Column: UK Should Clean Up Their Own Act First

April 5, 2016

[Written by Larry Burchall]

The just out “Panama Papers” is a global investigation into the sprawling, secretive industry of offshore that the world’s rich and powerful use to hide assets and skirt rules by setting up front companies in far-flung jurisdictions.

Based on a trove of more than 11 million leaked files, the investigation exposes a cast of characters who use offshore companies to facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking.

For us Bermudians the “Panama Papers” present the scary possibility that Bermuda’s name will turn up as one of those murky dirty tax havens used to “hide assets and skirt rules”.

Breathe a little easy folks. Bermuda’s name may well turn up later, but, probably, way down the list.

However, one name that makes the “top ten” jurisdictions used to “hide assets and skirt rules” is the United Kingdom. UK, not Bermuda. And Minister Bob Richards has been fighting the UK over this since 2013.

Graphic courtesy of the Panana Papers website:

In simple terms, these ten named jurisdictions are specifically identified, in the “Panama Papers”, as the top ten jurisdictions where the “world’s rich and powerful” can and do hide their gotten [ill or otherwise] gains and wealth in places where anonymous ‘bearer shares’ are legal and in common use.

What’s a ‘bearer share’? It’s a share or stock in a company or corporation that has issued shares/stock that is not recorded in the name of the person, or any person, who actually owns them. Instead they are owned by ‘bearers’ who could be anyone who happens to have them in his or her little Gucci or Louisa Vuitton satchel – at the time.

In Bermuda, all shares/stock in a company are specifically identified to persons or to other companies. So if, in Bermuda, a company owns a block of shares/stock in another company [BF&M owning a block in Ascendant], then the shares are identified as being owned by BF&M whose shareholders, in turn, are all known and identified by name in the BF&M share Register. So in Bermuda, every share always comes back to a named owner – a real and findable person.

Ask to see the share register – you may have to pay for the privilege – and you can see, by name just who owns what. That is the norm and the law in Bermuda. Been that way since the 1940’s. Tain’t so in the UK.

That means that rascals like V Putin or Bashar al-Assad or a Mexican drug lord like El Chapo [the guy escaped from his prison cell through that long tunnel] can stash their wealth in bearer shares and thereby get it washed and laundered into the global market. These rascals can therefore profit from their shenanigans by putting their money into things like hotel development or paying for 300 foot superyachts or buying weapons so that their people can outgun national police forces.

The fact that the UK is one such jurisdiction – listed, at the moment, in the “Panama Papers” as number ten – makes a mockery of the UK’s request that we in Bermuda must deliver up information on share ownership through open share registers.

In effect, the UK is asking – damn near telling – us lot in Bermuda that we must give up info that the UK itself does not give up; or indeed have access to.

Minister Bob Richards has – nicely and diplomatically of course – told those Brits to go to hell. He has told them that when they – the Brits – have open share registers like Bermuda has had since the 1940’s, then and only then will Bermuda heed their attempts to poke into our Bermuda business.

Bermuda has had a KYC [Know Your Customer] policy for decades. The BMA [Bermuda Monetary Authority] is a rigourous examiner of all companies that want to register in Bermuda. Ex-Finance Minister Paula Cox signed a host of TIEA’s [Tax Information Exchange Agreements]. These combined efforts have helped keep Bermuda clean.

I may have been and I still am critical of much of Minister Bob’s handling of lots of other local stuff; but on this ‘Bermuda as a clean and honest financial jurisdiction’ matter, I stand solidly in his corner. I’ve got his back on this.

Tell those Brits to clean up their own act and get off that bad ‘top ten’ list before they come after us. Tell them to clean up their own act first.

- Larry Burchall

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Comments (7)

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  1. IslandTeacher says:

    Larry there is definitely a problem here. You set out the issue seemingly in such a straightforward way. Yet, we have pressure groups demanding blood and prominent Barristers saying the following ” “Jolyon Maugham QC, a tax expert, argues the UK Parliament could, in extremis, simply change the law and mandate full transparency in dependent territories such as Bermuda and the Cayman Islands because they are not sovereign territories. “I don’t think there’s any doubt that we have the power to directly legislate” he said.”

    It seems like the Bermuda Government need to invite the UK press over to tell our story.

    • Larry Burchall says:

      Trouble is that we are more transparent than the UK. If it comes down to a fight between governments, we would need to be prepared to take our special case to the Privy Council or EU Court.

      Island Teacher,

      From the Panama Papers, it’s clear that the Dependent Territory BVI is a huge offender – No 1 on the list. With UK No 10 on the list, a blanket move by the UK Government against ‘unlisted’ Bermuda is challenge-able at law.

      I’m not a legal expert. However, I do think that there is a legal precept that requires that a ‘fixing’ person must have clean hands about that which is to be fixed.

      Perhaps a legal expert can help us both…?

      • IslandTeacher says:

        Did you see Bob Richards on the UK news. I was told about it and found it on YouTube. Search for Bob Richards Newsnight. I thought he gave a spirited performance and put the case for Bermuda forward.

  2. Swing Voter says:

    Larry should run as an independent ….. help whoop OBA & PLP A$%es without even canvassing.

  3. Aware says:

    Well said Larry

  4. Kathy says:

    Hmmmm….Sounds familiar….isn’t the US doing the same thing with Nevada, Wisconsin and FATCA!

  5. Ash says:

    Is it possible that they’ve lumped UK dependent territories with UK? I don’t want all of this to be said and then come to find out Bermuda was in the stats for the UK.