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Martin Kenney: Hold on. Not everyone in the City of London (or in BVI) is bent

I can’t help thinking that Graham Vanbergen was trying to be deliberately provocative when he wrote this article on the City of London being a tax haven for the mega wealthy.

Although originally published on TruePublica, I spotted it on the site run by the Centre for Research on Globalization, where it had the catchy title: Money Laundering and the City of London’s “Crime due Scene”: Haven of Tax Havens for the Mega-Wealthy. Although I disagreed with much of what he wrote, it was an enjoyable read.

Vanbergen adopted a table-thumping approach to what he claimed to be abject corruption of the highest order.

He wrote:

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.

Money laundering was permeating through the City’s financial sector on a massive scale (he believed). He described the City as a tax haven, shielding “the mega-wealthy from paying their fair dues,” as they plundered and steamrolled across the globe, borrowing money to make war, safe in the knowledge that they were above the law.

He asserted that they have all but bypassed democracy, making their own rules that are encapsulated in “Gentlemen’s Agreements,” usurping law enforcement and undermining the regulators. He attacked offshore islands, specifically in the Caribbean, which offered offshore facilities to those seeking them. From the tone of the article, it would appear that Vanbergen would welcome a few businessmen being burned at the stake.

Humor aside, Vanbergen does have a (partial) point.

Yes, there is a lot of money that passes through the City of London that has a dubious derivation. There will be money laundering going on there as I type. And there will be criminal money passing through the offshore companies Vanbergen lambastes. But the same goes for the stock exchanges in New York, Japan and any other financial hub you care to name.

Globally, the world’s governments are fighting the criminals and improving their anti-money laundering and anti-corruption regimes. In my professional field, I have seen improvements. It’s not perfect and we have a tough fight on our hands. But slinging politically-motivated-mud at the City and financial institutions is a cheap shot.

I grow tired of hearing the same old arguments about offshore companies, trusts and bank accounts. These can be perfectly legitimate tax avoidance vehicles. Some question their ethical standing (to own one usually requires you to have some money in the first place). But the fact is they are perfectly legal. Even Vanbergen (perhaps grudgingly) admits that they do have “good and legal reasons” to exist.

I am proud that my firm is based in and operates out of the Caribbean. As a consequence I will stand up for the governments of these islands when I see them being besmirched by people who do not put both sides of the argument to their readership. Likewise I will be critical of them when in my eyes they make a decision I consider to be a mistake.

The British Virgin Islands (BVI), for example, does not operate a system that is so secret that law enforcement agencies or victims of fraud worldwide are precluded from ever obtaining the details of the beneficial owners of BVI companies. Reports to the contrary are falsehoods peddled principally by people with a political axe to grind.

If somebody makes an application to the court and can evidence wrongdoing, then the court in the BVI will make the appropriate order and the information will be forthcoming. This is no different to the UK, where production orders require law enforcement to support their applications with evidence.

The UK government regularly considers putting pressure on the BVI government to operate a public register of company ownership similar to that operated in the UK. I have spoken out against the idea, on the basis that we will push the criminals deeper underground. They will simply go looking to form their company elsewhere or more nominee UBOs (ultimate beneficial owners) will be deployed, and the trail will go cold.

The current level of due diligence and compliance in the BVI for example, in my opinion, is as good or better than that usually found in the UK, the U.S. and elsewhere.

If you’re a follower of Graham Vanbergen you may now be thinking that I am condoning criminality and money laundering. I am not. In fact my professional life is devoted to the recovery of assets on behalf of victims who have lost them to fraud or to sharp business practice.

Offshore companies have been used to lawfully and efficiently move capital from developed to developing countries. They are the plumbing to globalization. They are not all used by fraudsters.

Fraud, corruption, and bribery should be eradicated. But we have to be realistic. Every population has its share of good and bad. Contrary to popular belief the whole working population of the City of London is not bent. The same holds true of the two million offshore companies which exist in the world today.

Legislators worldwide are making new laws and protocols to make money laundering more difficult. Because some ne’er-do-wells can avoid detection doesn’t mean that the whole system is corrupt. It simply means there is more work to be done to prevent the financial systems from being manipulated by the dishonest few.

If Graham Vanbergen and people like him have their way, the global economy will be at risk of serious harm. The world needs business people — those who are clever, innovative, and capable of employing a workforce.

I readily agree we need to continue exerting pressure on those who make their money criminally, and those who evade paying their taxes. But not at the cost of global malaise or collapse brought about by seeing conspiracies where they don’t exist.


Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice focused on multi-jurisdictional fraud and grand corruption cases |@MKSolicitors.

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