them. But in his views of the Channel Islands he is well wide of the mark on a consistent basis and I will not let those false and highly damaging statements pass unanswered.
Anyway – take a look and make up your own minds.
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David
I’m not singling out Guernsey.
Transparency has to be across the board otherwise it won’t work.
Why should financial information (to a limit) be secret? I don’t see transaction provacy as a right, it is a service provided, not something for the HRA. It’s only money moving about. What is money? A bartering facilitator. I’m afraid that the whole industry is so far up its behind that it cannot appreciate the bare facts of life. Finance is not a game. It has a deep and direct impact on EVERYONE in the world, no matter where the deal is done.
Unless funds can be traced back and taxed at source then the system is failing. It’s very simple. It is philosophically and morally bankrupt. But it can be changed and Guernsey can still have a major role to play. It’s just that the senior guys like you have a vested interest to keep things as close to as they were 20 years ago as you can, because that is how you make money for yourself. You think that the major players embrace regulation and reformation? Or do you think they try and stifle debate and influence politicians – many of whom have close links to companies incorporated in offshore centres, to mitigate costs?
Given the state of the financial markets and the disaster that has started because of their greed, is it any wonder why the knives are out?
Instead of getting pompous try conciliation. Explain to me why my example of a legit front can’t contain proceeds from illegit origins? Just because you’re on first name terms with SOME of your investors, doesn’t mean they’re telling the truth. Without the transparency to see the source and the means of funds it will never be the case.
I don’t doubt your commitment, or your assurances (much), but the argument you use is not satisfactory. I would rather approach the situation from the opposite side and COMPLETELY clean the mess, rather than patching up the carpet so stuff can be swept underneath it.
Russian oligarchs? Good or bad money? Criminally extracted from deregulated markets or genuine wealth from honest hard work? For us, clean, for the millions of russians that lost out in the nineties and are still paying for the mess, very dirty.
It’s just not as white as you make it out.
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Fast Robert
Well – transparency re. financial services does not exist anywhere. Not even in the good old USA or the UK or Germany or France. Public disclosure of beneficial ownership of companies (other than public companies) just doesn’t exist. Its NOT an offshore thing. Its a global thing. Good luck with your efforts to change that.
Your comment: “It’s just that the senior guys like you have a vested interest to keep things as close to as they were 20 years ago as you can, because that is how you make money for yourself” is completely inaccurate. Its people like me who can’t get it through to those who don’t want to listen (particularly you and Richard Murphy) that Guernsey is precisely NOT what it was 20 years ago, which is because that’s entirely the premise on which your slurs and allegations are based ! But of course it doesn’t suit your agendas to accept this fact does it ?
You go on to say: “You think that the major players embrace regulation and reformation? Or do you think they try and stifle debate and influence politicians – many of whom have close links to companies incorporated in offshore centres, to mitigate costs?” Wow – that last part is quite a statement. Please elaborate. Of course the industry attempts to influence politicans, only a few of whom have the slightest knowledge of the industry which pays the education and health and social security bills !
I simply don’t deal with the sort of people who can put up a false “legit front”. Responsible businesses here do proper due diligence and check out their potential clients very carefully before acting for them. Those that don’t shouldn’t of course be operating here. I don’t believe that many are. From what you say, the organisation that you work for seems to operate differently. I don’t need to repeat what I’ve said previously to you on that front.
Like Murphy, you go on about cleaning up the mess of the finance industry. What mess ? The messes of 20 years ago ? Done. The messes of 10 year ago ? Done. Massive AML legislation introduced. Done. Extensive GFSC regulation ? Done. Better training of staff at all levels ? Done. Entering into the EUSD ? Done. Signing multiple TIEAs / Done. Is that enough cleaning up for you to be able to counter your statement ? What else would you like the industry to do ?
Russian oligarchs ? No idea on that front. I don’t touch them and probably wouldn’t if given the opportunity. Others may well do.
And by the way, please take a look at how the tone and nature of your 3.01pm posting completely underlines your claim on the other current related thread that you aren’t against the finance industry. Is it any wonder why people get that impression from your postings ?
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David
I think I take a more macro view. Are you telling me that, globally, the finance industry is in rude health and has been well regulated and that there are no problems? Guernsey is doing well, in itself, it would seem, but are we that cut off from the bigger realities?
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Fast Robert
Maybe your postings would be viewed slightly more favourably if you made it clear that you were taking a macro view. Multiple references within them don’t tend to give out that message at all !
You are quite right. The global finance industry is in one hell of a mess and it has not been at all well regulated. But that doesn’t make it all bad. Our standard of regulation here is top drawer – indeed many (though not me) would say that it is excessive although that view must surely have softened in recent months. We aren’t totally cut off from what’s going on elsewhere even if we may be slightly rmeoved from it. We are bound to catch the world’s germs even if the symptons might not be so strong by the time they reach us. Some very tough chalenges ahead on both the political and economic fronts and nobody should be in any doubt about that.
Its why we should be focusing on Guernsey’s strengths and positives and not giving any credence to the views of the likes of Murphy who spread lie after lie of bizarre and unproven allegations about the CURRENT activities of many offshore finance centres just to try to drive us all out of existence for his own purely idealogical reasons. If we were as bad as he paints then he would have a case. But we aren’t and so he doesn’t.
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In response to my earlier email, Richard Murphy has shown his true colours. Yes – I’ve been banned from posting on his site. So just in case you are wondering what I tried to post in response to his most recent posting, here it goes:
“Richard
So you are taking your ball home now and don’t want to play any more ? How very grown-up !! That seems to endorse everything I have been saying. Never mind, I’m copying this posting onto the This is Guernsey website.
Just in case you consider publishing this posting in response to yours:
(a) Please elaborate on your point. What by you mean that “Guernsey in effect requires no corporate disclosure” ? Compared with where ? What does the UK do other than publish abridged unaudited (meaninless) accounts about beneficial ownership ?
(b) What on earth does the Isle of Man have to do with the amount of US work in Guernsey or Jersey ? Totally irrelevant and you are using illogical assumptions to reach your conclusion. I know for a fact that there are several fiduciaries in the Isle of Man who write an enormous amount of US-related business.
Sorry – I am not being naive and I don’t believe that you can possibly have the evidence that you claim to have because I don’t think it exists. I suspect my “evidence” is a little more reliable. I am at the coalface and I know what goes on and what doesn’t go on. Your assertions are simply not accurate.”
So there you go. You know just how much credibility to pay to the allegations and political lobbying of one Richard Murphy who is trying to destroy us with false allegations.
I’m sure that we haven’t heard the last of him but at least you know what he’s all about when reading his diatribe.
He’s done this before – he declined to debate live with Dan Mitchell and now claims on his site to have “wiped the floor with him”. Not quite what I heard !
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David
Mitchell is a zealot that works for the super-rich. The policies he advocates are a relic of an unregulated past and many of them are just falling apart around his ears. What the world needs is more regulation, more transparency, the break up of the big banks into components (I see Citicorp have had to do that), the separation between retail and investment banking and global agreements on tax sharing information. No one should be able to dictate what level of tax any one jurisdiction sets, but the rules of domicility and accountability must be uniform and understood. Accountants and tax experts should not be able to influence global affairs as much as they have been doing.
The idea that a regulator, who is in fact just a branch of the industry, has the necessary influence to manage the liquid nature of the finance industry has proven a myth. The UK and the US has seen massive deficits between the language the regulators use and the actuality of the situation. Therefore my personal view is that we should treat the GFSC with as much trust as Bernie Madoff.
All that said and back to Guernsey, I think we are trying to be as proactive as possible, at least by doing the bare minimum of what is perceived as the right things to do unilaterally, and that the messages coming out are not as ‘keep your nose out’ as they used to be.
I don’t think you should dismiss Richard Murphy’s expertise quite so readily. He spends his days (I’m speculating here) examining data, or the lack of it, and is basing his conclusions on facts, or the lack of them. I don’t think he hides in a dark room and dreams up ways of insulting the Channel Islands out of an ideological hatred. He, or his like-minded peers, are getting the ear of many influential people.
Guernsey is moving in the right direction, but is it moving fast enough? What is necessary is that we are ready for any shocks. I don’t think we are, we are too reliant on foreign shell companies for income.
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Fast Robert
I certainly don’t dismiss Murphy’s expertise. I merely dismiss his false propaganda and the things that he claims to “know”. And yes, he is a fierce socialist who does have an ideological hatred of capitalism (sound familiar ?). His agenda is crystal clear. You clearly sing from his hymn sheet.
Mitchell certainly is extreme right, but he is no more to the right than Murphy is to the left. Many of his arguments about the right to privacy and the benefits of flat-rate taxes etc have huge merit.
And yes, I agree that better global regulation is a must, as is a revision of accounting rules. But I don’t subscribe to the loss of general privacy provided that it does not permit illegal tax evasion. More appropriate ways have to be found to square that particular circle, but nothing is impossible.
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