Originally published in May 2016: When it comes to The City of London, the term ‘tax haven’ is not describing all that it should. It is a It doesn’t just shield the mega-wealthy from paying their fair dues it goes further and offers a departure from the rule of law as you would know it. Secrecy is its raison d’être. These secrecy laws do not benefit the local people living in its jurisdiction but only those individuals and corporations with enough money and with something to hide.
The reality is that the City of London caters for those above the law, it operates on the basis of bypassing democratic society as a whole. This has come about over time where an extraordinary ‘ gentlemen’s agreement’ has stood the test of time. Over the centuries, the head of state and his/her governments have had the need for large loans for wars and the like. The City, in exchange for such commodity, has extracted certain privileges the rest of the population do not enjoy. The end result over the time is that it now has its own jurisdiction to do pretty much as it pleases.
A ‘watchman’ sits at the high table of parliament and is its official lobbyist sitting in the seat of power right next to the Speaker of the House who is “charged with maintaining and enhancing the City’s status and ensuring that its established rights are safeguarded.” The job is to maintain order and seek out political dissent that might arise against the CityThe City of London has its own private funding and will ‘buy-off’ any attempt to erode its powers; any scrutiny of its financial affairs are put beyond external inspection or audit.
For over a hundred years the Labour party tried in vain to abolish the City of London and its accompanying financial corruption. In 1917, Labour’s new rising star Herbert Morrison, the grandfather of Peter Mandelson made a stand and failed, calling it the “devilry of modern finance.” And although attempt after attempt was made throughout the following decades, it was Margaret Thatcher who succeeded by abolishing its opponent, the Greater London Council in 1986.
Tony Blair went about it another way and offered to reform the City of London in what turned out to be a gift from god. He effectively gave the vote to corporations which swayed the balance of democratic power away from residents and workers. It was received by its opponents as the greatest retrograde step since the peace treaty of 1215, Magna Carta. The City won its rights through debt financing in 1067, when William the Conqueror acceded to it and ever since governments have allowed the continuation of its ancient rights above all others.
The City effectively now stands as money launderer of the world, described now as the capital of the global crime scene. It is the heart and engine of the offshore haven, with Jersey, Guernsey and the Isle of Man its european collection centres, the caribbean and others hoovering up billions of American dollars from all over the globe. Whilst there are good and legal reasons for offshore accounts, it has a dark and shadowy client list; terrorists, drug barons, arms dealers, despots, dictators, shady politicians, corporations and companies, millionaires and billionaires – most with something to hide.
The Independent newspaper reported in July 2015 that The City of London is the money-laundering centre of the world’s drug trade, according to an internationally acclaimed crime expert. Another expert in Mafia criminology has come forward and stated the UK is now the most corrupt country in the world and firmly pins the blame on The City of London. In addition, every notable financial expert now agrees that due to incredibly lax financial laws facilitated by the British government, the London property market is heavily influenced by laundered money from all over the world involving hidden tax havens, most of which are British.
In 2016, the Home Affairs Select Committee concluded that the London property market was the primary avenue for the laundering of £100bn of illicit money a year. Yes, £100 billion laundered each year – in property alone.
The London money launderers don’t just wash money from crime into property. Worse, they are financing terrorist activities and operations all over the world.
Her Majesty’s British Overseas Territories and Crown Dependencies make up around 25 per cent of the world’s tax havens, which are now blacklisted by the European Commission and now ranked as the most important player in the financial secrecy world.
Tax havens featured on the EC’s blacklist of June last year include Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Montserrat and the Turks and Caicos Islands to name just a few and each is inextricably linked to the City of London’s crime offices.
David Cameron won praise in 2013 after announcing at the Open Government Partnership summit in London that the UK intended to require companies registered in the UK to reveal the identity of their real owners in public filings at Companies House. This was then heavily watered down after the Queen was warned that her British territories were now ranked as some of the world biggest tax havens, harbouring tens of trillions of illegally stashed cash and assets that was described as a “web of secrecy jurisdictions”. The Tax Justice Network (TJN) said Britain now rules the world of tax havens.
The consequence of its operations is that money laundering is now at such levels and so widespread that the authorities have recently admitted defeat in its battle of attrition by stating openly it has been completely overwhelmed and lost control.
Keith Bristow Director-General of the UK’s National Crime Agency said just six months ago that the sheer scale of crime and its subsequent money laundering operations was “a strategic threat” to the country’s economy and reputation and that “high-end money laundering is a major risk”.
Banks located in The City of London are connected to terrorists committing some of the worst atrocities of our time, the same with the international drug trafficking trade. Many people around the world are suffering and dying as a direct result of the activities going on in this one tiny regime. One bank alone laundered $7billion in cash. When caught its cocky arrogance was no better defined than its response “in the past, we have sometimes failed to meet the standards that regulators and customers expect” when they were fined $2billion in the USA for breaking international sanctions. Toothless financial regulators in Britain look aside and do nothing other than pay lip service to this crime wave set in the heart of one of the most important capital cities in the world.
This from Michael Meacher MP “After a blizzard of revelations of financial wrongdoing over this last year, without parallel in recent history, what do the following have in common: Barclays forced to pay $360m over its manipulation of Libor, HSBC fined $1.7bn for money-laundering and flouting sanctions, Standard Chartered made to pay $667m over breached in sanction laws, RBS over Libor fixing to name but some? They are all British companies that have committed very serious offences, but they were not prosecuted by British regulators at all, only by US ones.” The scandals escalated and the authorities had to act but did little in real terms.
As a consequence, the City of London remains politically immune and acts with criminal impunity as it sucks up what is now understood to be trillions in ill-gotten gains. Bankers and hedge-fund operators dodge the authorities with skill sets honed over hundreds of years who stride with disdain over anything remotely resembling decency. HMRC investigates nothing, it takes what it is given, the austerity ridden taxpayer continually short-changed.
It is of no coincidence that this small area of Britain, just 1.2 square miles has the highest pay in the land and the third lowest council tax for property anywhere in the United Kingdom. A £10 million mansion costs less than £1,000 a year in council tax, the same residence for New York bankers attracts $225,000 a year in property taxes.
At the last census, its population stood at just 7,325, its employees stand at 414,600, nearly 40 per cent of them in financial services. Nearly 17,000 businesses are registered there, 2,700 are finance and insurance based and just over 45 per cent are foreign owned entities. HSBC’s organisation is the ninth largest bank in the world following four Chinese and four American banks located down the road in Canary Wharf.
This tiny island haven, with its own borders and police force, sits inside London as an international hub, the tax haven of all tax havens. Glass towers full of international crime lords. The banks use offshore business organisations to escape regulation and the grip these organisations have over an ever corrupt political class is incomprehensibly astounding. The Conservative party is literally bankrolled by bankers and hedge funds. Half of the wealthiest hedge fund managers in the land pay millions each year to the Tories – what do they expect back from their investment? Not just hundreds of millions of stamp duty exemptions and taxes the hedge funds no longer have to pay.
The City of London would have you believe they contribute massively to the state for their efforts. One year after David Cameron’s arrival at No 10, corporation tax represented 40.8pc of tax collected from the London financial industry, while last year it was just 19.8pc. This is an environment where banks are earning even more by taking even bigger risks with our economy having fleeced the taxpayer for half a trillion pounds a few years earlier – enough additional money to fill the funding gaps for the NHS, education, police and social services for decades.
Unrecoverable VAT and employers’ National Insurance together make up over half of taxes borne, with corporation tax less than a fifth of this so called massive contribution. The City of London does very well like no other.
Thatcher’s neoliberal dream is now totally out of control. The legislators have capitulated to its power. Democracy is systematically deconstructed in favour of the corporations. In the legislators’ place, people-powered organisations emerge such as Tax Justice Network, Democratic Audit, New Economics Foundation to name a few who operate in the arena of social justice in an attempt not to stifle capitalism, but to level the playing field a bit.