Geoffrey Cox often has more important things to do than vote in the House of Commons, but one debate he did attend was back in 2018, when MPs discussed forcing Britain’s overseas territories to open up their corporate registries – the databases that reveal the actual people behind the shell companies.
The proposal was controversial. Setting up an offshore entity is not itself illegal, but the secrecy offered is attractive to tax evaders, fraudsters and money launderers. On one hand, if passed, it could expose the secrets of the thousands of companies, and thus dissuade any sinners from routing their business through Britain’s offshore archipelago in future. On the other hand, if would involve London imposing its will on people to whom it had made a promise of self-government, and thus be an act of neocolonial arrogance. Cox knew which side he was on.
“We are breaking that promise to them, and it is beneath the dignity of this parliament to do away with that promise and that pledge of good faith,” he said.
In the end the amendment passed, but this argument – that Britain needs to respect the autonomy of its overseas territories and thus tolerate whatever egregious skulduggery they enable – keeps resurfacing. If this week’s scandal – in which Cox was revealed to have earned £150,000 defending the British Virgin Islands’ government in an investigation into allegations of systemic corruption, cronyism, jury intimidation and misuse of public funds – has shown anything, however, it is how utterly bogus that position is.
According to the argument, the islands are autonomous jurisdictions, and thus too foreign for Cox or any other MP to legislate for them. Simultaneously, however, when it comes to legal proceedings, it is easy for a British-qualified lawyer like Cox to act in the islands’ courts as if they were part of the UK. Like some weird quantum particle, our overseas territories are British and not British at the same time, depending on what your intentions are. They’re autonomous when it serves the interests of their clients and those clients’ servants (for instance, when providing anonymity or tax-free companies); but not when it doesn’t (for instance, when bringing in British police officers to investigate what those shell companies get up to). Over the last few decades these shell companies have provided a convenient way for wealthy people to minimise their taxes and for kleptocrats to hide their theft, and there is no reason why the rest of us should put up with it.
This disastrous situation occurred accidentally, as colonies freed themselves from London’s control in the years after the second world war: they gained increasingly more self-government, over more areas of their internal affairs, until they became independent. The process is not yet over: across much of the Caribbean, the Queen remains the head of state, and the privy council is the final court of appeal, (Barbados will finally become a republic later this month). The problems have arisen, however, where the process has stalled, as it has in the British Virgin Islands, the Cayman Islands, Anguilla, the Turks and Caicos Islands, Gibraltar and elsewhere, which have stopped halfway out the door. They’re autonomous and not autonomous at the same time, to the great benefit of wealthy people and corporations, as well as their enablers.
Those benefits come at the expense of people elsewhere, including right here in the UK. In the 1990s, British bookmakers were tightly regulated and highly taxed because it was recognised that gambling was an addictive activity with a real potential to cause social harm. It was Gibraltar that gave the bookies a means of destroying the system and supercharging their profits. By basing themselves in our loyal little naval base at the mouth of the Med they were able to take bets in pounds, on British sporting events, from British punters – and yet avoid British laws and taxes. In a desperate bid to regain tax revenue, the government gutted gambling regulation, giving us the explosion in betting and addiction that we’re living with now.
The Cayman Islands are only still British because Jamaica didn’t want them. The governor, who was left to rule a place whose primary industry was turtle fishing, encouraged offshore activity in the 1960s in a bid to create some kind of an economy, and now they’re one of the largest international financial centres in the world. The islands collect no tax for the UK, not being part of the UK, yet British lawyers and accountants can work freely there for British companies, and money moves back and forth to the City of London more freely still. Cox has worked there, too. In 2014, he successfully defended the islands’ former premier against corruption charges, including the suggestion that the politician’s withdrawal of $50,000 on a government credit card in casinos in the Bahamas and the US was illegal (he denied the accusations).
We have become accustomed to this situation, whereby money and its servants can travel freely between the widely scattered bits of the Queen’s domain, yet the law cannot follow them. To understand its absurdity, however, you only have to imagine the outcry if the situation were reversed: if British MPs could legislate for our overseas territories and police officers could operate in them without hindrance, but lawyers could not argue in their courts and money could not freely move to pay legal fees. The situation we have now is every bit as peculiar as that. We don’t complain only because we’re used to it.
The situation is not inevitable (France has a few remaining colonies too, but they’re administered as parts of France, returning representatives to the parliament in Paris), and only persists because it is so profitable to so many well-networked people. The rest of us, however – the citizens of the countries that lose tax revenue, or whose rulers loot their treasuries, or whose drug cartels launder their money – have lost far more than those people gain. We do not have to put up with it.
There have been some improvements over the years. That 2018 amendment passed, and will supposedly be implemented one of these years; UK police officers already have access to the jurisdictions’ corporate registries in a way that they once did not. However, the essential dynamic is unchanged. The last pink bits of the old British empire have been transformed into a machine that benefits the rich and powerful at the expense of the rest of us.
It is time for Britain’s remaining colonies to make their minds up. If they wish to be independent, they can become so with our blessing and our assistance, but they need to get on with it. If they wish to be British, however, they need to shoulder the responsibilities that come with that, not just the rights.