10 Jun 2021
The last time the UK chaired a summit of the G7, or the G8 as it was in 2013, David Cameron was in an ebullient mood as he held a closing press conference in glorious late afternoon sunshine by Lough Erne in Northern Ireland. He sensed he had pulled off a diplomatic triumph by putting a new subject at the forefront of world leaders’ agenda: the global fight against corruption.
“These are really strong commitments that have never been written down in this sort of way and then signed,” Cameron said. “These are words on a page that the G8 is going to be judged on year after year after year.”
Once obscure issues such as the need for public registers of beneficial share ownership, the automatic exchange of tax information and curbs on profit shifting by multinationals were finally in the spotlight. Fighting corruption had become Britain’s surprising new international calling card – and Cameron’s personal mission, strange as it may now seem given his tenacious lobbying career after leaving politics.
There was some real progress after the G8 meeting, especially on the idea that public registers of beneficial share ownership – making clear who the real owners of companies are – could leave the money launderers with fewer places to hide. In 2019 it was estimated tax avoidance cost developing countries as much as £180bn a year.
But nearly a decade after the promises in Northern Ireland, the UK has lost its leadership role. The British Virgin Islands, arguably the biggest tax haven in the world, is still setting the UK preconditions before it will set up a publicly accessible registry of share ownership. This is three years after legislation was passed by MPs intended to require all UK overseas territories to set up registries by 2020.
Unexplained Wealth Orders, once billed as the magic bullet to force the autocratic elite to hand over ill-gotten wealth, lie largely unused, and badly mauled in the British courts. The expectation was 20 orders would be issued in the first two years. Only four have been, and in one case the judge ordered the UK to pay the daughter of one of Kazakhstan’s political elite millions in compensation for wrongful seizure of her property.
The Serious Fraud Office remains badly underfunded, and the City of London – with its army of accountants, lawyers, property and art dealers, bankers and PR firms – still protects the funds of the world’s kleptocracy. Plans for a public registry of foreign firms owning property in the UK, first unveiled by Cameron in 2015 and consulted upon in 2018, have still not been implemented and did not feature in the latest Queen’s speech.
Similarly plans to reform Companies House so that its officials can police, as well as administrate, the registry of companies, remain stuck. Inside Whitehall, no coherent structure exists to fight corruption. There is still an anti-corruption champion – John Penrose MP – but the role has been downgraded from cabinet status.
Ten different government departments have a role in fighting corruption, and even more for money laundering. If everyone has responsibility for driving an agenda, no one has.
In giving evidence to the US Congress’ foreign affairs committee last month, Ed Lucas, senior fellow at the Centre for European Policy Analysis, ended his devastating testimony by reflecting on the “dismally ineffective approach of the UK”. He counselled Congress: “I hope that US officials and elected representatives will underline forcefully their dissatisfaction with Britain’s progress. It should be a source of national shame that London remains the money-laundering capital of the world.”
Corruption is once again a live issue and Britain’s failure to maintain its leadership position is becoming obvious. Boris Johnson at his G7 summit in Cornwall this week will make much of the fight to defeat authoritarianism in Russia and China, but in doing so he will have to gloss over the role of the City, overseas territories and the London property market in facilitating the Russian kleptocracy. His hostility towards the recommendations from the long-delayed report by parliament’s intelligence and security committee on Russian influence is impossible to overlook. Tom Keatinge, director of the centre for financial studies at the British defence thinktank Royal United Services Institute, warns that “when the tide goes out you find out who is swimming naked. For Boris Johnson and illicit finance that embarrassing moment is about to arrive.”
Britain’s recent inertia is likely to be seen as more than a minor domestic broken promise. Corruption is rapidly surging back up the global agenda, largely thanks to America. Joe Biden has said the competition between autocracy and democracy is the great generational challenge, and he plans “to rally our allies to combat corruption and kleptocracy”. Tackling global corruption is not a distraction from dealing with China, Russia and other strategic competitors, but central to it. On Thursday, Biden announced that fighting corruption is a “core national security interest, and essential to the preservation of our democracy”.
By Patrick Wintour, The Guardian, 9 June 2021
Read more at The Guardian
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