Letter 6

Flouting the law!

On the 14th June John Boothman wrote in his column in the Jersey Evening Post that there is no real evidence that Jersey’s finance industry flouts international law.

Let us look at some evidence then:

  • A Jersey based accountant, Philip Egglishaw who works for Strachans, is under investigation by the Australian Crime Commission for aiding his clients in avoiding $300 million tax1
  • Caversham Fiduciary Services, Caversham Trustees Limited and Nicholas Bell were fined £65,000 for failing to comply with money laundering rules2.
  • The relatives of the late Nigerian dictator Sani Abacha had at least $200 million hidden in Jersey. Although this sum was repatriated to Nigeria, the loophole that allows Jersey to facilitate bribery payments involving African countries remains, despite a promise to the Organisation for Economic Cooperation and Development that they would close said loophole3.
  • Daniel Speak whilst working for Citibank stole £350,000 from his employees and has been subsequently jailed4.
  • Abbey National paid Jersey £10 million to settle a lawsuit after it had been found operating a currency transaction fund through Cater Allen Trust Company5.
  • Orb, a Jersey based company is under investigation by the Serious Fraud Office regarding £30 million belonging to a dotcom firm called Izodia6.
  • In 2002 British Aerospace was under investigation for their part in a money laundering fraud involving the Qatar government. At least £100 million seems to have passed through three Jersey registered trusts at ANZ Grindlay Trust Bank7.
  • Money given to Russia by the International Monetary Fund (IMF) turned up in a management company in Jersey. It is argued that this was done to restructure its $150 billion overseas debt, of which $50 million was held in Jersey, and renegotiate its deal with the IMF 8.
  • Paulo Maluf, the former Mayor of Sao Paulo, Brazi,l has had his bank accounts frozen at Citibank Jersey whilst an investigation that the $200 million in said accounts may have come from the public revenue of Sao Paulo9.
  • A former energy minister from Trinidad, Finbar Gangar has been charged with failing to declare offshore bank accounts, including two in Jersey at Barclays Bank10.
  • The Accident Group, a company who chased accident compensation for its clients on a no win no fee basis, collapsed in 2003 with a debt of £48 million, although they had declared a profit of £4.5 million just nine months earlier. Investigations have found that the directors of said company set up an offshore Employment Benefits Trust (EBT) for themselves two years before the collapse of the company. The EBT is held in Jersey11.
  • Sonangol, Angola’s state owned oil company, siphoned off $1 billion of public revenue into offshore accounts including Jersey during 2000 alone. Sonangol’s chief executive, Manuel Vicente, says that one of the company’s offshore accounts is based at Lloyds TSB in Jersey, which has seen at least $78 million pass through its accounts. Sonagol seem to have used some of this money to make financial inducements to foreign companies that Angola needs to help with modernising its infrastructure. These payments are kept quiet and usually off the company’s accounts by using offshore accounts. The British Foreign Office is supposed to be looking into the use of such inducements as a way of finding out how much of Angola’s public revenue is being used in government corruption12.

When companies and rich individuals use offshore companies to hide or launder money they are evading and/or avoiding their codified tax liabilities from the countries of origin. In the age of globalisation this tends to make countries try to recoup their lost public tax revenue through taxing low and middle earners. Indeed, Jersey will soon be implementing the zero-ten corporate tax changes that will create a “black hole” in excess of £100 million that will be filled by increased income tax for low and middle earners and a regressive goods and services tax that will impact most on low earners and those who are economically inactive.

Jersey is one of seventy or so tax havens in the world that have in excess of $11.5 trillion hidden in the form of ‘companies’, ‘trusts’ and ‘funds’. If this sum was taxed at a moderate rate at least $250 billion could be recouped in a year. Just imagine what could be done for global poverty with that kind of money!

Chris Steel

Treasurer Attac Jersey


1 www.smh.com.au/news/business/jersey-home-of-the-tax-dodge, accessed 16 June 2006.

2 www.newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk, accessed 16 June 2006.

3 www.business.guardian.co.uk, accessed 16 June 2006.

4 www.observer.guardian.co.uk/business/story, accessed 16 June 2006

5 www.telegraph.co.uk/money/main, accessed 16 June 2006.

6 www.observer.guardian.co.uk/business/story, accessed 16 June 2006.

7 www.observer.guardian.co.uk/business/story, accessed 16 June 2006.

8 www.cnnmoney.printthis.clickability.com, accessed 16 June 2006.

9 www.ipsnews.net/news.asp, accessed 16 June 2006.

10 www.trinidadexpress.com/index.pl/article, accessed 16 June 2006.

11 www.manchestereveningnews.co.uk/news, accessed 16 June 2006.

12 www.publicintegrity.org/bow/printer-friendly.aspx, accessed 4 April 2006.