UK Parliament fails to tackle financial secrecy in its overseas territories

So near and yet so far…

Hopes were riding high yesterday that UK parliamentarians might seize the opportunity to take historic action to end decades of financial secrecy in the UK’s Overseas Territories. We blogged about this yesterday highlighting the fact that a lot of ongoing Parliamentary business was at risk of being shelved because of the sudden general election called by British Prime Minister Theresa May. There’s a phenomenon known as the wash-up period which “refers to the last few days of a Parliament before dissolution. Any unfinished business is lost at dissolution and the Government may need the co-operation of the Opposition in passing legislation that is still in progress.”

An amendment was tabled for the Criminal Finances Bill some months back which would have obliged the UK’s Overseas Territories (including such secrecy havens as Bermuda, the British Virgin Islands and the Caymans) to create fully public registers of the beneficial ownership of companies. As we asked yesterday in our blog, will the UK parliament step up to the mark? Unfortunately, today we have the answer. No. Defeat has been snatched from the jaws of victory.

Here’s a statement on what happened, or rather, what didn’t happen from Simon Kirkland of Christian Aid:

“Parliament had a golden opportunity to strike a blow for transparency and against tax haven secrecy – but failed to deliver a knockout punch. Last year the Panama Papers revealed the shocking extent of offshore secrecy jurisdictions that allow criminals, dictators, and major multinational companies to stash their cash in secret, hidden from public view. The public was rightly shocked that many of these offshore tax havens are governed through the UK.

The British Virgin Islands was the most utilised tax haven named in the Panama Papers, with over half of the corporate entities named registered there. The public has demanded action on this issue, and Parliament today ducked that challenge when a key vote in the House of Lords was abandoned.

Campaigners applauded when the UK cracked down on secrecy by making a public list of who owns which companies. However, when Parliament considered bringing the UK’s Overseas Territories such as the British Virgin Islands up to the same levels of transparency as the UK by 2020, the Government dug its heels in. Instead of bringing them up to a 21st century level of transparency, the Government is promoting a two-tier system of transparency that allows money to be hidden from public view – by anyone from major companies to terrorist groups. This is morally wrong, especially given that developing countries lose at least $100 billion a year to tax havens like the Overseas Territories.

We are deeply disappointed that the amendment – proposed by over 80 MPs from eight parties in the House of Commons, including the former International Development Secretary Andrew Mitchell MP – did not even get a vote today in the House of Lords. Many MPs and Peers from a range of parties, led by Dame Margaret Hodge MP, have united around this amendment in recent months. In the House of Lords, it has received support from Lords from right across the House.

We call on all parties at the general election to commit to this important policy in their manifestos, and continue to press for progress in the next Parliament.”

This is bad news for the world. For a few it means champagne corks are popping. Whatever the outcome of the British general election, work will have to start from scratch.