Peer questions UK oversight of territories

(CNS): Too much money and too few people is a recipe for bad government, so says one member of the House of Lords about the UK’s Overseas Territories. Liberal Democrat peer William Wallace has said that while the action to force tax havens to loosen their bonds of secrecy is to be welcomed, it is important for the UK to remember many tax havens, like the Cayman Islands, as UK dependent territories benefit from Whitehall’s relaxed oversight regime. Theliberal life peerpenned his views in a letter to the Guardian one of the UK’s leading quality dailies in response to an editorial regarding tax havens.

Wallace, who served as Director of Studies of the Royal Institute of International Affairs for twelve years, said many of the world’s leading tax havens fall under the British crown.

"Jersey, Guernsey, Isle of Man, Gibraltar, Bermuda, Cayman Islands, British Virgin Islands and Turks and Caicos are all significant offshore financial centres. All benefit from the British system of law, from the expectation of offshore investors that British oversight guarantees higher standards than competitor centres – and all have benefited from Whitehall’s relaxed oversight regime,” Wallace wrote.

He noted the strong evidence of systemic corruption in the Turks and Caicos Islands, which has forced the UK government to impose direct rule, and questioned if the current model for autonomy in overseas territories is sustainable. “Too much money in communities with too few people is a recipe for bad government,” he wrote.

Wallace said that the situation in the Crown Dependencies is better but noted that Jersey and Guernsey have only partially, and reluctantly, lifted secrecy on offshore accounts, and continue to offer incentives for corporations and wealthy individuals whose main business is onshore to relocate on their islands.

“Any thorough campaign against the large-scale tax avoidance and evasion constituted by offshore secrecy must therefore raise the question of how the British government oversees its own dependencies, and what changes in the relationship between the UK and its dependencies may be needed,” Wallace stated.