It’s been 18 months since the Panama Papers broke. When that story first revealed the scale of the UK’s offshore industry and the damage it does, the UK government recognised the problem and committed to address it.
At the International Anti-Corruption Summit last year, David Cameron described corruption as a cancer, declaring that “if we want to beat poverty, if we want to beat extremism and narrow the gap between the richest countries in the world and the poorest countries in the world, we have to tackle corruption”.
But so far, the UK government has done nothing. Not only has it failed to deliver on its commitments to tackle the root causes of tax evasion, corruption and money laundering, but it shows no sign of strengthening its efforts to make good on its overdue promises, said Global Witness today.
Theresa May has since declared her interest in delivering an economy that ‘works for everyone’, promising measures to tackle corporate irresponsibility and aggressive tax avoidance. Yet the Paradise Papers have shown that the offshore system is thriving, with UK’s tax havens, property market and other institutions at its heart.
"The government’s silence in response to the Paradise Papers is deafening. We know that the UK’s offshore industry lies at the heart of some of the world’s worst problems, like tax evasion, money laundering and terrorist finance. When David Cameron welcomed world leaders to London 18 months ago, it felt like there was genuine momentum to address the problem, but the list of broken promises and hollow pledges keeps growing. The time for platitudes and rhetoric is over, the Prime Minister must act,” said Murray Worthy, Senior Campaigner – Anti Money Laundering, Global Witness.
Five things the UK government said it would do (but hasn’t) since the Panama Papers to tackle corruption:
- Crack down on the UK’s tax havens: Only last year the Conservative government described the need for all countries – including the UK’s tax havens – to reach the ‘gold standard’ of public registers of beneficial ownership to stop corporate secrecy enabling tax evasion and corruption. However, as time has passed the UK government’s ambitions have dropped. Now the Foreign Office says that only if public registers become a ‘global standard’, then they would expect the UK’s tax havens to follow. Rather than expecting them to be part of the drive to tackle offshore corporate secrecy, they are now only expected to act after the rest of the world does.
- Stop dirty money entering the UK property market: Despite promising to clean up the London property market as its headline commitment for the Summit, the UK continues to offer safe haven to corrupt individuals by allowing anonymous companies to buy property here. This means it is far too easy for the criminal and corrupt to launder money through luxury property, hiding their identities and disguising the source of their ill-gotten gains behind anonymous companies, often registered in offshore havens that offer secrecy – such as Bermuda, Panama, or the British Virgin Islands. The Department for Business, Energy and Industrial Strategy ran a consultation seeking views on the beneficial ownership property register which closed on 15 May 2017. The government has yet to publish its response – and there is no space in the parliamentary schedule for the legislation.
- Deliver a plan to fight corruption: As one of its Summit commitments, the UK promised to develop a cross-government Anti-Corruption Strategy by the end of 2016. This is now almost a year overdue. Any strategy should provide the framework to counter corruption, with a full description of the problem, a clear set of objectives, and a long-term vision. It should also tell us about the scale of the problem and where the UK plans to focus its efforts. The delay on this speaks volumes about the government’s commitment to act.
- Punish companies that commit economic crimes: In January the Ministry of Justice opened a call for evidence about new criminal offences which would punish fraudulent, dishonest and harmful activity committed by companies. The call for evidence was closed in March but the Ministry has yet to respond. The government cannot drag its feet on this crucial reform any longer and still claim to be in favour of creating an economy that ‘works for everyone’.
- Missing in Action: Anti-Corruption Champion, Sir Eric Pickles, stood down from parliament in May. Six months later, and in the midst of a corruption crisis, the government is yet to reappoint his successor and the post remains vacant.