Off-shore
or
just elsewhere
Off-shore in the popular mind is usually associated with an island somewhere in the West Indies. Actually, the term off-shore means simply somewhere elsewhere to do business that has specific features that assist a companies business activities. The chief distinguishing features are; low relative tax, lax or inadequate regulation, opacity, secrecy, and dubious sovereignty.
The City of London lays at the centre of the spiders web of the off-shore system of tax evasion - let's not quibble over avoidance and evasion - companies are not paying what's due and the City's role is to facilitate the crime.
The inner ring of the web is formed by the Crown dependencies of Jersey, Guernsey and the Isle of Man - these focus mainly on European business. Jersey describes itself as an extension of the City of London in its promotional material. In 2009, Jersey alone provided £135bn in bank deposits upstreamed to the City.
Note, the funds were 'upstreamed' not sent 'off shore', the direction of travel was towards the City, for further upstreaming, perhaps to the Cayman Islands or elsewhere.
The British overseas territories form the middle ring of the web (23 in all), such as the Cayman Islands and Bermuda. Like the Crown dependencies, they have governors appointed by the Queen and are controlled by Britain, but with enough distance, when problems occur to make sovereignty dubious.
The outer ring of the web includes places like Mauritius, Hong Kong and the Bahamas, with no connection to Britain but still channelling billions through the City every year.
Also, the wizards of finance can turn anywhere into an off-shore opportunity when the features are favourable, anywhere from the US state of Delaware to a fishing port in North Korea.
What's to be done?
The City is the best resourced financial lobbying group anywhere in the world. The City runs its own show, untroubled by the affairs of state. Where the City doesn't wheel and deal, it hosts the wheelers the dealers - AIG, who went recklessly mad in the New York market was doing its damage from the City, when companies like Lehman Brothers had their wheeling and dealing restricted by US regulation, they did their business out of the City.
The City, which hosts the International Accounting Standards Board, a private company registered in Delaware, funded by the top four accountancy firms and multinations to write their own disclosure rules. Rules that make it difficult to track or trace cross border flows of capital, particularly for resource rich underdeveloped countries.
The City pleases itself and the politicians appear not to have any desire to interfere with business. However, that doesn't mean that things will not change because the world beyond the City is changing. Soon the rising poor countries of the world are going to be reviewing the way they engage with the City boys, checking the books, reviewing the ways global finance works.
In the EU not a few eurocrats are turning their gaze upon the activities of the City, as are the IMF and the OECD; early days but at least they are debating issues in public that in the past were not said.
Also, due to the activities of various protest groups like UK Uncut, the Tax Justice Network and Occupy the media have found it impossible to ignore the tax dodgers and the role of the tax man. The protests, if nothing else have moved the social role of finance to the front page - perhaps in time the politicians may take notice as well.
There are many suggestions one could make to end the abuses taking place in the City but without the political will to act, it would be pointless.
However, it might be a good start for one of the political parties to ask if it's not time to end the City's privileges in a divided London, take a bulldozer to Temple Bar and introduce properly democratic voting rights for the citizens. Dave has no plans in this regard.