Yesterday’s arrest of businessman Beny Steinmetz over alleged bribery to obtain rights for one of the world’s most important iron ore concessions is an urgent reminder of why the UK’s tax havens need to open up. Today MPs have tabled an amendment to the government’s Criminal Finances Bill that would bring to an end the corporate secrecy that allows these jurisdictions to be used for corruption and money laundering.
The arrest is reported to be in relation to accusations of bribery relating to the granting of lucrative mining rights to Beny Steinmetz Group Resources (BSGR) over the Simandou mountain range in Guinea, West Africa, in 2008. Beny Steinmetz’s company BSGR confirmed his detention, saying the bribery allegations were baseless.
In 2010 BSGR sold 51% of those rights to the world’s largest iron ore company, Vale, for $2.5 billion—equivalent to twice Guinea’s entire budget at the time. BSGR paid nothing for the rights, although it says it invested $160 million in the project.
A report by Global Witness in 2013 revealed how anonymous companies in the British Virgin Islands, a UK tax haven, founded by a director of Beny Steinmetz Group Resources signed corrupt deals with the wife of the President of Guinea.
These anonymous companies were central to this arrangement, allowing both BSGR and the wife of the President, to hide their involvement in this alleged corruption. This was possible because the British Virgin Islands, a UK-linked tax haven that the UK government is ultimately responsible for, allows companies incorporated there to hide their real owners.
But an amendment to the government’s Criminal Finances Bill, being proposed today by Margaret Hodge and 80 other MPs from the Conservatives, SNP, Greens, Lib Dems and other parties, would bring that secrecy to an end. This amendment would set a deadline for bringing all the UK’s Overseas Territories, of which the British Virgin Islands is one, into line with UK domestic company laws that require companies to publicly disclose their real, true owners.
Yesterday’s arrest over a multi-billion dollar corruption scandal in one of the world’s poorest countries, facilitated through a UK tax haven, should remind all MPs and the UK government why this change is so urgently needed.
If this amendment is supported by MPs and by the government it would ensure that UK tax havens like the British Virgin Islands would no longer be able to be used to fuel corruption and bribery around the world. Yesterday’s arrest over a multi-billion dollar corruption scandal in one of the world’s poorest countries, facilitated through a UK tax haven, should remind all MPs and the UK government why this change is so urgently needed.