Brexit and the Panama Papers

The two biggest news stories of the week are the government’s decision to spend public money on lobbying for its pro-EU position in the referendum and the revelations from Panamanian legal company Mossack Fonseca about the nefarious tax affairs of the global elite – the Panama Papers. So would the secrecy of the rich and powerful be better protected in or out of the EU?

The overseas territories and Crown dependencies that lie at the heart of the global network of tax avoidance and money laundering are a particular British problem. Most countries have seen their former colonial possessions become independent, or allow them a status as part of their own territory. Only the UK and Netherlands have offshore territories that exist in a legal limboland that facilitates dubious economic activity. Consequently there is little sympathy amongst other EU countries for protecting these post colonial anachronisms.

Although it is right that the Prime Minister has been vilified for his refusal to be open with the electorate, in fact what matters politically is whether his family’s use of secrecy jurisdictions has influenced his decisions on the policy which should be taken in the interests of the country. This week’s reports that David Cameron ‘argued to water down transparency rules over trusts’ suggest that there is conflict of interest that will not be resolved by the Prime Minister publishing his tax return.

Cameron is part of a tiny class of the super-wealthy who disdain the little people who willingly (or unwillingly) pay their taxes but do not have the resources to avoid them. This is why evidence that Cameron intervened to water down the effect of EU transparency rules on trusts is so damaging.

This week a letter to then European Council president Herman van Rompuy was leaked: it indicates that Cameron intervened personally to ensure that trusts like the one he had benefited from that was registered through legal company Mossack Fonseca, should be treated differently to companies in anti-money laundering rules.

In response to this my good friend and colleague Judith Sargentini, Green MEP for the Netherlands who was lead negotiator for the Parliament on the money laundering directive, made clear that she was aware of the UK blocking greater transparency over money laundering and that she had personally warned that it could create a loophole for tax dodgers.

The leaked van Rumpoy letter proves two things. First, that this government’s claims to be leading on tackling tax avoidance are entirely hypocritical. And second, that given the history of both the U.K.’s financial sector and this government’s leading figures, if we are looking for genuine solutions to the obscene behaviour of global elites we would be better off looking to Brussels then Westminster.

 

You may like to sign our petition to David Cameron on Panama Papers.