Her Majesty The Queen
London SW1A 1AA
I write as director of the global Tax Justice
Network and as former Economic Adviser to the States of Jersey.
On 7th November the Tax Justice
Network will publish the 2013 Financial Secrecy Index, a world ranking of
jurisdictions offering financial secrecy. The index will show that Britain, taken
together with its Overseas Territories and Crown Dependencies, is by far the most
important part of the global offshore system of tax havens or secrecy
At the G8 meeting in Loch Erne this June your
Prime Minister undertook to tackle the global problem of offshore financial
secrecy and signed up to a pact that "has
the potential to rewrite the rules on tax and transparency for the benefit of
countries right across the world, including the poorest". By September
he was claiming success in persuading the Overseas Territories and Crown Dependencies
to commit to better standards on financial transparency.
But our findings show that these
jurisdictions still fall woefully short of acceptable standards of
transparency, having made only modest reforms since 2009, when the G20 led by
your government committed itself “to take action against non-cooperative jurisdictions,
including tax havens.”
For example, none of the Overseas Territories
or Crown Dependencies operate a properly transparent public register of
offshore companies, trusts and foundations. None obtain and maintain
information on beneficial ownership and make this information publicly
available. Not one requires that all company
financial accounts are made publicly available.
We are not alone in feeling that the secrecy
facilities provided by these jurisdictions stains the good name of Britain in
the international arena. The victims of this secrecy include, among others, two
billion Commonwealth citizens.
A recent study of 33 African
countries found that they lost over US$ 1 trillion (£650 billion) in
capital flight since the 1970s, of which $640 billion came from 16 Commonwealth
countries. These losses dwarf the external debts of 'just' $190 billion for the
33 countries, meaning that Africa is a major net creditor to the world,
contrary to what is widely believed. But the assets are in the hands of a
relatively few wealthy Africans, protected by offshore secrecy, while the debts
are shouldered by entire African populations. Worldwide, up to US$32 trillion
is estimated to be sitting offshore in conditions of secrecy.
In 2008 you asked why economists had failed
to foresee the financial crisis that was then engulfing the globe. Many good explanations have been offered, but
few economists have addressed the profound structural faultlines created by tax
havens or secrecy jurisdictions.
Financial secrecy and endemic tax evasion contributed to the crisis and continue
to threaten the integrity of the global economy, to undermine public finances, to
undermine respect for the rule of law, and to widen inequality across the world.
I enclose a copy of Nicholas Shaxson’s book Treasure
Islands, which exposes the issues that so many economists have ignored.
I urge you, as Head of State of all these
territories, to exert all possible influence to address one of the most harmful
faultlines in the global economy. While
constitutional propriety militates against direct public intervention in the
politics of the United Kingdom, longstanding convention preserves your right to
advise, encourage, and warn your Prime Ministers.
I sincerely hope that the next set of
Financial Secrecy Index results, which we will publish in November 2015, show
that genuine progress has been made.
With best wishes
Minister David Cameron