The super-rich are trying to exploit human rights law to dodge tax
If the Paradise Papers have taught us anything, it is that the world’s super-rich will move heaven and earth to stop the public from finding out .
The mammoth document leak, from the , has shone a glimmer of light into the dark world of fantastically complex investment trusts, managed funds and leasing companies that tycoons, celebrities and big business use to hide their wealth.
But why did it take a disclosure of 13.4 million documents and a 12-month investigation by a consortium of 380 international journalists to reveal what should be publicly available?
In 2013, in Northern Ireland that Britain would publish a register of business interests fully open to the public. Four years later, the of overseas territories and crown dependencies remain as opaque as ever.
One reason for this failure of public disclosure is the . A powerful alliance of big business and the super-wealthy have used lawyers and lobbyists to cynically exploit human rights laws to ensure tax havens keep secret the real identities of those who benefit from their low taxes.
Shortly after Cameron announced his plan for a public register, Appleby – whose leaked documents have shed light on the affairs of the Queen, , and friends of Donald Trump – told its clients that such “zealotry will potentially damage the future of offshore finance in the Isle of Man”.
The British law firm even warned that governments were “eroding” privacy protection, comparing the threat to a plot from . In the 2016 hit thriller, the title character, played by Matt Damon, fights corporate corruption amid the growing surveillance powers of the state.
On 13 September 2016, : “The onset of beneficial ownership information of trusts being accessed by the public, subject to the demonstration of a legitimate interest, is a significant change of position. As governments push for greater transparency of our affairs, our right to privacy should not be ignored. It is a major issue of our time and very much in the social conscientiousness: it was even a plot feature in this year’s Jason Bourne film. Whilst there is a need for financial structuring to be transparent, there needs to be a balance between transparency and privacy with a degree of practical reality applied.”
On the , an alliance of tycoons and secretive billionaires argued that their human rights would be infringed if the UK tax haven was to make their identities known to the public.
When the Isle of Man government put the proposal to the business community, the Manx government attracted a wave of “references to Article 8 of the European Convention on Human Rights and its provisions covering the right to a private life.”
on the Manx register, the secretive businesses that use the Isle of Man as a tax haven argued that they would be “affected adversely by a loss of privacy”. They warned that “investors in companies which carry out activities which are legitimate, but may be controversial” would have their privacy compromised.
Instead, they said that if a central register was to be established, any information should be available only to governmental and regulatory bodies.
When the became law in 2000, it was supposed to recalibrate the rights of the weak against the powerful. But in the last 17 years, legal advisers to big business and vested interests have learned how to use it to protect their clients’ wealth and reputations.
The UK’s crown dependencies have now meekly fallen into line and agreed to bar the public from access to the beneficial ownership register.
The Isle of Man government concluded, in a document setting out its reasons for opposing public access, that: “A publicly accessible register may well advance collateral issues, such as the internationalist objectives of various NGOs and individuals, but it does not add significantly to the current system of access to beneficial ownership information that already exists on the Isle of Man. Although not unsympathetic to the issues raised by those NGOs and individuals who responded to the Consultation, it is the responsibility of the Isle of Man Government to consider the broader picture and protect the national interests of the Isle of Man.
“The Isle of Man government has a duty towards those who create wealth in the island, provide jobs for its residents and contribute to its tax revenues ... Taking into account the above, the Isle of Man government has therefore concluded that a public register of beneficial ownership is not an appropriate option for the island.”
But where does this leave the rights of onshore taxpayers who want to be sure that the NHS and other public services are being properly funded by the tax contributions of the super wealthy?
There can’t be one law for the super tax avoider and another for the ordinary taxpayer.
• Robert Verkaik is a freelance security correspondent