Britain’s hidden empire
https://www.moderntimes.review/britains-hidden-empire/
Nick
Holdsworth
Our regular
critic. Journalist, writer, author. Works mostly from Central and Eastern
Europe and Russia.
The
Spider’s Web employs an array of experts in offshore tax havens to detail the
degree to which the British elite has created a system of shocking inequity.
This is a film all ordinary, tax-paying citizens should watch.
The
Spider's Web: Britain's Second Empire
Director:
Michael Oswald
Producer:
Michael Oswald, John Christensen
Country: UK
«At the
twilight of the British Empire, bankers, lawyers and accountants from the City
of London set up a spider’s web of offshore secrecy jurisdictions that captured
wealth from across the globe and funnelled it to London.»
This
on-screen statement opens Michael Oswald’s powerful and accessible film.
Voice-over
images of the decline and end of the British Empire – troops and native police
beating back crowds of demonstrators; tanks on exercises, a human skull mounted
on the hull of one – enunciate the film’s timely thesis.
«As British
elites saw their wealth, privileges and empire disintegrate, they began to
search for a new role in a changing world and they found one: in finance.»
«This is a
film about how Britain transformed from a colonial power to a modern financial
power and how this transformation has shaped the world we live in,» the
narration continues.
From this
firm foundation, the film employs an array of experts in offshore tax havens,
banking and accountancy to detail the degree to which the British elite – and
its political servants in parliament – has created a system of shocking
inequity that is today complicit in many of the world’s global ills.
The
Eurodollar market
Post-Imperial
decline and a run on the pound prompted the creation of a system of double
accounting that allowed the City of London to become the leading centre for
international financial transactions.
This was
done via a system called the Eurodollar market, which lead directly to the
establishment of offshore tax havens.
«The
British Empire had sunk, leaving hardly a trace behind, but the City of London
had adapted and survived.»
The
sophisticated development of an ancient Anglo-Saxon system of secret trusts to
hide the owner of assets through a web of complex legal relationships, shell
companies and delegates, is neatly summed up by tax fairness campaigner Alex
Cobham of the Tax Justice Network :
«It’s about
providing a legal space in which you pretend is not taking place in the economy
where it really is taking place – so you are taking activity from the place
from where it is regulated and taxed and pretending that it is happening
elsewhere.»
A parallel
development is directly linked to the recent revelations in the Panama Papers:
The creation of the so-called ‘Secrecy Jurisdictions’ where fly-blown islands
that remained among Britain’s Overseas Territories – such as the Cayman Islands
– began to be used by smart British lawyers and bankers as legally tax-exempt
locations in which companies could establish branches or make use of shell
companies.
The
creation of «bone-fide tax havens»
Nicholas
Shaxson
As author
and former FT journalist Nicholas Shaxson – whose book Treasure Islands: Tax
Havens and the Men Who Stole the World (2011) was an early shot in the campaign
to lift the secrecy cloaking international finance – observes:
«What the
Cayman Islands were doing was straightforward illegal: drugs money was coming
in, tax evasion…whatever you wanted, you could have it.»
Shaxson
adds that of the 14 remaining British Overseas Territories today, seven
(including Bermuda and the British Virgin Islands) are «bone-fide tax
havens» – and all are former members of
the British Empire.
The
Eurodollar market became a huge success for those that had created it and those
that took advantage of it: By 1997 more
than 90 per cent of all international loans were channelled through it,
creating a market worth literally trillions of dollars.
«The
British Empire had sunk, leaving hardly a trace behind, but the City of London
had adapted and survived,» the narrator intones.
«In Britain
no bankers go to jail – they are a protected species. That is part of the
business model.» – Nicholas Shaxson
The role of
the City of London – a medieval entity that describes a tiny part of central
London (the «square mile» that more or less occupies the area of the old Roman
city) – is examined in more detail.
Exempt from
many laws and regulations that other Londoners have to observe and dominated by
medieval guilds and corporate interests.
It is run
by the company – the Corporation of London – and has its own courts and police
force. It is this unique factor – as the film asserts – that had fuelled the
creation of the network of secret financial jurisdictions worldwide and the
massive tax-avoidance with which they are now identified.
Bankers:
Protected species
But it is
not only tax avoidance that the City’s clever schemes – actively aided and
abetted by the Bank of England – facilitated, the film says.
Banks such
as BCCI – that within a decade of being granted a licence by the Bank of
England had become the seventh largest bank in the world – collapsed in
bankruptcy and ignominy in 1991.
«The City
of London, by and large, really likes to do its dirty work outside London.» –
John Christensen
It was
identified as having financed terrorism, and for channelling CIA money for
covert operations as well as facilitating money laundering.
«In Britain
no bankers go to jail – they are a protected species. That is part of the
business model,» Shaxson notes.
The light
tax regulation through which the UK governs its tax havens effectively means
that most of their activity – though nominally in independent jurisdictions –
is controlled from the City of London.
«The City
of London, by and large, really likes to do its dirty work outside London,»
says investigative economist, John Christensen adding: «I see these [tax
havens] as the Frankensteins created by the City of London.»
Today as
much as half of all global offshore wealth may be hidden in Britain’s secrecy
jurisdictions – contributing to misery in many of the places from which that
wealth is illicitly extracted.
Losers from
this deal include Africa. The latter has massive capital outflow: although seen
as a debtor to the developed world, with debts worth $177 billion at the end of
2008, it is effectively a creditor as an estimated $944 billion was moved
offshore by African elites between 1970 and 2008.
Thus the
offshore system enables the «looting» of third world countries by their elites,
undermines democracy and contributes to global inequality and instability.
Public and
private payment schemes
The film
explores in greater depth the complex web of connections between offshore
financial havens and British political and public activities.
It links
the exploitation, for example, of Public Private Finance Initiatives (where
private money is raised to pay for big public capital spending projects) that
often mean spreading costs over 30 or more years at three or four the times the
cost of simply paying for a hospital, new road or other public scheme directly
from the treasury.
«The
Spider’s Web is a film all ordinary, tax-paying citizens should watch.»
The film
details the links between politicians, hidden wealth and influence peddling –
focusing for example on the former head of the British tax office who developed
a system of back room deals to resolve tax disputes with big companies and in
retirement was hired for lucrative consultancy positions with leading
accountancy firms.
It even
reveals that the London headquarters of HMRC – the UK’s tax and customs
collection agency – is owned by an offshore company that is pays no tax in the
UK at all.
The extent
to which the British government operates its financial policy more or less in
collusion with the City of London – contributing to inequality at home and
abroad – is revealed.
A plan to
end the iniquitous system
Michael
Oswald
Framed with
strong images of the City of London, tax havens and set to a haunting original
soundtrack, The Spider’s Web is a film all ordinary, tax-paying citizens should
watch. Those who benefit from the global financial system may have money and
power, but are vastly outnumbered by those of us who do a day’s work, earn a
fair rate and pay our taxes.
The film
closes with a five-point plan for ending this iniquitous system that has
effectively allowed bankers at the heart of the British Empire to re-colonize
the world through a web of secretive financial instruments.
The first 3
steps of the five-point plan are as follows:
Stop public
councils from issuing public contracts to companies operating out of tax
havens.
Create
public registries of the beneficial owners of companies, trusts and foundations.
Introduce
full transparency of deals and secret agreements between companies and
governments.
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