PM promises central register to reveal who benefits from ‘shadowy’ companies By Patrick Wintour and Nicholas Watt, The Guardian – June 15, 2013 http://www.guardian.co.uk/politics/2013/jun/14/tax-secrecy-central-register-cameron Britain is to “sweep away” tax secrecy by introducing a new central register that will ensure all the true owners of “shadowy” shell companies have to be declared to the tax authorities, David Cameron has announced. In one of the biggest steps by Britain to crack down on “aggressive” tax avoidance and money-laundering, the prime minister pledged in a Guardian interview to end the era of “secretive companies in secretive locations” that cost exchequers around the world billions of pounds in lost revenue. The prime minister will ask G8 leaders, including Barack Obama and Angela Merkel, to sign up to a new set of core principles on tax on the second and final day of the summit, which opens in Northern Ireland on Monday. The summit will also be dominated by Syria after the White House announced that the regime of Bashar al-Assad had crossed a “red line” by using chemical weapons against rebel forces. Cameron told the Guardian that Britain shared the “candid assessment” of the US that the Assad regime had used chemical weapons against the rebels. He said Britain had proof that Damascus had used the nerve agent sarin on at least two occasions. “It does constitute a war crime,” he said. “As the statement from America has put it, it crosses a line as defined by all sorts of international agreements over many decades.” He said Britain now had to do more to help the rebels, but said no decision to arm them had been made. His remarks came as the US offered to provide arms to the rebels in the country, a dramatic change of heart that brings Obama into line with the position forged by Cameron and the French leadership in recent weeks. Discussions about how, when and where to give what to whom are certain to encroach on the G8 talks. Merkel said the situation was serious enough to require UN security council deliberation. The Syrian government rejects the accusation that it has used chemical weapons. The prime minister, who will also hold talks about Syria in Downing Street on Sunday with the Russian president, Vladimir Putin, before travelling to Northern Ireland, believes that significant steps can be taken on tax avoidance at the G8 after the EU agreed new rules on exchange of information. Cameron said he wanted to set an example to fellow G8 leaders by cracking down on British accountants, lawyers and business figures who use shell companies – often located in offshore tax havens – to hide the identity of ultimate beneficiaries. Echoing Graham Greene’s description of Monaco as a “sunny place for shady people”, the prime minister told the Guardian: “We need to know more about who owns which company – beneficial ownership – because that is how a lot of people and a lot of companies avoid tax, using secretive companies in secretive locations. “The way to sweep away the secrecy and get to the bottom of tax avoidance and tax evasion and cracking down on corruption is to have a register of beneficial ownerships so the tax authorities can see who owns beneficially every company.” Under the changes, companies registered in Britain would come under a legal obligation to obtain and hold adequate, accurate and current information on the ultimate owner who benefits from the company – and be required to place the information on a central register that would be maintained by Companies House. The central registry would be introduced into law by incorporating the EU’s fourth money-laundering directive. The central register will initially only be made available in Britain to authorities such as Revenue & Customs. But the government is to hold a consultation on whether it should be made public, a step the prime minister said he would only take if it would not harm the interests of British businesses. “I am sure that is where I would like to end up, but I do not want to disadvantage Britain by doing something others won’t do,” he said. “I don’t also want to give up our leverage on others by trying to make them move at the same time.” Brendan Cox, a spokesman for the If campaign, said: “Public registries would make a major difference in the fight against tax evasion. They would mean all countries had access to the data and the ‘many eyes’ principle would mean more effective scrutiny.” On Friday night, an interactive database allowing users to search through more than 100,000 secret companies, trusts and funds created in offshore locations including the British Virgin Islands was launched online by the Washington-based International Consortium of Investigative Journalists (ICIJ). It is hoped that the release of the data – part of a cache of 2.5m leaked files which the non-profit ICIJ has analysed with the Guardian and other global news groups – will lead to further tip-offs and investigations into the role of offshore tax havens. Cameron is to ask fellow G8 leaders to follow his example by signing up to core principles similar to the proposed binding rules in Britain. G8 countries will be asked to agree that companies should “know who owns and controls them” and that “basic information should be adequate, accurate and current”. Their records should be accessible to law enforcement and tax authorities, Cameron said. He added: “When you look at how individuals and companies sometimes evade tax or aggressively avoid it – that is a problems one and two. Problem three, in many ways even more serious, is corrupt payments from extractive companies or dictators or middlemen in the developing world. They use shadowy nominee companies where you can’t see who is the beneficial owner – that is why who benefits is so important.” Britain expects the G8 to agree to call on the Organisation for Economic Cooperation and Development to produce a new agreement modelled on the US-led Financial Action Task Force on tax transparency, which is supported by 75 countries. The OECD proposal, supported by 28 states including Britain’s main crown dependencies, would be multilateral and lead to “automatic exchange”, in which countries pass on tax details without a request having to be made. The prime minister is confident that the leaders of Britain’s crown dependencies and territories will take steps at a meeting in Downing Street towards agreeing the automatic exchange of tax information. He said: “They are now agreeing to tax exchange of information, not just on request but what matters is automatic exchange of information. You don’t know what you have not go as it were, to make one of the Rumsfeldian type remarks … When you have got automatic exchange you can see what you are missing.” But there were signs of resistance from some of the crown dependencies after the chief minister of Bermuda called for clarification before agreeing to sign. Hubert Hughes, the chief minister of Anguilla, said the Caribbean island did not have the resources to uphold an OECD agreement that would involve liaising with 80 countries. The chief minister told the Guardian: “We don’t have the financial resources, we don’t have the economy to deal with that. Our British governor has done his best to create a failed state in Anguilla – our British governor has done everything to drive good investment from Anguilla.” Hughes added that he resented being lectured by Britain on tax transparency in light of the City of London’s role. “It is a matter of hypocrisy because when I look at the City of London – they should do something about that first and not try to shelter behind these little territories that are just trying to survive. “We are not tax havens as such, we are offshore centres. The City of London is one of the biggest tax havens in the world – it is the biggest money laundering centre in the world.” But the chief minister said he would sign the OECD framework if Bermuda, whose population is nearly five times that of Anguilla, accepts the measure. “We tend to walk behind them,” he said. In his Guardian interview, Cameron praised the work of the Oxford economic professor Paul Collier, who wrote in Prospect magazine recently that lawyers and accountants who create shell companies should “hang their heads in shame” for creating artificial structures that facilitate “evil”. The prime minister said: “I feel very passionately about it. The more I have looked into it the more I can see that unless you take action on the tax and transparency agendas you will never get the sort of development and change we want to see. Does it raise moral issues? Yes it does. Tax evasion is illegal so it is not immoral, it is criminal. But aggressive tax avoidance raises moral issues.” The prime minister also hopes to use the G8 summit to launch negotiations on a new EU-US trade pact, though this has run into difficulties as Paris seeks to exclude its film industry from the agreement. Cameron said he is willing to be patient. “I am a great admirer of French films. But I don’t believe that you save industries by protecting them. Would the British film industry be stronger if we didn’t have this amazing exchange between the British film industry and the strength and power of Hollywood? But I totally understand the French feel very passionately about this. What I just hope is we want to get the trade talks off to a good start. Both sides want [the negotiations] to get off to the right start. But we shouldn’t go for artificial deadlines.” Meanwhile, in Australia the recent revelations by the ICIJ on the tax havens of the super-rich are having an effect: By Kate McClymont, Linton Besser, James Robertson, SMH – June 15, 2013 A number of prominent Australians including captains of industry, politicians, philanthropists, developers, lawyers, accountants, criminals and entrepreneurs are set to become embroiled in one of the nation’s most explosive tax investigations into offshore structures. This follows the leaking of a cache of data to the International Consortium of Investigative Journalists in Washington. Its stories have had worldwide ramifications and embarrassed business leaders and politicians across the globe. Now, a Fairfax investigation can reveal that more than 500 Australians feature in the 2.5 million documents. The documents were independently leaked to tax authorities in Australia, Britain and the US, which together have already launched investigations in what might become the biggest international tax probe in history. The leaks stem from two overseas wealth management companies – Commonwealth Trust Ltd in the British Virgin Islands and Portcullis TrustNet, an Asian-based company offering services in tax havens stretching from the Cook Islands to the Seychelles. The Tax Office has confirmed two individuals are already the target of a criminal investigation, and has requested information and documents from at least 40 other people. The Herald is not suggesting that all the Australians who appear in the overseas data and whom it has named in its coverage have been involved in illegality as taxpayers can hold offshore accounts for a number of legitimate reasons, such as facilitating international business transactions. Among the prominent Australians with overseas companies are David Mortimer, the former chairman of Leighton Holdings and Australia Post, and the former chief executive of TNT. Celebrated chef Tetsuya Wakuda and Melbourne mining supremo Owen Hegarty have each had companies in the British Virgin Islands while philanthropist Janet Holmes a Court, once the richest woman in the country, has previously had a company in the Cook Islands. A web of overseas structures was also employed by Tim Johnston and other directors of Firepower, which fleeced $100 million from investors with the false promise of a pill that would reduce cars’ fuel consumption. The documents show corporate criminal Tony Senese incorporated a company in the Cook Islands shortly before being jailed in Melbourne for seven years on 25 charges of false accounting. Justin Breheny, an executive with insurance giant IAG, used his British Virgin Islands company to buy shares in an unknown company while Double Bay businessman Colin Sim also had interests in offshore companies. Jefferson and Aileen Cheng, who had criminal charges against them dropped over the construction of the Ninoy Aquino International Airport terminal in the Philippines, also had a complex web of offshore companies. Colourful businessman Karl Kazal confirmed he set up two offshore companies to handle distribution of hospital equipment from the United Arab Emirates but said the offshore accounts were never operational. A West Australian organised crime figure, who cannot be named because he is about to face trial for a major drug importation, is on the list, along with Michael Milne, who is serving an 8½ year jail term for money laundering and dealing with the proceeds of crime. The Sydney businessman was one of the initial targets of Project Wickenby, a multi-agency taskforce comprising the Australian Crime Commission, the federal police and the Tax Office. The Herald has confirmed that Project Wickenby will handle some of the fresh investigations. Greg Williams, the Tax Office’s deputy commissioner of serious non-compliance, said: ”The people who are involved in this, it is not the man in the street. It is not the average salary and wage earner. It is people who are wealthy enough to make this behaviour potentially worthwhile for them.” But if they have failed to declare taxable income, Mr Williams said ”the time to come forward is now if you have concerns about something you might have done”. For more on this Australian article head here: http://www.smh.com.au/national/big-names-revealed-in-offshore-tax-sweep-20130614-2o9ok.html Global Tax Secrecy to be ‘Swept Away’
Stephen: I’ve said it before, but it’s not unsurprising that a vast proportion of the current financial cleansing seems to be coming via the financial hub of London. Today’s update is that UK PM David Cameron is to set up an international agreement to prevent the sort of ‘tax secrecy’ that has allowed huge companies and super-rich individuals to avoid paying their share around the world. Meanwhile, the effects of the recent revelations by the International Consortium of Investigative Journalists (ICIJ) about the tax havens of the super-rich are starting to be felt in Australia. Tax Secrecy to be Swept Away, says David Cameron
Big Names Revealed in Offshore Tax Sweep