A CONGOLESE OR BRITISH SCANDAL: THE ROLE OF THE BRITISH VIRGIN ISLANDS

A CONGOLESE OR BRITISH SCANDAL: THE ROLE OF THE BRITISH VIRGIN ISLANDS

12/05/2016

‘Out of Africa’ cartoon.

The Panama Papers' scandal has also brought new attention on the secretive financial structures that mask the real owners of offshore companies. The UK’s tax havens played a central role in the facilitation of these secret sales. As early as 2011, a British Member of Parliament published a list of 59 shell companies involved in the Congolese mining sector: 47 of them were based in the British Virgin Islands (BVI).

The Financial Secrecy Index ranks countries according to the level of financial opacity they provide – the list is a rogues gallery of regulatory frameworks that are crucial in the facilitation of corruption. The 2015 index ranks the UK in 15th place, but the index notes that if the UK and its satellite tax havens (its Crown Dependencies and Overseas Territories) were considered together, it would be in first place.

Illicit money flows into these offshore jurisdictions and then onto the major global financial centres, including London. Gertler has made prodigious use of secrecy regulations in jurisdictions that are part of the UK network, especially the BVI. The incorporation of offshore companies sustains an entire secondary industry of financial services companies and lawyers. Gertler has regularly retained Trident Trust in the BVI and Hassans in Gibraltar. There is no suggestion that these service providers acted other than in accordance with local laws.

While the sales of mining assets should have been announced by the Congolese authorities, the UK is ultimately responsible for the tax havens that allowed these deals to take place in the shadows. The UK is legally responsible for the good governance of its Overseas Territories.   A UK government white paper stated that “As a matter of constitutional law the UK Parliament has unlimited power to legislate for the Territories.”  In these territories the UK government appoints key government officials and laws in the territories must be approved  in London.

In addition it is London-listed companies (Glencore and, at the time, ENRC) that played a critical role in these deals that deprive Congo of its mining revenues. These actions are at loggerheads with the UK’s own aid contributions to Congo, which currently stand at around £150 million annually.

Tortola in the British Virgin Islands (BVI). Several of Dan 

Gertler’s companies have been incorporated in the BVI,

which is a tax haven and secrecy provider.

The UK has led the way in making company ownership within its own borders more transparent, but it has stopped short of requiring its Overseas Territories to do the same. In October 2013 Prime Minister David Cameron said that the UK would make the details of who owns and controls UK companies publicly accessible, however this would not apply to the Overseas Territories. In September 2015 Cameron criticised some of the UK’s Overseas Territories for not doing enough to combat money laundering and tax evasion.

Cameron is hosting an Anti-Corruption Summit in London in May 2016. He should take this opportunity to turn his words into actions and deal with the secrecy regulations in the UK’s own constitutional backyard. He must broker an agreement with the UK’s tax havens to shine a light on company owners; anything less must be counted as a failure of leadership.

By Global witness