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April 4, 2013updated 10 May 2016 6:40am

BVI account-holders exposed, tax justice campaigner Richard Murphy vindicated

By Spear's

The Guardian has some quite astonishing news today, exposing thousands of people using offshore accounts who hold ‘anonymous wealth’. A consortium of journalists have plowed through 2 million documents to come up with a list of names stretching from the widow of a billionaire Spanish industrialist to Azerbaijan’s dictator who benefit from entities in the British Virgin Islands.

One man greeting the news with satisfaction is Richard Murphy, co-founder of the Tax Justice Network and director of anti-tax avoidance think-tank Tax Research LLP. He has been fighting the use of secrecy jurisdictions (his term for tax havens or low tax jurisdictions) by HNWs, multinational corporations and their lawyers and accountants since 2003, so today’s news is vindication, if not a surprise, he tells Spear’s.

‘[The Guardian articles] are good news in the sense that they tell the world what we’re saying is right. There’s nothing there which is terribly big news as far as I’m concerned: corrupt officials, corrupt banks who are willing to help people hide their money, shell companies being used to hide corruption, crime, assets, to defraud wives.

‘The good thing is we’ve got the evidence.’
THERE ARE MANY revealing glimpses. Scot Young, who has gone to jail rather than reveal his true assets (estimated at £400 million) to his wife when she sued him for divorce, has been shown to be the beneficiary of BVI companies (although no figures are mentioned). A senior Mongolian politician has admitted having an offshore entity. The president of Azerbaijan (pictured below) has three BVI entities in his daughters’ names and Baroness Carmen Thyssen-Bornemisza (pictured above) holds her art offshore.

What is more important than the confirmation of what he already knew, says Murphy, is the effect it’s going to have on those with offshore accounts and entities: ‘It’s going to scare those who use offshore regimes. They were frightened by Switzerland being cracked and now they’re even more scared, so they’re wondering, “Where can I hide? What are the chances of keeping my affairs secret?”

‘That doubt is incredibly important. If the opportunity for secrecy disappears, [low tax jurisdictions] have nothing to sell their customers. That’s what they sell: secrecy.

‘[The revelation] is going to change the whole dynamic. We expect to see people going for the option of regularising their affairs once they realise the risk of being exposed is high. Better to own up than be found out.

Options for regularisation include the Liechtenstein Disclosure Facility, which allows Britons to bring money onshore via Liechtenstein; a UK-Swiss tax deal; and no doubt other similar agreements which will soon be made with low tax jurisdictions.
BUT AREN’T THERE always more places for people to go to hide their money? ‘The world is finite and the pressure is growing. The demands of FATCA are high; once that’s in place, the pressure to do similar styles of agreement increases.’ FATCA is an American law aimed at recovering tax on non-US accounts.

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Read more: The Guardian’s tax scoop tars all HNWs with the same brush

If HNWs do want to hide their money still, ‘that comes down to Singapore, Singapore and Singapore. The Singapore government is so draconian with those who break its laws.’

Murphy suggested that the Guardian’s stories should lead to prosecutions: ‘I expect the information to be handed over to the tax authorities; if it isn’t, the journalists won’t have complied with the rules on money-laundering.’

Today represents another victory for Murphy’s cause of tax openness: ‘We haven’t won the war yet, but are we wining battles? Yes we are. Will there be new odd skirmish where the lawyers get the upper hand? Yes. But the trajectory is to go towards openness.’

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