The Spider's Web: Britain's Second Empire (Documentary)
The. British soldier. All. Around, the globe you'll find him from, Gibraltar to Hong Kong. Everywhere. He, stands, against the threatening, years, staunch. Symbol, of our common, will to order. The. British Empire. The. Largest empire of the world has ever known. For. Over 300, years Britain, ruled its, army is conquered, and, its bankers, proclaimed, the might of its currency. But. One day it all began to fall apart, one. By one countries, declared their independence from, Britain and no. Amount of force could reverse the tide. As. British elites saw their wealth privileges. And Empire disintegrate, they. Began to search for a new role in a changing, world and they, found one in finance. This, is a film about how Britain transformed, from a colonial power to. A modern financial, power and how, this transformation. Has shaped the world we live in. In. The days of the British Empire the City of London was the world's, biggest global, financial, center. The. City of London was the kind of beating financial, heart of the British Empire for, historians Kane and Hopkins called it the governor of the imperial, engine all, these countries in the Empire used. To use the sterling currency, and the City of London was kind of the. Financier, of this so not just inside the sterling zone but outside the sterling zone as well as. Britain's, Empire declined. So. Too did, the City of London, one. British Army truck is bombed killing two soldiers and wounding, 12 as. Rioting. Becomes daily more widespread on Cyprus, young people of high-school age take, an increasing, part in the violence, here, a group of girls are being dispersed, after a rock-throwing battle, with British military police. With, the decline of Empire British. Commercial, interests, across the globe were under threat in. 1956. Egypt. Nationalized the, Suez Canal a. New. Middle East crisis, arises as, President, Nasser of Egypt tells, a wildly cheering crowd in Alexandria, that. Egypt has seized the internationally. Owned Suez, Canal. France. And Britain issue a 12-hour ultimatum, within. Hours of its exploration Britain's, warplanes, are winging their way to Egypt and its bombers attack five key cities including, Cairo. The. United States was opposed, to the invasion and put. Pressure on Britain and France to withdraw their troops. No. United, States involvement, in these present, hostilities, it. Is our open intent this. Matter will be brought before the United Nations General Assembly, there. The, opinion, of the world can be brought to bear in our quest for a just end to. This tormenting, problem. Britain. Was humiliated. The. Suez Crisis signified, the end of Britain's role as one of the world's major powers. Following. The crisis, there was a run, on the, Sterling. On the UK pound, some. People suspect. That the American, government was. Encouraging. This Romany a UK bound. As. Finances. Withdrew, their money from Britain the, value of the pound decreased. To. Protect the value of the pound Britain. Limited, the banks overseas, lending, they. Were not able, to, invest abroad and, obviously. They were unhappy and, we don't exactly dig context. But it's, very clear the banks or their representative. Made. A presentation, to the Bank of England which in itself was, dominated. By, representing. From the banking in the strain it, seems. That they have reached. An agreement. Which. Was. Never written that if, the banks. Intermediated. Between two non-residents. In. A foreign currency in that case dollar that, this particular. Intermediation. This, particular bill, will. Not be considered. By the Bank of England, under its own jurisdiction. The. Banks began to create a market, for dollars in London called, the London euro dollar market. To, differentiate, these euro market, activities, from their domestic, banking activities, banks.
Kept Two sets of accounts. The. Bank of England the UK regulator, declared. That the London Europe market accounts, were not in London they, were elsewhere. And therefore. It had no responsibility. For regulating them. It's. About providing, a legal, space in. Which you pretend, activity. Is taking place and. The importance, of that is that you pretend, it's not taking place in. The economy, where it really is taking place so, you're taking activity, from the place where it's regulated, and text and pretending. That it's happening elsewhere, now. Where doesn't. Really matter it's just elsewhere. When. American, banks realized that London offered the ability to avoid US regulations, they. Moved their international, operations, to the city. Around. The same time as American banks were moving their international, operations, to London, another. New kind of financial space began to emerge far. Away from London in, Britain's overseas, jurisdictions. The, last remnants, of empire. Back. In the 60s the Cayman Islands was a complete, backwater, the, stories, go that, mosquitoes. Were so thick in the air sometimes, they're enough to suffocate, cows that's, a legend that you hear about Cayman Islands I don't know how true it was but, it was there was nothing happening that accountants. And lawyers from London arrived in the Cayman Islands and other British dependencies. And began. To draft a set of financial secrecy, laws and regulations. Because. These jurisdictions. Main selling point was secrecy, they. Were called secrecy. Jurisdictions. What. The Cayman Islands was doing was, straightforwardly. Illegal, activity, drugs. Money was coming in in huge quantities. Tax. Evasion, whatever whatever you wanted you could have it. The. Bank of England was observing, the developments, from London and noted. In a report marked, secret dated. 11th of April 1969. We. Need to be quite sure that, the possible proliferation. Of trust companies, banks, etc which. In most cases would, be no more than brass plates manipulating. Assets outside the islands does, not get out of hand. There. Is of course no, objection. To their providing, boltholes, for non-residents. But. We need to be sure that in so doing opportunities. Are not created, for the transfer, of UK capital, to the non Sterling, area outside, UK rules. These. Small, territories, the last remnants, of the British Empire which are still overseas territories, today they are still the last remnants of the British Empire, there. Are 14, of these overseas territories, seven of them are bona, fide a tax, havens including the Cayman Islands Bermuda, the. British Virgin Islands. Some, of the biggest tax havens in the world today are still British. With. Access, to large amounts of offshore money the, euro market, grew rapidly. By. 1980, it had reached 500. Billion dollars, by. 1988. Four. Point eight trillion dollars, and by. 1997. Nearly, 90 percent of all international, loans, were, made through this market. The. British Empire had sunk leaving, hardly, a trace behind, but. The City of London adapted. And survived. The, City of London London's. Financial district. Is a peculiar. Place. It. Has been called the city within a city a state. Within a state it. Is run by an organization called, the City of London Corporation a. Private. Company that performs, all the functions of a local council, with, a private police force and private. Courts those. Of you who aren't from the UK some of you even who are might. Not be aware just, how weird a thing the. Little city of London is, within, the big city the big London, the, city of London is a. Separate. Entity to, the. Wider, London. And it, has its own head, the Lord Mayor he's distinct, from the mayor who. Runs, the rest of London. Every. November the city stages, the Lord Mayor's Show the. World's oldest, civic procession. The, City of London has long had this curious, legal status, because. Back. In 1066, when, William the Conqueror came over the, city was one, of the only portions of England that he failed to conquer and he, struck a deal with the city in 1067, that allowed them to continue functional. To. This day the, City of London is exempt, from numerous, laws that govern the rest of Britain. Its. Political system derives, from the Middle Ages the. City's electorate, is dominated, not by its residents but. By the private, businesses, operating, within the city. It's. Lord Mayor is selected, by the heads of medieval, guilds. They, have a, representative, in the House of Commons called. The, remembrancer, apart, from the clerks of the court of the Kazakh honest he's the only unelected, person they're all, other lobbyists.
Have To stop you know in the lobby they're not allowed past the lobby the. City of London has a permanent representative. In the House of Commons whose. Role is to report back to the City of London Corporation and. To. Lobby Parliament, on behalf, of the city. The. Corporation, of London clearly. It's. A uniquely. Unique, and interesting, phenomenon. That should, have attracted. Many. Political scientists, vertical column is an economist. But. I don't know of anyone, who has studied. Systematically. The corporation London in this impact, on, policy. Or. Economic. Policy. So. We can only surmise. Some. People. Assume. Or, surmise, that the corporation London is extremely, powerful, and. Is able in one way or another to shape. British. Policy, particularly, within financial, matters climate, Lee the Prime Minister after the second world war, had. Had something to say about the steeple on the corporation, he did yes, so. Over and over again we have seen that there is in this country another, power than that which has its seat at Westminster. The. City of London a convenient, term for a collection of financial, interests, is able. To assert itself against, the government, of the country those. Who control money can, pursue a policy at home and abroad, contrary. To that which has been decided, by the people. At, the heart of the City of London stands, the Bank of England the. Bank of England is not just a central bank it, is also a financial, regulator. At. The demise of Empire the. Bank of England used this Regulatory Authority to, help attract the world's banks, to London. In. 1972. The. Bank of England issued a license to the bank of credit and commerce international, which. Set up its head office in London. Within. 10 years, BCC, I grew, into the seventh largest bank, in the world ten. Years later, BCCI. Was, bankrupt. The. Deputy, director of the CIA Richard. Kerr said, late today that the CIA did, use, BCCI. To. Support, CIA, activities, overseas. But. BCCI, had not just collaborated. With the world's intelligence, services, it. Had also engaged, in extensive financial. Fraud money. Laundering and, terrorist. Financing. BCCI. Was, financing. Terrorism the Bank of England Hewitt says the report but, instead of supervising. It properly it tried to prevent the bank's collapse I am, saying very directly, that the Bank of England, had.
Sufficient. Information, in front of it to, close BCCI. 15. Months earlier than it did but, millions of depositors, were hurt in that process. Numerous. Whistleblowers. From BCC I had contacted, the Bank of England yet. The Bank of England did, nothing. The. Bank of England had plenty of time to, intervene. And investigate. But, it did not do so because the, tradition, at that time which, still survives, is that a while actually you, know you have to just kind. Of send hints, and talk, over lunch tables, with the chaps regulating. Other chaps and all, would be well. Robin. Lee Pemberton, the governor of the Bank of England at the time of the collapse of BCC, I commented. The. Present system of supervision, has served the community well, if we. Close down a bank every time he found an incidence of fraud it. Would have rather fewer banks than we do at the moment. London. Was a place for banks to engage in business that was not allowed elsewhere. Where. Senior bankers did not have to worry about the consequences, of their actions. This. Is one of the reasons why today there, are more banks, in London than. In any other financial, centre. In. Britain nobody, goes to jail no bankers go to Charlie generally don't they. Are a protected, species and, that is part of the offshore business model of the UK is to say we, will protect you we will bring your money here we will look after you we're, not gonna put you in prison we'll let you do what you want. Light. Touch regulation was, one way of attracting business to London another. Was, secrecy. From. The 1960s. Onwards City, of London institutions, began to establish offshore. Branches, in former outposts, of the British Empire their. Aim was to create offshore, centres with strong secrecy, legislation, in, order to attract capital from, across the globe. Swiss. Banking secrecy is the most famous most well-known you know put the money in Swiss bank and they won't they promise not to tell anybody and that's. One kind of secrecy but another kind of secrecy, which, is very British is the, trust and. The trust is a very slippery. Complicated. And devious. Mechanism. Trust's. Emerge, the legend has it from the time of the Crusades when the Knights would go from frightened foreign lands and they would leave their assets, in, the care of trusted, stewards, what. Trusts, do ultimately. Is they play with the concept of ownership ownership, is not such a simple thing so. The. Settle or the Knights in this case would. Hand over the assets to. Someone. Who these. Days would be called a trustee, it's often a lawyer legally. You are separated, from those assets they're not yours anymore there's a barrier you, can't. Be taxed on them you can't be nobody's, going to find anything about your connection, to these assets. In. Britain's offshore, jurisdictions. No. Qualifications. Are necessary, to be a trustee. Anyone. Can set up a trust and act as a trustee, there. Is no registry, of trusts, there. Are no bodies to certify, that a trust has been set up. The. Only persons who know about the creation, of this Agreement, are the. Trustee, and the settler there's no obligation, to, register, it there, is no financial, reporting. Obligation. Of trusts. They are not required to put annual statements, on. To account, anywhere, so, actually, trusts, up to. Intents and purposes invisible. Arrangements. Economist. John Kristensen was, an economic, adviser to the secrecy jurisdiction. Of jersey for ten years we're. Not talking about a few million, we're. Talking now about trillions. Trillions. Of dollars of capital which, apparently belong to nobody for. Tax purposes and father purposes, they belong to nobody, everything. Works, of Arts gold bullion, horse. Racehorses. Real. Estate not, just financial, assets but a whole load of non-financial. Assets belong. To these trusts. Sitting. There belonging, to nobody, now. Think that one's through but, we are talking, about maybe. As much as fifty trillion dollars of, assets, sitting. Offshore behind. These instruments, well. The Cayman Islands are among several British overseas territories. Who have signed a new information, exchange agreement, with Britain and the rest of Europe to, tackle tax evasion, the, countries are now, required, to automatically, provide details, of the ownership of bank accounts and how, they're used, Cayman, became the first signatory, last week it's, important, that the Cayman Islands should be recognized, as, the first overseas, territory.
To, Sign such an agreement with the United Kingdom and. I think this importantly. Reflects, the constructive. Approach that, the Cayman Islands has taken, in, delivering. Our shared, objective. Of rooting, out tax, evasion. The. Trust, light of the core of the British secrecy, model they don't use banking, secrecy the, Swiss use banking secrecy the, British of course are only too willing to kill a banking, secrecy because, they will and capture a larger market share that's, why the Brits are doing this. Trusts. Are the basic building block of anglo-saxon. Secrecy, and they, form the basis from which complex, offshore structures, are created, every. Secrecy. Jurisdiction, offers a specific, set of services, from. Trusts, to shell companies, to secret bank accounts, and nominee, directors. The. Combination, of these services, into complex structures, spanning. Multiple jurisdictions. Enables. The creation of secrecy structures, that are almost impossible to, penetrate. An. Offshore, structure will, often. Have a trust kind of sitting at the top of it the, trust will be here managing, the assets kind of controlling, their assets, underneath. It the trust will own, some. Shell companies, each. One might be in a different jurisdiction might, have a trust in one jurisdiction whose. Trustees, are somewhere else whose. Beneficiaries, are somewhere else which, owns offshore. Companies, somewhere, else each of these companies might. Then own assets, so that we might own you know a bank account for. Racehorses, a yacht are painting, a portfolio. Shares or whatever. There. Are numerous variations of, trusts, and offshore secrecy, structures. There. Are offshore, lawyers, whose work entails, the creation, of ever more complex, and obscure structures. The. Aim of these structures, is to hide the identity of the owners of offshore assets and allow, offshore wealth, to, be recycled back into global, markets. On. The amount of money, being. Administrated. From, tax. Havens. You. See that the DISA curve going like this and all. The talking we have been doing along with other wonderful. People fighting, against, tax havens has, not changed anything you know it is the word where you say, go on talking and go on talking you're interesting, me and I'm going on doing, what I want to do we, know everything, today because we have had the Panama papers we, have seen it and we are, not able, to act, upon, it and. We. Are not able to act upon it because. This. System is really protecting. The. Few people that, are having. Benefit, from it and. These. Are in person. Takes very few people but they are powerful, and I. See, in the Panama, committee. That I'm sitting, in the, only thing that. Could change this is. To have a public. Accessible. Register. Of, the beneficial, ownership, of. Trusts. And of. All kind of companies, it is easy. The. Panama papers are, a collection of leaks from the offshore law firm mossack fonseca. Mossack. Fonseca, is the fourth largest offshore, law, firm the. Other nine of the ten largest offshore law firms are registered, in British overseas, jurisdictions. When. Countries complain, to Britain about the activities, run out of its offshore havens, Britain. Claims that these places are independent. And that, there is nothing it can do I've. Heard time and time again from, officials, in Berlin, and, in Paris, and Washington. And in other countries that they've, been told by the British government. Yes. They are well aware of what's going on in Jersey and they think it's very unfortunate, but they don't, have the powers to intervene well. That's a straightforward Ally, they. Do have the powers to intervene they just choose not to. Britain. Plays this kind of game of. Pretending. When, it suits them to pretend that these places are independent. At. The end of the day Britain, appoints. The governor appoints.
Lots, Of senior. People in these places they're. Responsible, for Foreign Relations and, defence and also they can veto their legislation, as well so Britain has, a massive degree, of control basically, it is controlling, these places allowing, them a little bit of political space. During. His time as economic, adviser to Jersey John. Christensen, frequently, traveled to London for talks with various, British government departments. As. Economic, adviser I had. A lot of contact, with different. Departments. Traditionally. UK. Governments have tried not to interfere in the domestic affairs of, places like Jersey so happens are more subtle sort of way you can go and talk to someone either, the Home Office or the Treasury and, they say we're not actually particularly, keen on this piece of legislation it. Might be a good idea if you didn't. Go down that route, and. Over a cup of tea that's quite a strong signal that's a signal go back to the island and safe they don't want you to do this. The. British government prefers, not to interfere, overtly. Instead. It communicates, its desires through informal. Discussions, there. Is no paper trail or official, statement, discussions. Take place behind, closed, doors. The. Relationship, so these places have with London is is very, much, about. The British establishment, and people understanding, each other I mean anybody, who knows who is British will knows British. British people knows, that communication. Between us is often. Very subtle and, you. Have to kind of know. The. Codes when. People say stuff I mean a lot of irony involved, and a, lot, of kind. Of codified, language, the, British establishment, that, people. Kind of understand, how it works and, I. Think that, is very much the case with the, British relationship, with the tax havens I think there's a lot of, understanding. Of what we can and can't do without anyone, having to actually spell, it out. By. Keeping its power hidden Britain. Is able to claim that these jurisdictions. Are politically, autonomous. Independence. Fork a man is not in government's, agenda that's, the message being sent to the UN Special Committee on decolonization. Attorney. Steve McPhee will be representing, government at the UN meeting the, committee was set up to help colonies, around the world on the road to independence but. Mr. McFeely says he'll, be making it clear that Kaman is not ready for that transition, I'm. Not messages done the. Premier his, cabinet, his party. Has. No mandate from, the people of the Cayman Islands to seek independence. That is the message that will be carrying. When. The bahamas declared independence, from britain in 1967. The. Offshore bankers, relocated. To the cayman islands and continued. Their business from there. It. Was the British connection that. Reassured, bankers, and their clients, that their money was safe. This. British, bedrock, that is what has allowed these places to become so trusted, by the financial, services industry and. Offshore, finance, and all these people. In. Reality, much. Of the wealth administered, in Britain's offshore, havens is controlled, from London, the. City of London by a large likes to do it's really dirty work, outside. London, they, might happen, forbid Br. A regulator that she takes the job seriously and. Starts to prosecute them for fraud in. London so, better to do the forwards off showing Gibraltar. Or Jersey, where. There's much less risk that a serious, prosecution. Lever happen. Deals, are often discussed and concluded, in London but, then registered, offshore, for, tax transparency, and, regulatory, purposes. What. They allow the, city to do is to get involved, in dirty business but then, when the scandal hits, to. Say well, they're kind of independent. There's nothing we can do about those places that's nuts not ask that's that's tax haven activity, and where the city you know we're, not involved in that kind of stuff so, it's an incredibly, kind of convenient, relationship. The. City of London has. Shaped, the. The. Way in which Jersey. Guernsey, and, the British. Overseas territories. Have, developed, as tax. Havens. Isis. I see these places as the Frankenstein, was created, by by.
The City of London. Today. The. UK is the world's largest provider, of international, financial services, the UK. Has an almost unique, role in global finance, and if. You look at data. The. Kind of data that we've constructed in the financial secrecy index you. Can see the relative shares, of, each country, in the. Global provision. Of financial services. Exports. That's financial, services to non-residents, now. There, are two big centers. And everything. Else is quite small in comparison, the. Two large centers, are, the United States with, around 19%, of, the global market and the. United Kingdom and its offshore jurisdictions. Which, have around 25, percent of the global market and if, you add to that. Other. Jurisdictions. Ex-colonies. But. Recently, dependent, fairly recently, by. Which I mean Hong Kong, Singapore. Maybe. Even Dubai and Bahrain and. Cyprus. Then. You reach the figure of nearly 40 percent and, I. Think that figure represents, better. The. Position, of London, in a global financial market. The, soldiers left that the administrators, left all the colonies but they. Still kept a significant. Degree of control over the financial, flows from these former. The. Former parts. Of empire in the rest of the world so you could describe it as a Second Empire, Britain's. Second Empire sort, of hidden financial, empire spanning. Large, parts of the globe. At. The time of the British Empire the, city of London was the world's largest global financial, center. Not. Only Britain's colonies, but, also independent. Countries, did their banking, in London and used, the Empire's currency, for trade and financing, as. The. Empire declined, so. Too did, the City of London the. Establishment, of a London euro market, enabled. City of London banks to continue to exploit their empire, error networks, and expertise, and the. Creation of secrecy jurisdictions. Gave, banks, access, to large amounts of cheap money. International. Banks from across the globe set, up branches in London, and Britain's offshore, jurisdictions. In order, to take advantage of this new system. This. System has, taken the place of the. Occupation. I mean. Up, till 62. For. France I don't know for England at about the same time England. Very physically, present in India. For instance or in and, other. Colonies. And when. You look at the, money, flows through. The tax, havens they. Are increasing. When we withdraw from, the colonies. We. Are. Still plundering, developing, countries, as former. Colonial powers. Wealthy. Individuals. Organized. Crime and corporations. Shifted. Their wealth offshore, in exchange, for secrecy, and no, tax and, as. Countries around the world began to deregulate, and open their economies, it, became ever easier, to do so. Today. As much as half of all global offshore, wealth may, be hidden in Britain's secrecy, jurisdictions. One. Of the losers is Africa. Whose, flight capital, flows mostly into the modern British spider's. Web I. Think. It's no coincidence that. Britain's, offshore. Empire. Have. Mostly more or less at the same time as. Collapse, of the formal Empire we. Tend to think of Africa as being a huge, net. Debtor to the rest of the world but. That was. The extent of their debts at the end of 2008. 177. Billion the. Debt of sub-saharan. African, nations stood, at a hundred and seventy seven billion, dollars in 2008. Yet. The wealth these country's elites had moved offshore between. 1970. And 2008. Is estimated. At, 944. Billion, dollars over. Five times their foreign debt.
Nine. Hundred and forty four billion, dollars. Do. The maths far. From being a net debtor. Africa. Sub-saharan, Africa. Is a net creditor. To the rest of world as. Capital. Moved offshore. African. Nations borrowed, money from international, banks at high interest, over. Time, these, debts became so great that, they may never be repaid. Secrecy. Jurisdictions. Were starving, developing, nations of their wealth and their tax revenues. For. A long time a lot of developing countries, fluting recently, ecuador have been trying to set up a UN tax. Body which, is of a higher value, than what is currently there which is the UN Tax Committee and every. Time this has happened it has gotten blocked, during. The financing, for development process. In addis ababa last year I. Think it was the UK, and the u.s. that blocked attempts, again to set up this world's. Tax organization, so. Why. Would they not want to have democratic. Decision-making. In. Global. Decisions, on, how tax gets collected across borders I don't, understand, this as long as we have cross-border, activity, that involves both, criminal, and legal activity, as long as we're unable to separate, the two this is going to continue to be a problem. Western. Nations block attempts, to provide greater transparency, of international, financial flows and the, implementation. Of global, standards, for the collection of tax across borders. Whilst. Elites, in developing, nations use, offshore centers, to, hide their wealth offshore. The. Oil from Gabon has, not been affected, people, in Gabon and, this. Is true for the copper in Zambia. For the for, the, gold. In Mozambique. Or in Mali, they. Have been affected, they. Company. That to extract, it and their. Shareholders. It. Has benefited, the corrupt elite, in the country, in developing, countries. The. Offshore system, of tax havens has, facilitated. The looting, of these countries by their elites. It. Has enabled them to steal, the money and keep it safe somewhere else illicit, financial flows, because. The. Anonymity that drives them creates. Incentives. For people in positions of power to. Be corrupt this is why there's, a group of countries where development. Progress is so difficult, it's. That. The incentives, of individuals, and, ability to pursue, them through. All the mechanisms, that underpin illicit flows our. Way, the. Type of mechanisms. That in that leads you to a powerful. Representative. Effective. State that, can start to doubt the development. Worldwide. Developing. Countries lose over a trillion dollars every, year in capital, flight and tax evasion. Most. Of this wealth flows into large Western, nations like, the United States and Britain and enables. Their currencies, to stay strong whilst. Developing nations currencies, remain, weak. But. Illicit, flows into, Western nations, also, had another unexpected. Side, effect, the. Economies, of the United, States and Britain began. To financial, eyes, the. Origins, of this financialization. Or deindustrialization. Go. Back to the 1960s. And, he, wore demonstrators. Protest, u.s. involvement in. The Vietnam War, in, mass marches, rallies, and demonstrations. President. Johnson meanwhile, let it be known that the FBI, is post, Lee watching all anti-war. Activity, in the. 1960s. US, economist, Michael Hudson was, working at Chase Manhattan Bank on Wall Street as. Chases balance-of-payments economist. During. The 1960's, the United States, balance.
Of Payments deficit was, entirely. A result of foreign military expenditures. Dollars. Were flowing out of the United States as a result of the cost of the Vietnam War, the. United States attempted, to prevent the dollars flowing to Vietnam from, being deposited in foreign, banks, the. Government asked Chase to set up a branch in Saigon, during. The Vietnam War as, you can imagine it didn't have windows, was sort of a fortress it, lost money but, the government went. To chase because it said if you don't get, this money. That's being thrown off by the military, in Vietnam, then, it's going to go into French banks, it'll get the general to go and you know what he's gonna do every month he's gonna cash it in for gold that's, what the United States was trying to stop. The. US was not successful. In stopping the outflow, of money so. It began to hatch a different, plan in. 1967. Michael, Hudson was handed a memo by a former, State Department employee, in. 1967. I, was, given by a former, State Department employee in. The elevator the Chase Manhattan a, memo. From, the State Department, urging, the Chase Manhattan would, take, the lead in, helping, the, United States become, the, Switzerland of the world meaning the flight capital, the State Department, through, Chase asked. Me to estimate, how much money do, you think is available if America. Were to become the new Switzerland, and how, do we do it the, plan was to organize offshore, banking, centers in, the Caribbean and elsewhere and the, hot money wouldn't come directly, into Chase because, that wouldn't be nice. And very legal what happened was that the. Latin. American criminals other criminals, drug, dealers all, sorts of organized, crime would, put their money in the, offshore, Caribbean. Banks, and these offshore banks, would, then, deposit. The inflow, in the, head office. By. Moving offshore dollars, back into the United States the, US was able to stop the outflow of dollars and support. The value of its currency. Every. Country looks to a foreign exchange rate and the. Foreign, exchange rate is not only imports, and exports its. Capital, movements, and, if you look at the International, Monetary Fund's, monthly. International. Financial statistics, you. Have sort of a steady balance of trade a steady, immigrants, remittances, what, goes up and down are called errors and omissions what. The United Nations and the IMF call errors and omissions are, flight, capital, it's the the, reason that it's submitted is they. Don't like to really look at this in, the 1930s. Roy. Ovid Hall economist. For the US Commerce, Department wanted. To include, criminal. Movements. In the balance of payment statistics, and Congress. Got very upset I I. Was told in Washington, the cut the argument. Was we're a Christian country we don't want to report crime it's just don't look at it and. They, forbid. Him to, include. Criminal. Money in the balance of payments I guess now you call it errors and omissions you, don't call it criminal, inflow and outflow. In the 1960s. And 70s, Britain. Was faced with a similar dilemma as, the United States money. Was flowing out and this, decreased, the value of the pound. Britain. Realized, that eight to could support the value of its currency by. Opening its domestic markets, to the trillions, of dollars passing.
Through Its offshore havens. But. Just, as in the United States this. Had an unexpected. Side effect the British, banks today. Just. As in the 19th century don't, put their money into, our British manufacturing. They put their money into, real estate speculation. Into financial, speculation foreign. Currency, trade, so. The. Financialization. Of London has, helped. De-industrialized. The country because it's enabled, sterling. To, be supported, by this huge inflow, of hot money this, inflow, of drug-dealing. Money and criminal, money and tax. Evasion money, all over the world that. Is going to London instead, of going to Switzerland Liechtenstein. Or. The Caribbean. With. The silent backing of the United States, Britain's. Offshore, havens, grew rapidly and before. Long the, offshore system, developed, into the world's dominant international. Financial market. Few. Were aware how this market functioned, in. 1986. Economist. John Kristensen, went offshore to, investigate, he. Applied for a position at the Jersey office of one of the world's major accounting. Firms but. Deloitte and Touche was, and I was working on what's called company, and trust administration, straightforward. Optional, stuff I went. Off short specifically. To work in that area because that's why you're dealing with the, offshore companies, the shell companies, the offshore trusts, and you're administering them, that, way I could I could see from, working inside a big. Global accounting. Firm exactly. What the clients, were doing I had. Complete, access, to all the, client files and. Over the course of my period of working with Deloitte - Sh I. Investigated. Over a hundred, of their clients, offshore, and this. Is what I found. There. Were some insider traders, some market rigging some avoiding, disclosure of conflicts of interest illicit, arms trading illicit political campaign donations, contract. Kickbacks, bribery, fraudulent, invoicing, trade mispricing, and, at the bottom tax evasion. Okay. This. Is. What the clients were doing. The. Basis of a sample, of the clients I looked at not, a single client was involved in but I would regard as genuinely, legitimate. Activity, they were all, involved. In some kind of tax dodging, or. Worse. I met. With the car, leaving used, to be an American senator. And. He made a lot of inquiries, into. Private, banking, asking, questions. To the bankers, what. Do you think the, percentage is among. Your clients that. Are using this, companies. For, legitimate. Purposes and. The. Answer, was I believe, that. 99.9. Percent, of my clients are, using these companies for illicit, purposes. This. Is a, reality, this, is American. Bankers telling what they are doing and. It's exactly, the same thing with. UK. Bankers. Helping. Their client, to have an account in Panama or, in. Bermuda. Or in Cayman Islands. Secrecy. Jurisdictions, are heavily used for fraudulent and gray area financial, activities. Areas. Where secrecy, is not just desirable, but, a necessity. Legitimate. Financial activity, has, no need for the secrecy of shore havens provide, nor. A desire, to pay the high fees of shore banks and law firms charge. Today. Close. To half of the world's secrecy, jurisdictions, are British, dependencies. In. Public. These, jurisdictions. Claim they are transparent. And their, financial services, sectors are engaged in legitimate financial, activities. Our. Economy, is not based on secrecy it's. It's. Based on transparency it's. Based on a, sound. Regulatory. Environment, it's, based on good. Governance, and good government. With. A British. Government, legal. System that's what our financial. Institutions are, based on well. Tonight we have a response, from the head of command finance, after, a group, of us Bay's anti tax evasion activists, announced.
Plans To travel to k-man to draw attention to what they feel is corporate tax evasion finance. Chairman, mr. Richard Cole says he's encouraging, the group to visit and says our financial, sector has nothing, to hide I would. Say if anybody wants to come to k-man to find out what cut what's coming you know what we do here come, on down we. Have no secrets here. When. I went to the Cayman Islands back, in. 2008. I think it was I called. The government spokesman he said okay we have had an order from on high that nobody, is allowed to speak to you you are off-limits. In. 2011. Journalist. Nicholas Jackson, released Treasure, Island's, a groundbreaking. Book about the offshore system, the. Author of a series of international, media reports says he would welcome a debate with Cayman finance, chair Tony Travers mr.. Travers recently, called Nicholas, Jackson, an imbecile, with the understanding, of enough of an 11-year. Old they're always going, to be the politics, of envy and, the politics. Of envy are exacerbated. By. Imbeciles. Who don't actually understand, what's going on in the Cayman Islands I don't know what he's talking about and furthermore, he doesn't know what he's talking about. The. Cayman Islands is the fifth largest financial. Center in the world it. Hosts. 80,000. Registered, companies, over. Three-quarters, of the world's hedge funds and one. Point nine trillion, dollars, in deposits, it, has. A population, of, 60,000. Roughly. Equivalent to New York's homeless population. A. Strange. Mixture, of characters, populate, the offshore world, British. X Pollock schoolboys. Members. Of the world's intelligence, services, global. Criminals, assorted. Lords and ladies and, bankers. Galore. With. So much at stake for so many wealthy and powerful individuals. It, may come as no surprise that, Britain's, offshore, havens, have developed their own curious. Mechanisms, to, prevent information, from leaking out. For. Many people who. Work offshore and. You, don't like what, they're doing it's. Very hard, indeed to dissent, because, they will be attacked personally with, a degree of viciousness, which. Is quite extraordinary. Most. Of the time that the instruments, of suppression are relatively. Sophisticated. You. Won't get promotion, by doing this or, your. Family won't. Like it. It's. Not generally, let's, slam them in prison that's far too crude, we are talking about very. Substantially, you know the establishment, the British establishment, in these cases that the mechanisms, are very very subtle, sort, of ostracism, is is one, way of doing it these. Peculiar. Mechanisms. For you know if someone, tries to blow, the whistle you find all sorts of methods that aren't they. Might you know just fire them you give, them far too much work to do you steer them in a different direction. One, person who is intimately, familiar with how suppression, works offshore his. Former, Jersey senator and health minister Stuart sivori. In. 2009. He, leaked a report on a rogue nurse suspected. Of killing patients at jerzees Hospital, it. All came to a head during a state's debate on Tuesday, the 10th of March Senator, Stewart sivori brought the sitting to a standstill, claiming. Sanity Jimmy per-shot, had sworn at him and told him to go and top himself further. Per-shot, denied, the claim saying I absolutely, refuse. But less than a week later he, was forced, to admit he'd lied senator, Persaud has now admitted this, on another occasion he did tell senator Stewart's livery to go and do everyone, a favor and, slit, his wrists, I was.
Arrested. At my house one morning by. Six. Plainclothes. Police officers, there were another two specialist, data. Search police officers, on hand, and also another two police officers in full body armor on those battering, rams they can't be using drugs raids so. 10 police, officers descended, on me without a without. A search warrant, the property, was turned over from top to bottom all. The computers, were seized and searched all, kinds, of private, constituency. Data was stolen by the police. Shortly. After we began filming a police. Officer, exited, the police station as he. Hurried past he. Grinned at the camera. The. Officer was on his way to test, the sirens on his motorbike which. He did at intervals, throughout much of the remainder of the interview when. It came to cross speaking. The. Stewart's of Ray was prosecuted. Under the days of protection, law. When. The authorities, were prosecuting. Me I claimed, that this was a legitimate Public. Interest Disclosure defense. And I with, an expert witness was able to produce a set of reports of effects we destroyed. In. Reaction, to this the. Magistrates ruled that Stewart's if Ray's defense case that, he had leaked the report in the public interest would. No longer be admissible. But. Continued, to prosecute, him all the same without. A defense case. Over. The past seven years Jewett's, of Ray has been repeatedly, taken, to court and imprisoned. Three times. He. Does not know when or if the, persecution, will end nor. Does he know when he will find himself behind bars again. To. Look at Jersey from the outside looks, like it's got a prosecution, system, looks like it's got a court and. A knows the job but. None, of its real it's a Potemkin, village none. Of these systems. In Jersey meet the tests, of being. Objective. Of. Being objective, who actually functioning. Properly the, experience, that Stuart, shivery had, is you. Know good he's, perhaps at there at the blunt written to the models of the scale, you know he, was simply suppressed. And. Taken to court on, trumped-up charges. This, is the kind of this is kind of how oppression, happens in JCCC all. Kinds of little things, get. Done to harass people you, know even, they don't often go to the kinds of extremes that they did against me interns actually arresting and putting me in prison but uh the. Authorities use all kinds, of other, lesser. Little. Methods. To interfere. With people kind of sabotage, things you know, instruct. People make life difficult for people you, know if you annoy the establishments, in Jersey, you won't get a job here you know you you know your children won't get decent jobs you know that's kind of how it works now I. Went. To church in March, 2009, with was Nick Jackson but. 24, hours after, we arrived in Jersey we were there for several days and, accepted did you know that have you noticed that were being followed there, since we arrived in at, the airport we've. Been followed, so, don't look now but we're. Being followed now, turns. Out he was quite correct we were being followed and. I found that very. Disturbing. Very, disturbing, indeed. They. Have a saying in Jersey if you. Don't like it here there's. Always a boat in the morning. Jersey. Finance promotional, literature States, Jersey. Represents. An extension, of the City of London, it's. Where the City of London chooses, to do many, of the activities which they couldn't do in London itself. We're. Here just talk about this one comedy called Appleby I just read what they say on their website members. Of the firm Appleby, have gone on not only to political office but.
Also In. A number of centers bermuda, jersey, the Isle of Man and the Cayman Islands to senior judicial office. So. Essentially they're, boasting, the fact that their staff and, their partners, have a real interchange, between the people that are in power in, these offshore financial centers. The. Same lawyers, and accountants, who set up an administer, offshore trusts, also. Occupy senior, political positions, in. Britain's. Offshore, world most. Politicians are, in business they. Lobby for business and promote, business, interests. The. Draft refine, and pass legislation. Politicians. Sit on the boards of the companies they are supposed to regulate. There. Is no place, for dirty. Money, in Britain. Indeed. There should be no place for dirty money anywhere. The. Challenge I'm laying down for every country today is to, root out the rot of corruption, to, ensure transparency over. What your own companies, are doing require. Transparency. For foreign companies in your country - and work. With us to spread this approach to transparency. Around the world. In. Public, British, politicians, claim they're cracking down on secrecy jurisdictions. And corruption, but. In practice they, do the opposite. Talk. To politicians in Brussels they, say that they've had more. Lobbyists. From. London. And. Including. Politicians. Attempting. To protect the City of London's interests, and they've had from every other European, Member State combined, which. Gives you some idea of the extent. To which British. Politicians, and see themselves as essentially lobbyists, for the City of London. We. Begin with our big story Caymans efforts to ensure transparency in, its financial services, sector is being recognized, by the international, community earlier. This week the UK's Prime Minister David Cameron told, Parliament that the tax haven label placed on its Crown Dependencies, and overseas, territories, is unfair. Many. British politicians. Have personal, and business ties with the City of London and British, secrecy, jurisdictions. Former. British Prime Minister David, Cameron's, father Ian Cameron, was, an expert in offshore, funds and was. Involved in offshore trusts, from the 1980s, onwards, but. This courthouse behind me here in st. Helier we, found this, it's, a document, called a grant of probate and it's attached to the English will of none, other than Ian Cameron David, Cameron's father. Ian. Cameron was certainly a wealthy man in 2009.
His Personal, fortune was estimated by researchers, for The Sunday Times Rich List at, 10 million pounds yet. When Ian Cameron died in 2010, his estate was much smaller than might be expected, just, 2.7, million pounds. In. Many cases it's the politicians, and their cronies and their families, and so on and the businesspeople who sponsor with their political parties who, are using. These offshore services, themselves so, so they've got no personal, interest in closing it down if they wanted to close it down they could do it tomorrow the fact the matter is they don't want to do it because, they themselves are complicit, with the process if. You come. From the same kind of background you know the right people then. All the kind of legal niceties and, will. Often fall away you can get away with doing all sorts of things that they wouldn't just let any old person you know he came knocking on the door saying can you set up an offshore company to do this they tell you to get lost but if. You're part of the networks you can you, can do these kinds of things so, that's a very important part of the part. Of the whole system upper, class British public. School kind of. Establishment. That, has been there since you, know for centuries. The. British establishment, an old boys network of. Privileged, elites had. Carved out a lucrative niche for themselves in, the offshore world after. The demise of Empire. They. Transformed. Themselves from administrators. Of empire into, financial, handlers, for the global elite and multinational. Corporations, as. More. Money flowed offshore. Societies. Around the globe began to feel the impact, of the offshore world. The. Reality is not what you, believe that. Your. Prime Minister has, the, power to, to. Decide on the future of your country the power, is hidden here. We. Have country, after country, around. The world where the lack of financial transparency, about. Taxation, about. Ownership, about corruption, has. Undermined, the, extent, to which government's deliver. Representative. Policymaking, for their citizens you. Know we have extreme cases like the. Hiding, of. Tax. Evasion by. People. In finance ministries, in Greece in France. But. We also have this system, that in general is geared towards. Anonymous. Company ownership the anonymous, ownership, of properties, across London, of half, of the land in Scotland you know do, we really think that any circumstances. In which governments. Work better in which markets, work better in, which the distribution, of income and assets is better when. We allow so, much to be hidden who, wants to not know who you're doing business with who, wants their government, to have, people. Working for it or to be led by people whose. Assets. Are hidden whose, financial transactions. Are. Conducted. Anonymously. Offshore, you, know this, is a bad. For, the world we, need the citizens to, understand, what is happening that they, are the ones who is carrying the burden and, that. Some. Individuals. Having, the power are. Exonerating. Themselves, ordinary. People are paying taxes. Rich. People are not so. This is. Inequality. And. It. Is leading up to populism. Because. It. Felt so clearly that the people, today leading the world are, not, able to take care, of the interests of ordinary people. Back, in the 60s and 70s you, know tax. Evasion, or pushing. Back against taxation it was kind of seen as anti-establishment. So, you know the Rolling Stones, and. Phil. Collins all these people kind of going offshore going. Away. It. Was seen as a sort of a rebellious, thing to do and if you fast-forward to the present day. Now. That. Is the establishment, the offshore system is the establishment. Today. Offshore. Is the way elites and multinational, corporations, conduct, their affairs, tax. Evasion, is the way business is done. This. Kind of sophisticated. Cheating. Requires. A huge, infrastructure. We. Like to talk about the Pinstripe, infrastructure. Of highly. Educated people who think, it is their right to help others to cheat societies. We. Have a new, mafia in town it does not actually shoot, people, who does not put bullets in their kneecaps but. Its trade is just as deadly, it, deprives, people of. Opportunities. To have health care education.
Security. Justice. And, essentially. A fulfilling. Life. Accountants. Form the backbone of the offshore system, they. Administer, the structures, that allow individuals, and corporations to shift their money offshore and, evade, taxes. There. Are about 2.5 million. Professionally. Qualified accountants. On this planet, about. 330,000. Are in the UK. Well-known, people, well-dressed, well-fed, highly, paid are sitting, in city centre offices, and they, are paid to dream up tax. Avoidance schemes for individuals, and for, corporations. We. Can all elect a government which. Says vote for us we will give you better health care better education. Better. Security, and next. Day accountant say sorry about that folks, you elected, this government, but we actually got a tax avoidance, scheme and, the Amazons, and the Google that Microsoft, saw won't be paying any taxes, in your jurisdiction too, bad you, voted for it but actually you're gonna get something else so, it's a crazy world that, part of the business model, of big accountancy, firms is how, to deny. Public, the services, by erosion of. Tax. Revenues, and these. Firms are then rewarded, with, government funded contracts, and, the same firms are then advising. Local. Governments. And the central governments and the same firms than report, on the company accounts, and tell us all as well when I argue, this with a Pricewaterhouse, partner, in a face-to-face debate is, it professor Sakai you never give us credit for anything, we, generate, millions, of dollars of revenues, and we have. Lots and lots of satisfied, clients, what is your problem. And. My response, is very simple, that's the language of drug pushers and pimps. In. Britain, a new, breed of civil, servant, was rising to the top, one. Such civil servant was Dave Hartnett, who rose to the top of HMRC, the, UK tax authority. Dave. Hartnett, had a new way of collecting, tax, deals. Would be negotiated. On an individual, basis behind, closed doors in. The, case of the largest clients, Dave, Hartnett, frequently, led the negotiations, himself. British. Telecom, was one of the first companies through the program and, received a refund of over 1 billion poms. BT's. Chief executive, Ben for van wrote earnings. Per share up, 14%, and, nice. To know that we have a 1 billion pound credit, from the taxman. Dave. Hartnett, claimed, this approach was more efficient. Litigation. In the courts is really phenomenally, expensive in. This day and age all over the world, and. I think is to be avoided where possible. And. The artists to persuade people to, pay by. Strength of argument, of the like. After. Protests, erupted, in 2011. The. Treasury select committee questions. Dave, Hartnett. Dave. Hart had claimed he, could not give any information due, to taxpayer, confidentiality. Instead. She prevents, you. For disclosing. Information to, Parliament, all, my advice mr. Barkley so far has been that, I, am.
Prevented. My colleagues are prevented. By. The act, and, by, the decisions of commissioners. Dave. Hutton had failed to mention that the legal advice he had received stated. That the disclosure, of information was. At the discretion of the head of HMRC. The. Head of HMRC, was, Dave Hartnett, himself. Just. Like the Mafia has penetrated the, state accountancy. Firms have also penetrated. The state at the head of anti-avoidance. In, the UK. Tax. Authority, is. From one of these firms. The. Newly. Appointed chairman, of Her Majesty's, Revenue and Customs which, is a tax authority, is a partner, from KPMG. Their. Partners, have penetrated, the state they, are running the Treasury. Britain's. Financial, services, industry, had penetrated the state and began. To shape its laws for. Its own benefit. The. Degree, of captured. Political capture, by. The city of London by the big banks and the big law firms is, so, enormous. That. The, politicians, have effectively become their, spokespersons. With. The government unwilling, to act in the interest of the public a group. Of protesters, confronted. Dave Hartman at a private event in Oxford. Fine, emissary. Things rough like. Females to decline here. Tonight, today. Is. The, Lifetime, Achievement Award. Services, to, corporate tax planning. Friends. In the industry a great friends and many of us over, the years and you, know really we just can't thank you enough all he's done obviously, it was a photo phone, you. Know it saved us billions of our. Tax bill, and our friends at Goldman Sachs as well we've also saved. You're. Trembling scum. After. His retirement Dave. Hartnett, moved to the private sector one. Of his positions, was at accountancy, firm Deloitte where. He advises foreign, governments, on corporate. Taxation. Dave. Hartnett, is a Companion, of the Order of the bath an honor. Bestowed on, him by the British monarch. We. Have former, our, Lea ministers, acting, as advisors. To accountancy. Firms accountancy. Firms to write jobs, and. Consultancies. For potential, ministers, to my mind really, it's an indication, of corrupt structures, people are buying and selling influences. When, in my former minister works for an accountancy, firm in still providing, any accounting, that knowledge, is opening. Political, opportunities. Home. And abroad that is what they are doing I hope by now you'll. Share my views that I don't trust most bankers and I trust most noise I don't trust most accounting, firms I actually think they're engaged in a conspiracy against, public interest. In. Britain, secrecy. And complexity, in finance, and government help, to obscure corruption, in public office, financial. Structures. Are often so complex, but, even after they are publicly revealed they, are not widely, recognized, for what they are an. Example. Of this is P fi the. Private, Finance Initiative. PFI. Is Private, Finance Initiative it is a way of funding, public infrastructure, things like hospitals. Schools. Roads. And bridges but financing. Them via the private sector rather than historical method which is via central, government over. A period of 30 or 40 years the. Amounts of colour of payment costs will be sort of three or four times higher overall. Than, if you borrowed it from the central government in the first place so, it's basically a giant accounting, skin. Once. The pfy policy, has been set up and you, find that. Big for accountancy, firms were. Actually, paid. Members of staff within the Treasury. Department, who, were then actually, going around and selling, an advising, upon. Imitate. Implementation. Of PFI contracts, by public, authorities. Effectively. Saying come, to us and we will show you how to derive the most benefit, from it in other words how to perhaps. Exploit, the, legislation. Even the, offices, of, the. State tax, authority, on our own offshore. HMRC. Which is the the tax collector, here, in the UK the. Offices, are owned. In. Bermuda. By. A company called make these dips it's. Quite informal. The. Company that owns the PFI, contract, to run HMRC's. Head office, borrowed. Money from offshore investors, at 15%. Interest. Because. The interest was so high the. Company was losing money. Therefore. It, did not pay tax in. 2011. HMRC. Could not prove that any, PFI, company, was paying any tax, in the UK I. Think. We'd have a serious conversation about the the, role of government in this, whole debacle and how. Much our government has been penetrated by, big. Banks and accountancy. Firms and ultimately. In whose interest it operates. The, reason we were protesting outside, the Africa PPP, conference, is that we, wanted to make sure that citizens. Back in Africa should. Hear about the, fact that such policies have been a complete, failure here. In the UK we know that these products, are not being marketed to African, countries and their own best interests, their, only motivation, is, to spread the reach of financial.
Services And to new markets there's, all been floated, in the interest of the, City of London, what, you're seeing is basically, a second form of colonialization, you've. Had initially, occupation. Resource, extraction. You. Know and. Through. That process you know countries, like Britain which have had a large, offshore empire, have, developed, significant, networks and there, are those networks, being used to promote and exploit financial, services. The, City of London was, the beating financial, heart of the British Empire as. Britain's. Empire declined. The. City transformed. Itself from a hub operating. The financial, machinery, of empire into. A global, financial, center. Former. Insignificant. Outposts, of empire became, the basis for a spider's, web of offshore secrecy. Jurisdictions. That captured, wealth from across the globe and funneled, it to the City of London. Today. 25. Percent of International Finance is, conducted, on British territory. Almost. Half of the world's secrecy, jurisdictions, are under British protection, up. To half of all offshore wealth, may, be hidden in Britain's offshore, havens. Financial. Services is how Britain's elites make their money and this. Is also where former, government ministers, senior. Civil servants, and retired spooks from mi5 and mi6. Receive. Lucrative, consulting, positions, after their time in public service. Together. They have transformed. Britain and its dependencies. Into. The world's largest tax. Haven, harming. Development, throughout the world and turning. Britain itself into, a country that serves above, all the. Interests, of its elites. You. You. You. You. You. You. You. You.