Bermuda, Isle of Man lobbied UK government to escape revealing companies' owners

2 November 2017 5:18pm
Houses of Parliament

1 November 2017. By Ben Lucas.

Bermuda and the Isle of Man directly lobbied the UK government during the passage of a key anticorruption law that threatened to force them to open up their company-ownership registers, MLex has learned.

The Criminal Finances Act, passed in April and currently being phased in, is designed to bolster the UK's fight against money laundering and tax evasion.

As the bill was making its way through the UK Parliament, some lawmakers wanted an amendment that would have forced the UK’s Overseas Territories and Crown Dependencies to make their central registers of companies' beneficial ownership data publicly accessible.

The UK has sovereignty over 14 overseas territories, including Bermuda, the Cayman Islands and the British Virgins Islands, while its crown dependencies comprise Jersey, Guernsey and the Isle of Man.

Some lawmakers and many campaigners argue that the secrecy afforded to companies established in these jurisdictions facilitates corruption.

The amendment sparked lobbying efforts by the leaders of Bermuda and Isle of Man, according to letters obtained by MLex through Freedom of Information requests. It was ultimately left out of the legislation.

Bermuda Premier Michael Dunkley arranged a meeting in February with UK Minister for Security Ben Wallace to discuss the transparency proposal. He wrote to Wallace later in February stating the territories’ compliance with international rules designed to prevent money laundering, tax evasion and corruption but said to go further would be unreasonable.

“Bermuda will continue to be at the forefront of maintaining international standards,” he wrote, “but [it] will not be forced into a position that places our regulatory efforts ahead of international standards.”

Dunkley resigned as premier in July after his party lost elections.

Isle of Man Chief Minister Howard Quayle also wrote to Wallace and also emphasized the island’s compliance with global standards.

In March, Quayle also wrote to lobby Susan Williams, who is minister of state at the Home Office and a lawmaker in the House of Lords, Parliament’s unelected upper chamber. Quayle argued that public registers aren’t necessarily the solution to fighting financial crime. He also warned of a fightback in the event of the UK government imposing such a change, calling it “unconstitutional” as it would need the island’s consent.

His government would “strongly resist” UK efforts “to legislate for the Isle of Man without such consent,” Quayle said. He also offered to meet and discuss the bill with Williams, whose formal title is Baroness Williams of Trafford.

A week after his March 20 letter, House of Lords lawmakers again proposed the transparency amendment and Quayle wrote again to Williams, asking for a meeting. She replied that she would be “pleased” to meet Quayle with Wallace when he next visited London.

They met on the April 24, the day before the House of Lords was due to vote on the amendment to the bill.

Representatives from Jersey and Guernsey also attended, according to a letter Quayle sent Williams on April 26 in which he thanked her and “the Bill team” for “keeping the lines of communication open over recent months and for your acknowledgement and support for the Isle of Man’s position on this matter.”

The amendment was withdrawn for the April 25 vote as the UK’s snap general election, called a week previously, tightened the time limit on the bill’s passage. Lawmakers said it was necessary to jettison amendments to ensure the bill made it into law.

House of Lords legislators did approve a concessionary amendment by the government requiring it to report before July 2019 on the effectiveness of recently agreed information-sharing agreements between UK law enforcement agencies and the overseas territories.

Labour scrutiny

Bermuda and the Isle of Man were also the focus of lawmakers in the lower House of Commons today amid questions by the leader of the main opposition party about a data leak suffered by Appleby, a Bermuda-based offshore law firm.

Labour Party leader Jeremy Corbyn asked the government to guarantee a full investigation by the UK’s tax authority, known as HMRC, if any misconduct was revealed. The firm said last week that the International Consortium of Investigative Journalists had inquired about allegations of wrongdoing involving the firm and some of its clients.

Appleby said a review of the claims by the consortium — famous for publishing the Panama papers — found no evidence of any wrongdoing by the firm or its clients.

“Will the prime minister commit the HMRC to fully investigate all evidence of UK tax avoidance and evasion from this leak and prosecute where feasible?” Corbyn said in Parliament today.

“HMRC does take these issues very seriously, does investigate, and does take action. And where appropriate, tax loopholes are closed,” Prime Minster Theresa May replied.

It is unknown when the ICIJ will publish its investigation into the leaked data. But Corbyn added that it was understood to contain details of an Isle of Man business-jet tax avoidance scheme.

He also criticized the government for supposedly blocking attempts to add Bermuda to the EU’s tax haven blacklist. Some British Overseas Territories have raised concerns that they will be at greater risk of being blacklisted by the EU after the UK leaves the bloc.

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