"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.

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Senior Labour and Liberal Democrat politicians call for a progressive alliance

As Brexit gets underway, opposition grandees urge their parties – Labour, Lib Dems, the SNP and Greens – to form a pact.

A number of senior Labour and opposition politicians are calling for a cross-party alliance. In a bid to hold the Conservative government to account as Brexit negotiations kick off, party grandees are urging their leaders to put party politics to one side and work together.

The former Labour minister Chris Mullin believes that “the only way forward” is “an eventual pact between Labour, the Liberal Democrats and the Greens not to oppose each other in marginal seats”. 

“Given the loss of Scotland, it will be difficult for any party that is not the Conservative party to form a government on its own in the foreseeable future," Mullin argues, but he admits, “no doubt tribalists on both sides will find this upsetting” and laments that, “it may take three or four election defeats for the penny to drop”.

But there are other Labour and Liberal grandees who are envisaging such a future for Britain’s progressive parties.

The Lib Dem peer and former party leader Ming Campbell predicts that “there could be some pressure” after the 2020 election for Labour MPs to look at “SDP Mark II”, and reveals, “a real sense among the left and the centre-left that the only way Conservative hegemony is going to be undermined is for a far higher degree of cooperation”.

The Gang of Four’s David Owen, a former Labour foreign secretary who co-founded the SDP, warns Labour that it must “face up to reality” and “proudly and completely coherently” agree to work with the SNP.

“It is perfectly legitimate for the Labour party to work with them,” he tells me. “We have to live with that reality. You have to be ready to talk to them. You won’t agree with them on separation but you can agree on many other areas, or you certainly should be trying.”

The Labour peer and former home secretary Charles Clarke agrees that Labour must “open up an alliance with the SNP” on fighting for Britain to remain in the single market, calling it “an opportunity that’s just opened”. He criticises his party for having “completely failed to deal with how we relate to the SNP” during the 2015 election campaign, saying, “Ed Miliband completely messed that up”.

“The SNP will still be a big factor after the 2020 general election,” Clarke says. “Therefore we have to find a way to deal with them if we’re interested in being in power after the election.”

Clarke also advises his party to make pacts with the Lib Dems ahead of the election in individual constituencies in the southwest up to London.

“We should help the Lib Dems to win some of those seats, a dozen of those seats back from the Tories,” he argues. “I think a seat-by-seat examination in certain seats which would weaken the Tory position is worth thinking about. There are a few seats where us not running – or being broadly supportive of the Lib Dems – might reduce the number of Tory seats.”

The peer and former Lib Dem leader Paddy Ashdown agrees that such cooperation could help reduce the Tory majority. When leader, he worked informally in the Nineties with then opposition leader Tony Blair to coordinate their challenge to the Conservative government.

“We’re quite like we were in 1992 when Tony Blair and I started working together but with bells on,” Ashdown tells me. “We have to do something quite similar to what Blair and I did, we have to create the mood of a sort of space, where people of an intelligent focus can gather – I think this is going to be done much more organically than organisationally.”

Ashdown describes methods of cooperation, including the cross-party Cook-Maclennan Agreement on constitutional reform, uniting on Scottish devolution, a coordinated approach to PMQs, and publishing a list 50 constituencies in the Daily Mirror before the 1997 election, outlining seats where Labour and Lib Dem voters should tactically vote for one another to defeat Tory candidates.

“We created the climate of an expectation of cooperation,” Ashdown recalls. Pursuing the spirit of this time, he has set up a movement called More United, which urges cross-party support of candidates and campaigns that subscribe to progressive values.

He reveals that “Tory Central Office are pretty hostile to the idea, Mr Corbyn is pretty hostile to the idea”, but there are Conservative and Labour MPs who are “talking about participating in the process”.

Indeed, my colleague George reveals in his report for the magazine this week that a close ally of George Osborne has approached the Lib Dem leader Tim Farron about forming a new centrist party called “The Democrats”. It’s an idea that the former chancellor had reportedly already pitched to Labour MPs.

Labour peer and former cabinet minister Tessa Jowell says this is “the moment” to “build a different kind of progressive activism and progressive alliance”, as people are engaging in movements more than parties. But she says politicians should be “wary of reaching out for what is too easily defined as an elite metropolitan solution which can also be seen as simply another power grab”.

She warns against a “We’re going to have a new party, here’s the board, here’s the doorplate, and now you’re invited to join” approach. “Talk of a new party is for the birds without reach and without groundedness – and we have no evidence of that at the moment.”

A senior politician who wished not to be named echoes Jowell’s caution. “The problem is that if you’re surrounded by a group of people who think that greater cooperation is necessary and possible – people who all think the same as you – then there’s a terrible temptation to think that everyone thinks the same as you,” they say.

They warn against looking back at the “halcyon days” of Blair’s cooperation with the Lib Dems. “It’s worth remembering they fell out eventually! Most political marriages end in divorce, don’t they?”

Anoosh Chakelian is senior writer at the New Statesman.