Phil Brickell

I beg to move, That this House has considered the impact of financial secrecy in the Overseas Territories on UK communities. It is a pleasure to serve under your chairmanship, Mr Twigg. Before being elected to this place, I dedicated almost 15 years of my working life to tackling financial crime at two major UK banks. That work took me across the globe to the USA, the United Arab Emirates and often to India, so I like to think I can speak with some authority about financial secrecy overseas and how it impacts us at home. For a number of people watching this debate, the contents of my speech will make for uncomfortable viewing, so let me be clear from the outset that my objective is not to criticise the overseas territories writ large—far from it. Some have shown a real commitment to transparency, which I commend them for, and others have a zealous determination to work with the Foreign, Commonwealth and Development Office to drive through much-needed reforms, but are hampered by a lack of local expertise. But other overseas territories seem insistent on blocking change at every opportunity, and it is those that I wish to focus on. Hon. Members might ask, “What connects the sun-kissed beaches of the British Virgin Islands with the rain-soaked streets of Bolton?” What do my constituents care about shell companies, trusts and the veil of financial secrecy that a number of our overseas territories seem quietly content to provide? The purpose of today’s debate is to challenge the notion that what goes on over there has few ramifications for our daily lives over here. Financial secrecy in our overseas territories has real-world consequences for my constituents, businesses and Britain’s standing in the world. Journalists including Nicholas Shaxson and Oliver Bullough have outlined how the UK’s overseas territories have systematically undermined the global economy by creating a shadow banking system—“Moneyland”, to use Oliver Bullough’s parlance. In a number of our overseas territories, low levels of taxation and substandard levels of transparency have attracted the world’s crooks and kleptocrats like moths to a flame. Money laundering, fraud, bribery, tax evasion: regrettably, many of the scandals we read about are likely to involve a financial structure in the British overseas territories. It is an enduring embarrassment going back many, many years, and it undermines our global reputation. In 2016, 11.5 million documents detailing financial and attorney-client information relating to 214,488 offshore entities were leaked—the now-infamous Panama papers. More than half the shell companies exposed in that leak from Panamanian offshore law firm Mossack Fonseca were set up in the British Virgin Islands. That leak revealed the sheer scale of the dark economy, which allows the rich and powerful to store their assets offshore, out of sight of the taxman, law enforcement or the press. From the likes of the former Georgian Prime Minister Bidzina Ivanishvili to the more than 30 Mossack Fonseca clients blacklisted by the US Treasury, roughly $2 trillion passed through that firm. In 2017 came the Paradise papers, with another 13.4 million documents from firms, including from Bermuda, the BVI and the Cayman Islands, then the 2020 FinCEN files, followed by the 2021 Pandora papers. Each leak tells a story about unfairness, about how those who can afford to find ways to avoid paying their fair share can do so, and about how the world’s crooks and kleptocrats cleaned and stashed their dirty cash. Each leak exposed the role played by the UK’s own overseas territories in enabling assets to be hidden. So what is the impact on UK communities? I will focus on three areas where there is a direct, tangible impact on the UK: first, inhibiting growth; secondly, threatening national security; and thirdly, damaging our standing in the world. Sustainable economic growth and good-quality public services require the tax that is owed to be collected, whether it is from a small business in Westhoughton in my constituency or from oligarchs who have decided to make London their home—nobody should be above the law. The Chancellor has already made good progress on closing the £44 billion tax gap by hiring 5,500 new compliance staff, incentivising whistleblowers and committing to a 20% increase in the number of tax fraudsters charged each year. Those are all noble endeavours, and I applaud them, but financial secrecy continues to erode our tax base, because when money that should be taxed is hidden offshore, it is the honest British taxpayer who ends up footing the bill. It harms His Majesty’s Revenue and Customs’ ability to collect what is owed, it fuels unfairness in our system and it leaves less for our stretched public services. There are too many cases to list, but I will endeavour to go over some, such as brothers Michael and Stephen Hirst, who evaded over £3.2 million in tax by routeing profits through companies they secretly controlled into Gibraltar and the British Virgin Islands. But it goes deeper than that. Illicit money flowing through opaque companies registered in our overseas territories does not stay offshore; it finds its way into our UK property market. That distorts it, according to the National Crime Agency, and hinders people’s attempts to get on to the housing ladder. Transparency International UK has identified over £11 billion in suspicious wealth invested in British property, more than half of which was routed through shell companies in our overseas territories. Behind those faceless firms are the likes of Bangladeshi businessman Shafiat Sobhan, Pakistani tycoon Malik Riaz Hussain and Azerbaijani banker Jahangir Hajiyev—individuals accused or convicted of grand corruption who saw London as the safest place to stash their gains. That money even floods our high streets. If we walk down any high street in the UK, we will see a proliferation of vape shops, candy shops, Harry Potter shops and barber shops. Not all of them have unscrupulous owners, but some are used as fronts for money laundering and tax abuse. As London Centric recently reported, these practices are often enabled by opaque corporate structures in offshore jurisdictions.