"We are not attractive to the ethically challenged"

British Virgin Islands executive director protests against tax haven image.

"We are not attractive to the ethically challenged," protests Elise Donovan, executive director of the British Virgin Islands’ financial centre. Donovan is saying that everything you think you know about the BVI – banking secrecy, half a million companies for under 25,000 residents – is wrong, or at least good.

"People who have strong business acumen know about the BVI. We have to educate the people don’t know the facts. People who know business know that the BVI is a reputable, above-board jurisdiction… There’s a misconception that we are in some sort of illicit activity, when we are part of the wheels of commerce in the global financial world."

Speaking at BVI House in Mayfair, alongside Dr Orlando Smith OBE, premier of the British Virgin Islands, and financial secretary Neil Smith, Donovan seems to chafe at the BVI’s reputation, not enhanced recently by the revelation in The Guardian of high-profile figures who had offshore accounts there.

Mongolia’s former finance minister and François Hollande’s 2012 election campaign co-treasurer were both fingered (not for illegal activity), as were Scot Young (went to jail rather than reveal assets) and Baroness Carmen Thyssen-Bornemisza (owns her art there).

Perhaps Donovan has a point. As I wrote in April, when the story broke, no-one made the point that there is nothing nefarious about legitimate offshore banking. I also argued that the investigation constitutes invasion of financial confidentiality on an enormous scale – also a point overlooked by many in their fervent tax-haven bashing. (Tax justice campaigner Richard Murphy was one who celebrated the leak.)

How was this information obtained, I ask Premier Smith (pictured left). Given that the BVI pride themselves on their banking confidentiality, the report must have been extremely embarrassing for the island’s IFC as well as off-putting for potential customers.

"[The information] was acquired illegally," Smith says firmly, "but we’re not exactly sure how. We were shocked, but we were comforted by the fact that it did not originate from our regulatory system, from the IFC or from any structures in the BVI."

Just how the data was obtained remains to be discovered, but I wonder if the premier is worried that the BVI will have sustained a reputational hit as a result of its release. He says that customers – both current and potential - needn’t be worried about the IFC’s commitment to confidentiality, despite the report.

People aren’t going to see it like that though. The BVI is not alone here in feeling that it is misunderstood as a "tax haven", in which billions of illegitimately acquired offshore dollars are stored in obscure bank accounts: all IFCs, it seems – and not just those in idyllic, sun-dosed islands – are being tarred with the same brush. As Smith says, "Any jurisdiction that deals with financial services is called a tax haven. That is just a name people use but it’s not what it’s about."

There is a difference, often overlooked, between confidentiality – in which the BVI IFC maintains "very high standards" – and secrecy, which it does not tolerate, says the premier: ‘Secrecy suggests that someone wants to hide something, confidentiality suggests you simply don’t want to have your information public. You wouldn’t want your bank information public, for example.’

I certainly wouldn’t – although I suspect it would be dull enough to avoid serious scrutiny – but some point to other aspects of the BVI to justify their suspicions that a lot of people there are up to no good. They point to the 500,000 active registered companies on the BVI, for example, so I ask financial secretary Neil Smith what they’re actually used for.

His response, at a slight angle to the question, is clearly motivated by frustration with the IFC’s public image: "The biggest misconception for me is that it is not possible to find out who owns a particular company [in the BVI]. Yes, the public won’t know, but if the UK government want to know who owns a particular BVI company then they need only ask, and that information will be provided." The BVI has 24 Tax Information Exchange Agreements in place with other countries, and signed its most recent with Canada on 21 May.

Smith is also annoyed at the idea that billions of dollars are actually stored in the BVI: "We don’t keep money here. It’s true that the BVI owns a lot of assets, but they’re not in the BVI. They may be in London or Hong Kong, but they’re not actually held here."

Even if they were though – assuming they had not been criminally acquired – that would not automatically make the account holders morally suspect. Of course, that’s never going to be the headline.

Neil Smith pleads for a fair go: "It’d be nice if the BVI is recognised for the quality of its IFC. Just put us on a level playing field, and treat us in an objective manner." Whether, in a world where large governments are bullying smaller governments to name names so they can cream off tax (the decimation of banking secrecy is incidental), the BVI will get fairness remains to be seen.

This article first appeared on Spears

Photograph: Getty Images

Mark Nayler is a senior researcher at Spear's magazine.

Photo: Getty
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Theresa May could live to regret not putting Article 50 to a vote sooner

Today's Morning Call.

Theresa May will reveal her plan to Parliament, Downing Street has confirmed. They will seek to amend Labour's motion on Article 50 adding a note of support for the principle of triggering Article 50 by March 2017, in a bid to flush out the diehard Remainers.

Has the PM retreated under heavy fire or pulled off a clever gambit to take the wind out of Labour's sails while keeping her Brexit deal close to her chest? 

Well, as ever, you pays your money and you makes your choice. "May forced to reveal Brexit plan to head off Tory revolt" is the Guardian's splash. "PM caves in on plans for Brexit" is the i's take. "May goes into battle for Brexit" is the Telegraph's, while Ukip's Pravda aka the Express goes for "MPs to vote on EU exit today".

Who's right? Well, it's a bit of both. That the government has only conceded to reveal "a plan" might mean further banalities on a par with the PM's one-liner yesterday that she was seeking a "red white and blue Brexit" ie a special British deal. And they've been aided by a rare error by Labour's new star signing Keir Starmer. Hindsight is 20:20, but if he'd demanded a full-blown white paper the government would be in a trickier spot now. 

But make no mistake: the PM didn't want to be here. It's worth noting that if she had submitted Article 50 to a parliamentary vote at the start of the parliamentary year, when Labour's frontbench was still cobbled together from scotch-tape and Paul Flynn and the only opposition MP seemed to be Nicky Morgan, she'd have passed it by now - or, better still for the Tory party, she'd be in possession of a perfect excuse to reestablish the Conservative majority in the House of Lords. May's caution made her PM while her more reckless colleagues detonated - but she may have cause to regret her caution over the coming months and years.

PANNICK! AT THE SUPREME COURT

David Pannick, Gina Miller's barrister, has told the Supreme Court that it would be "quite extraordinary" if the government's case were upheld, as it would mean ministers could use prerogative powers to reduce a swathe of rights without parliamentary appeal. The case hinges on the question of whether or not triggering Article 50 represents a loss of rights, something only the legislature can do.  Jane Croft has the details in the FT 

SOMETHING OF A GAMBLE

Ministers are contemplating doing a deal with Nicola Sturgeon that would allow her to hold a second independence referendum, but only after Brexit is completed, Lindsay McIntosh reports in the Times. The right to hold a referendum is a reserved power. 

A BURKISH MOVE

Angela Merkel told a cheering crowd at the CDU conference that, where possible, the full-face veil should be banned in Germany. Although the remarks are being widely reported in the British press as a "U-Turn", Merkel has previously said the face veil is incompatible with integration and has called from them to be banned "where possible". In a boost for the Chancellor, Merkel was re-elected as party chairman with 89.5 per cent of the vote. Stefan Wagstyl has the story in the FT.

SOMEWHERE A CLOCK IS TICKING

Michael Barnier, the EU's chief Brexit negotiator, has reminded the United Kingdom that they will have just 15 to 18 months to negotiate the terms of exit when Article 50 is triggered, as the remaining time will be needed for the deal to secure legislative appeal.

LEN'S LAST STAND?

Len McCluskey has quit as general secretary of Unite in order to run for a third term, triggering a power struggle with big consequences for the Labour party. Though he starts as the frontrunner, he is more vulnerable now than he was in 2013. I write on his chances and possible opposition here.

AND NOW FOR SOMETHING COMPLETELY DIFFERENT

Emad asks if One Night Stand provides the most compelling account of sex and relationships in video games yet.

MUST READS

Theresa May is becoming adept at avoiding defeats says George

Liv Constable-Maxwell on what the Supreme Court protesters want

Theresa May risks becoming an accidental Europe wrecker, says Rafael Behr

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Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.