Paradise Papers

Eighteen months after the Panama Papers were released, we have experienced another leak this week, the Paradise Papers. These are 13.4m files from two offshore service providers and 19 tax havens’ company registries, which illuminate once again the world of offshore finance. As Co-Chair of the All Party Parliamentary Group on Anti-Corruption, transparency both here in the United Kingdom and overseas is a subject of immense importance to me, ensuring that our property market and banks are free from dirty money. I hope this leak will spur the Government into further action on improving transparency, namely with a public register of the ownership of properties here by overseas companies, that I and other colleagues have been pushing for.

The Paradise Papers reveal how tax havens and offshore financial deals are used by lawyers, bankers and other professionals to protect their wealthy and powerful clients’ money from tax officials and higher taxes. Whilst tax avoidance is not illegal, the issue of concern is the secrecy of this offshore world; as the Tax Justice Network eloquently phrases it, “no one would go offshore if they could do whatever they wanted to do onshore. People and companies use offshore financial jurisdictions precisely because they allow them to do things they can’t do at home”.

It is this environment of corporate secrecy which makes a perfect habitat for corruption. Offshore financial secrecy and weak links in the global financial system can be exploited by corrupt persons to hide their identity and launder stolen funds. Which is precisely why openness and transparency should be our priority to tackle this corruption and prevent dirty money entering our property market and banks.  Bribes, tax evasion and grand corruption destabilise development, keep the vulnerable in poverty, add significantly to the cost of doing business and fund terrorism. As a big financial centre, we are very exposed to corruption; demonstrated in the recent Azerbaijani Laundromat scandal which showed the UK is still used as a way to launder money and hide the proceeds of corruption and crime elsewhere in the world.

Indeed the Azerbaijani Laundromat is sadly not an exception, recent research by Transparency International UK has found 766 companies registered in the UK that have been directly involved in laundering stolen money out of at least 13 countries. These companies are used as layers to hide money that would otherwise appear suspicious, and have the added advantage of providing a respectability uniquely associated with being registered in the UK. In light of this research and in the wake of the Paradise Papers I hope the Government will find a new impetus to carry on the good work started last year at the Anti-Corruption Summit.

Now that we are over a year from the Summit, it would be beneficial to have an update on the Anti-Corruption Strategy promised for last December but lost when the then Anti-Corruption Champion stood down at the election. Furthermore, a welcome step to increased transparency and preventing money laundering in the UK would be to continue efforts towards introducing a public beneficial ownership register for the Overseas Territories and Crown Dependencies. This would ensure the UK could lead the way in tackling corruption by delivering on its commitment to introduce public registers of the beneficial owners of overseas companies buying UK property and bidding for government contracts. These steps would ensure people had confidence that our regime is robust and leaks such as the Paradise Papers become exceptions rather than the norm.