The Geoffrey Cox headlines look bad – the reality is worse
The British Virgin islands is not a country, it’s a loophole used to dodge tax, regulations, laws and oversight – and the Tory MP is helping it to do so
In a week where the UK government has become embroiled in an increasingly damaging sleaze scandal, Number 10 could have done without today’s headlines concerning the former attorney general and Tory MP, Geoffrey Cox.
Speaking to the Daily Mail, a senior Whitehall source accused Cox, who is representing the British Virgin Islands (BVI) government in an inquiry launched by the UK Foreign Office earlier this year, of “pocketing hundreds of thousands of pounds to help stop the exposure of corruption”. The inquiry has heard BVI officials accused of spending public money without checks, as well as more serious charges of being connected to drug running, leasing public land and granting jobs to friends.
On those specific charges, a friend of the BVI might argue that the Overseas Territory’s government has a right to legal advice, considering the serious nature of the allegations against it. Besides, how is the UK government in any position to criticise anyone about cronyism given its own role in COVID-related contracts?
The far bigger scandal is where the money came from before it was used to pay Cox’s fees, because the BVI is not like other places. Its government – Cox’s client – doesn’t raise money from taxes. More than half of its entire budget comes from selling companies that allow its clients to dodge not just other countries’ taxes, but also their regulations, laws, scrutiny and oversight. The BVI is not a country, it is a loophole.
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The islands’ government insists the companies are a crucial lubricant in the cogs of the globalised economy, that they help capital flow efficiently to where it’s needed. Perhaps they are, but it’s hard to believe that any good they’ve done could ever make up for the damage they’ve caused. Over the years, officials from Nigeria, Angola, Guinea, South Africa, Kenya, Rwanda, Equatorial Guinea, the Democratic Republic of Congo, Tanzania, Russia, China, Azerbaijan, Ukraine and many other countries have used BVI companies as their primary tool to disguise the theft of vast wealth from populations that desperately need it and to prevent themselves ever being brought to justice.
Without the kind of companies sold by the BVI, these kleptocrats couldn’t have stolen what they stole. And without their business and the fees it generated, the BVI would not have transformed itself from the most “backward unit in the British Colonial Empire”, as one imperial official called it in the 1940s. As of 2019, per capita, the British Virgin Islands was richer than the United Kingdom.
To be fair to Cox, he’s at least not being hypocritical: he has put his belief in the BVI’s business model on the record. When Parliament voted in 2018 to force Britain’s Caribbean tax havens to be more transparent, he opposed the idea, on the grounds that if criminals stopped using British offshore territories, law enforcement would lose insight into dirty money flows. “To demand that the overseas territories all suddenly go public will give one hit – just like the WikiLeaks thing was a one-hit wonder – because no one will then trust those jurisdictions where the light of publicity has been shone,” he told parliament.
His use of ‘no one’ is particularly revealing there, since it shows both the true nature of the BVI’s clients, and of the British role in enabling crime: if we don’t do it, somebody else will. So why stop?
The reason to stop is that we are supposed to be better than that. Yes, money will always be stolen, and it will therefore always be laundered: many bankers in Dubai happily accept any cash brought to them, and St Kitts and Nevis or the Marshall Islands will enthusiastically sell shell companies if the BVI won’t. Crooked lawyers in Nevada will structure assets, and accountants in Panama will check the books. But – as then-Tory MP Kenneth Clarke laconically made clear in that same 2018 debate – the point of turning away criminal business is not because it’s an effective step against criminality, but because it’s the right thing to do. “It is not an overwhelming argument to say, ‘Well, we should carry on having billions of pounds of criminal money flowing through our overseas territories while we wait for Panama to make a move’. That is not the strongest argument,” he said.
The former attorney general would no doubt insist that everyone has the right to a lawyer, even mobsters and their enablers. That’s true, Mr Cox, but it doesn’t have to be you.
Oliver Bullough is the author of 'Moneyland: Why Thieves And Crooks Now Rule The World And How To Take It Back,' a book on the hidden world of the new global kleptocrats.
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