London, United Kingdom – Last weekend, the Guardian reported that the British prime minister’s father, Ian Cameron, held directorships in companies registered in tax havens. These companies were created soon after then-Prime Minister Margaret Thatcher relaxed capital controls in 1979. They were the foundation of a fortune estimated at around £10m ($16m) in 2009.
That Cameron comes from a wealthy background hardly qualifies as front-page news. But his family’s links to the offshore sector have not, until now, been widely publicised. In its obituary of Ian Cameron, for example, the Telegraph mentioned his work as a stockbroker and described him as an “old school” City man. But it made no reference to his being the chairman of Close International Asset Management (Jersey), and a director of both Blairmore Holdings (Panama City) and Blairmore Asset Management (Geneva).
There is no hint of any offshore connection in David Cameron’s recent entries in the Register of Members’ Financial Interests published by parliament. In the past year he has listed benefits such as “honorary membership for life of the Carlton Club” and “discounted personal training”. He also notes “residential property in London, from which rental income is received”. When he was on the board of Urbium, a company that very successfully promotes the consumption of alcohol, he disclosed the fact. Doubtless he is scrupulous in his observance of the current rules concerning outside interests.
“A change in the interest rate affects savers and borrowers in a clear and obvious way. But politicians can quietly change the rules governing offshore and deliver huge benefits to a handful of very wealthy individuals.”
– John Christensen, Tax Justice Network
But it is time to ask if the British prime minister has a beneficial interest in an entity or entities registered offshore. Indeed, it is time to ask if any of our politicians benefit from facilities provided by companies, trusts and other institutions located in tax havens.
The main purpose of the Register of Members’ Financial Interests is “to provide information of any pecuniary interest or other material benefit which a member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in parliament, or actions taken in the capacity of a member of parliament” [Emphasis added]. If an elected politician uses offshore facilities, for the purposes of long-term tax planning, for example, or to hold wealth in trust for his or her heirs, surely this would qualify as a “material benefit”? And isn’t it reasonable to think that such an arrangement could have some bearing on his or her actions “taken in the capacity of a member of parliament”?
After all, states such as Britain have a decisive role in determining the size and scope of offshore. The UK government suddenly removed capital controls in 1979. It could, just as suddenly, reinstate them. It could also change its attitude towards wealth held overseas by UK citizens and residents. Politicians can make tax avoidance more or less easy through changes in legislation.
There is another sense in which offshore assets are not like other forms of property. John Christensen of the Tax Justice Network points out that the costs of creating investment vehicles and other structures in tax havens ensure that only a tiny minority can afford to take advantage of them: “A change in the interest rate affects savers and borrowers in a clear and obvious way. But politicians can quietly change the rules governing offshore and deliver huge benefits to a handful of very wealthy individuals.”
There are one or two indications that British politicians are aware of offshore. The most recent Register of Members’ Interests notes visits to Liechtenstein by four MPs: Daniel Kawczynski, Angus Macneil, Mark Menzies and Andrew Rosindell. One of the four, Daniel Kawczynski, also visited Jersey at the invitation of the island’s first minister. Two others, Brian Donohue and Graham Brady, visited Grand Cayman in the same period.
I hope that MPs who visit tax havens make a point of highlighting their concerns about offshore’s role in facilitating tax avoidance, tax evasion, money laundering and corruption. Doubtless the bankers of Liechtenstein tremble a little at the prospect of another grilling from Andrew Rosindell and the rest of the “British-Liechtenstein All-Party Parliamentary Group”.
But presumably there is more to the relationship between offshore and the British political class than occasional parliamentary visits. After all, a lot of politicians used to work in banking and associated trades. Many more look forward to doing so later in their careers.
Only full disclosure can dispel the growing sense that politicians have become detached from the country they are supposed to serve, and are loyal instead to the immaterial empire of offshore.i
The Register of Members’ Financial Interests “is not intended to be an indicator of a member’s personal wealth”. Perhaps that’s reasonable, although it is worth noting that the salary of £65,738 ($106,469) puts MPs in the top five per cent of UK wage earners; by most people’s standards, all MPs are rich. But the use of offshore resources to minimise tax is different in kind from the mere fact of wealth. It is a benefit that depends on very particular policies.
And as Christensen points out, the British government is “committed to a G20 plan to put an end to banking secrecy, yet we have no idea if our leaders have a stake in keeping effective regulation at bay. Any register of financial interests must include information about any interest at all politicians have in tax havens. The current situation manages to be both sinister and farcical. We would be happy to help parliament draft sensible guidelines”.
Surely Christensen is right. Arguments can be made in favour of the current arrangements. But if those defending the status quo derive material benefits from it, then these benefits cannot remain effectively secret. Without transparency there can be no accountability, as the register itself acknowledges. Only full disclosure can dispel the growing sense that politicians have become detached from the country they are supposed to serve, and are loyal instead to the immaterial empire of offshore.
If the prime minister and other politicians want to keep one foot in Panama City then that is their business. But it is something the rest of us are entitled to know.
Dan Hind is the author of two books, The Threat to Reason and The Return of the Public. His pamphlet Common Sense: Occupation, Assembly, and the Future of Liberty, was published as an e-book in March. He is a member of the Tax Justice Network.