Vince Cable has promised to investigate the ‘worldwide trade in offshore sham company directors’, The Guardian has reported after a joint investigation by the BBC, The Guardian and the Washington-based International Consortium of Investigative Journalists (ICIJ) revealed ‘widespread abuses’.
The business secretary said he would review the nominee director industry and the ‘possible abuses’ taking place. Tonight’s BBC Panorama programme will feature ‘undercover reporters [discovering] a world that specialises in secrecy, sells services which bend and breach UK law, is happy to help tax dodgers and even turns a blind eye to crime’.
Cable told The Guardian: ‘We are not complacent or naive. We recognise that there are individuals who will seek to abuse or evade the regulations … I can assure you that we will investigate fully any specific allegations and ensure that appropriate action is taken.’
David Leigh, the paper’s investigations editor, claimed that ministers in Cable’s business department had ‘failed for more than a decade to curb the booming sham director industry, which is largely led by a small group of expatriate Britons and opens the way to tax avoidance and concealment of assets’.
The department had also ‘allowed the anonymous purchasers of offshore companies, particularly those registered in the British Virgin Islands, to take over an increasing number of UK properties while hiding their true identities’.
Leigh quoted Cable as saying that if nominees did not even know they had been appointed as directors of a company, a criminal offence of making false statements could have been committed.
‘My department has also disqualified a number of individuals who have accepted directorships in return for a nominal fee or commission from someone unknown to them,’ he said.
‘I am, however, conscious of the need to avoid additional burdens being placed on the vast majority of companies and directors who do comply with the law. We are therefore focusing our attention on those who deliberately seek to contravene it.’
The BBC News website reported: ‘UK law states that directors are responsible for the companies they run. And they should know what those companies are doing. But in secretly-filmed meetings, Panorama undercover reporters were told of nominee directors being provided for UK companies who did not even know to which company they had been appointed.’
A ‘multi-year project’
ICIJ, founded in 1997, has a network of investigative reporters spanning more than 60 countries. It announced yesterday the launch of ‘the first part of a multi-year project aimed at stripping away the biggest mystery associated with tax havens: the owners of anonymous companies’.
The first part of the project, titled Secrecy For Sale: Inside The Global Offshore Money Maze, focuses on Britain, which ICIJ described as ‘one of the centres of the offshore industry’.
ICIJ added: ‘Organisations like the World Bank have advocated for greater disclosure and accountability of offshore structures. So, too, have advocacy groups like the Tax Justice Network, which estimates half of all global trade now passes through tax havens and one third of world wealth resides there.
‘Our aim is to allow the public to see inside the offshore world in a way that has never before been possible. Perhaps most surprising is that much of what we will be revealing this week and over the next few months is perfectly legal.’
British Virgin Islands
The Guardian’s Offshore secrets feature notes that the British Virgin Islands (BVI) is now ‘the world's biggest provider of offshore entities’. More than a million BVI companies have now been incorporated. But the UK ‘refuses to step in and force it to reform’.
The Tax Justice Network said today that the investigators had found the BVI ‘particularly troubling’. While Cayman was the first Caribbean jurisdiction most people thought of in the context of tax havens, the BVI ‘has not got nearly enough attention’, the TJN said. The BVI ranked eleventh in the TJN’s 2011 'financial secrecy index'.
The BVI is a British overseas territory and has a population of about 30,000. It does not levy corporate income tax and there is no personal income tax, capital gains tax or inheritance tax.
In a White Paper on the overseas territories, published in June, the UK government’s Foreign & Commonwealth Office (FCO) said: ‘The UK government respects the right of territory governments to compete on tax. The fiscal autonomy of the territories means that relations between territories and the UK in tax matters are in many ways similar to those between any other competitive tax systems.’
Overseas territories
The FCO website says: ‘The UK, the Overseas Territories and the Crown Dependencies form one undivided Realm, which is distinct from the other States of which Her Majesty The Queen is monarch.
‘Each Territory has its own Constitution and its own Government and has its own local laws. Territory Constitutions set out the powers and responsibilities of the institutions of government, which for most Territories include a Governor or Commissioner, an elected legislature and Ministers.
‘Governors or Commissioners are appointed by Her Majesty The Queen on the advice of Her Ministers in the UK, and in general have responsibility for external affairs, defence, internal security (including the police) and the appointment, discipline and removal of public officers. Elected governments have a wide range of responsibilities.’
Vince Cable has promised to investigate the ‘worldwide trade in offshore sham company directors’, The Guardian has reported after a joint investigation by the BBC, The Guardian and the Washington-based International Consortium of Investigative Journalists (ICIJ) revealed ‘widespread abuses’.
The business secretary said he would review the nominee director industry and the ‘possible abuses’ taking place. Tonight’s BBC Panorama programme will feature ‘undercover reporters [discovering] a world that specialises in secrecy, sells services which bend and breach UK law, is happy to help tax dodgers and even turns a blind eye to crime’.
Cable told The Guardian: ‘We are not complacent or naive. We recognise that there are individuals who will seek to abuse or evade the regulations … I can assure you that we will investigate fully any specific allegations and ensure that appropriate action is taken.’
David Leigh, the paper’s investigations editor, claimed that ministers in Cable’s business department had ‘failed for more than a decade to curb the booming sham director industry, which is largely led by a small group of expatriate Britons and opens the way to tax avoidance and concealment of assets’.
The department had also ‘allowed the anonymous purchasers of offshore companies, particularly those registered in the British Virgin Islands, to take over an increasing number of UK properties while hiding their true identities’.
Leigh quoted Cable as saying that if nominees did not even know they had been appointed as directors of a company, a criminal offence of making false statements could have been committed.
‘My department has also disqualified a number of individuals who have accepted directorships in return for a nominal fee or commission from someone unknown to them,’ he said.
‘I am, however, conscious of the need to avoid additional burdens being placed on the vast majority of companies and directors who do comply with the law. We are therefore focusing our attention on those who deliberately seek to contravene it.’
The BBC News website reported: ‘UK law states that directors are responsible for the companies they run. And they should know what those companies are doing. But in secretly-filmed meetings, Panorama undercover reporters were told of nominee directors being provided for UK companies who did not even know to which company they had been appointed.’
A ‘multi-year project’
ICIJ, founded in 1997, has a network of investigative reporters spanning more than 60 countries. It announced yesterday the launch of ‘the first part of a multi-year project aimed at stripping away the biggest mystery associated with tax havens: the owners of anonymous companies’.
The first part of the project, titled Secrecy For Sale: Inside The Global Offshore Money Maze, focuses on Britain, which ICIJ described as ‘one of the centres of the offshore industry’.
ICIJ added: ‘Organisations like the World Bank have advocated for greater disclosure and accountability of offshore structures. So, too, have advocacy groups like the Tax Justice Network, which estimates half of all global trade now passes through tax havens and one third of world wealth resides there.
‘Our aim is to allow the public to see inside the offshore world in a way that has never before been possible. Perhaps most surprising is that much of what we will be revealing this week and over the next few months is perfectly legal.’
British Virgin Islands
The Guardian’s Offshore secrets feature notes that the British Virgin Islands (BVI) is now ‘the world's biggest provider of offshore entities’. More than a million BVI companies have now been incorporated. But the UK ‘refuses to step in and force it to reform’.
The Tax Justice Network said today that the investigators had found the BVI ‘particularly troubling’. While Cayman was the first Caribbean jurisdiction most people thought of in the context of tax havens, the BVI ‘has not got nearly enough attention’, the TJN said. The BVI ranked eleventh in the TJN’s 2011 'financial secrecy index'.
The BVI is a British overseas territory and has a population of about 30,000. It does not levy corporate income tax and there is no personal income tax, capital gains tax or inheritance tax.
In a White Paper on the overseas territories, published in June, the UK government’s Foreign & Commonwealth Office (FCO) said: ‘The UK government respects the right of territory governments to compete on tax. The fiscal autonomy of the territories means that relations between territories and the UK in tax matters are in many ways similar to those between any other competitive tax systems.’
Overseas territories
The FCO website says: ‘The UK, the Overseas Territories and the Crown Dependencies form one undivided Realm, which is distinct from the other States of which Her Majesty The Queen is monarch.
‘Each Territory has its own Constitution and its own Government and has its own local laws. Territory Constitutions set out the powers and responsibilities of the institutions of government, which for most Territories include a Governor or Commissioner, an elected legislature and Ministers.
‘Governors or Commissioners are appointed by Her Majesty The Queen on the advice of Her Ministers in the UK, and in general have responsibility for external affairs, defence, internal security (including the police) and the appointment, discipline and removal of public officers. Elected governments have a wide range of responsibilities.’
