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Cameron pressured on overseas territories' tax secrecy amid corruption row

Published 11/05/2016

Gordon Brown has told David Cameron to
Gordon Brown has told David Cameron to "ensure no hiding places for tax evaders"

David Cameron has come under pressure in the House of Commons over tax secrecy in Britain's overseas territories and Crown dependencies, a day ahead of the anti-corruption summit he is hosting in London.

But the Prime Minister urged critics to be "fair" to the territories, which he said had shown greater readiness to introduce transparency than many developed countries, including the US state of Delaware.

Mr Cameron acknowledged that action on corruption must also be taken by developed countries as well as those in the developing world, and said new rules requiring foreign companies to declare the true owners of property in the UK would help ensure that they are not used as a place to stash "plundered money" from African countries.

Former prime minister Gordon Brown has urged Mr Cameron to join other EU states to impose sanctions against British overseas territories and crown dependencies that continue to act as tax havens for the wealthy.

And the Prime Minister is coming under pressure from development charities to use this week's summit to get tough on territories that refuse to establish public registers of company ownership.

Mr Cameron's position as host of the two-day summit was made more awkward after he was caught on camera branding two participating states - Nigeria and Afghanistan - as "fantastically corrupt".

The PM's comments, made to the Queen during a Buckingham Palace reception, were described as "embarrassing" by a spokesman for Nigerian president Muhammadu Buhari and "unfair" by the Afghan embassy in London.

After revelations about offshore financial activities in the so-called Panama Papers, Mr Cameron last month announced that the overseas territories and crown dependencies - like the British Virgin Islands and Jersey - had agreed to provide UK tax and law enforcement agencies with full access to company ownership details.

But charities have insisted they must go further and allow public access to registers, so they can be examined by journalists and NGOs, and Mr Cameron was pressed on the issue by Labour leader Jeremy Corbyn and backbench MPs at Prime Minister's Questions.

Joking that "first of all I had better check the microphone is on before speaking", Mr Cameron said: "We asked three things of the overseas territories and Crown dependencies.

"We asked for automatic exchange of tax information, we asked for a common reporting standard for multinational companies and we asked for central beneficial ownership registries, so UK enforcement could know who really owns companies that are based there.

"They've delivered on the first two and they will be following and delivering on the third."

Mr Cameron told MPs: "All of these things are real progress. Of course, we would like them to go further and have public registers of beneficial ownership, as we are introducing in this country."

But he said he would not demand that the territories set a minimum tax rate, as some critics want.

Scottish National Party leader Angus Robertson asked the PM if he had heard appeals from Nigerian anti-corruption activists who said their efforts were "seriously undermined" by the UK allowing corrupt individuals to "hide their ill-gotten gains in your luxury homes, department stores, car dealerships, private schools and anywhere else that will accept their cash with no questions asked".

Mr Robertson said: "The role of London's property market to conceal stolen wealth has been exposed in court documents, reports, documentaries and more. What is the Prime Minister going to do about this?"

Mr Cameron responded: "Action is necessary by developed countries as well as developing countries and the steps we are taking to make sure that foreign companies that own UK property have to declare who the beneficial owner is will be one of the ways we make sure that plundered money from African countries can't be hidden in London."

Writing in The Guardian, Mr Brown said: "If we are to ensure no hiding places for tax evaders, no safe haven for tax avoiders and no treasure islands for the money launderers who hide an estimated 7.5 trillion US dollars (£5.2 trillion) of global wealth, we need the automatic exchange of tax information worldwide.

"In addition to a comprehensive European blacklist of tax havens as the first step to a global blacklist, we should agree that British overseas territories and crown dependencies that fail to comply cannot be excluded from the blacklist; and the UK should now require them to have public registers of beneficial owners.

"Britain cannot achieve this on its own. And with America currently resisting reciprocal tax arrangements, collective action by all 28 countries of the European Union to blacklist avoiders, impose sanctions and even levy withholding taxes - on our own overseas territories, if necessary - is currently the one game in town."

Mr Cameron acknowledged the awkwardness caused by his unflattering remarks about his summit guests, telling MPs that "tips on diplomacy are useful, given the last 24 hours", during which he admitted he had made "many unforced errors"

He said that the leaders of Nigeria and Afghanistan are "battling hard against very corrupt systems" and had made "remarkable steps forward".

The secretary general of the Commonwealth, Baroness Scotland, described the furore provoked by Mr Cameron's off-guard remarks as "unfortunate".

The former Labour government minister told BBC Radio Four's Today programme: "E veryone knows that corruption is a global problem, and the fight is on against it. And what president Buhari did is set out an agenda that got him elected, that he was going to tackle corruption, and tackle it head-on."

Lady Scotland told BBC Breakfast : "The corruption is there... I don't think the Prime Minister was wrong to say that corruption is a real issue for these countries.

"But the problem... the question is, what are we going to do about it, and what is the president (Buhari) doing about it, and are we globally willing to help him?"

Speaking on a visit to Gibraltar, Foreign Secretary Philip Hammond said: "Actually both countries, and the leaders of both countries would recognise that they have got a serious problem with deep-rooted and endemic corruption.

"I have had discussions with president Buhari and with president Ghani and it's very high on the agenda of both of them.

"Both men are personally committed to dealing with what is a hugely corrosive problem undermining the economies of both countries, that is why they are both coming to London tomorrow for this conference, because of their personal commitment to resolving this issue."

He added: "The Prime Minister was merely stating a fact. These are both countries with serious corruption problems and the leaders of both those countries know they have those problems and are determined to deal with them."

Asked whether he wanted an apology from Mr Cameron, Mr Buhari told an anti-corruption event hosted by the Commonwealth Secretariat in London: "I am not going to demand any apology from anybody. What I am demanding is the return of assets."

He mentioned Britain's readiness to hand over the "bank account and fixed assets" of a Nigerian governor who died after being accused of money-laundering.

"This is what I'm asking for," said Mr Buhari "What would I do with an apology? I need something tangible."

Nick Bryer, head of Oxfam's inequality campaign, said: "Registers of company ownership that are not public are simply not good enough - the Prime Minister should push for full transparency of the UK's overseas territories and Crown dependencies at the anti-corruption summit tomorrow.

"Welcome progress by the UK and other countries to increase tax transparency and fight corruption will not prevent rampant tax-dodging unless the same standards are also extended to UK-linked tax havens.

"It's vital that the Prime Minister and other leaders make real progress this week to tackle tax-dodging that costs poor countries billions in vital revenue each year."

ActionAid head of campaigns Murray Worthy said: "The Panama Papers revealed a global tax-dodging network, with British overseas tax havens at its heart. And it is the world's poorest people who are hit hardest when companies and wealthy individuals don't pay their fair share of tax.

"The anti-corruption summit will have failed unless the Prime Minister honours his promises to tackle tax haven secrecy and demands British overseas tax havens boost transparency and publicly reveal the true owners of the countless shell companies they host."

Adrian Lovett, deputy chief executive officer of anti-poverty campaign ONE, said: "The prize is within reach at this summit for David Cameron to secure his leadership on tackling corruption.

"For this summit to be considered a true success, we need to see announcements on getting Britain's overseas territories to implement public registers of who owns companies and trusts. That would be real history in the making."

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