David Cameron was today caught describing Nigeria to the Queen as ‘fantastically corrupt’. But after the Panama Papers leak, the Prime Minister may want to choose his words more carefully: after all, that accolade could easily belong closer to home.
Your average dodgy Nigerian oil baron and big-time British fraudster have much in common; a shared love of champagne, a doctor in Harley Street and… a little company based off-shore in a tax haven whose sole purpose is to hide stolen fortunes. And in most cases, that tax haven is one of ‘ours’ - either a British Overseas Territory or a Crown Dependency.
Half of the companies featured in the Panama Papers were registered in British-administered tax havens. These overseas territories vary in the degree of venality and abuse they accommodate but collectively they are dragging our British brand through the mud. And they all depend on secrecy. After all, money laundering is not just linked to lavish lifestyles; it is also tied up with tax evasion, illegal arms dealing, drug smuggling and fraud.
This Thursday the Prime Minister will host a global event on how to combat the kind of corruption exposed in the Panama Papers. It will also look at how to protect honest businesses -- as well as wider society -- from its consequences. One of his guests is the recently elected President Buhari of Nigeria – assuming he still shows up after his host’s indiscretion. But in a turn of the traditional tables, Mr Buhari is not here to explain his government’s record but rather to ask the UK to clean up ours.
Nigeria is a country with a lot going for it. It is the biggest economy in Africa and a major oil producer. Democracy is now well entrenched. Lagos is humming with entrepreneurial energy. It is light years from the brutal kleptocracy of the last military regime. Nonetheless most Nigerians are painfully aware that much of the country’s wealth has been stolen - by civilians as well as the military. Despite its oil wealth, Nigeria cannot supply evens its smartest neighbourhoods in its largest city with steady electricity, far less ensure that rural hospitals have the power they need.
There is a lot of anger in the country, not just with the corruption at home but also with the role of developed countries -- notably the UK and USA --in helping to make it possible. Last month, reformists from across Nigeria’s political spectrum wrote to David Cameron asking him to stop letting the UK launder their country’s stolen money by taking tougher action on tax havens.
That is not to say the UK itself has a bad record. We have taken a lead in recent years on transparency and corruption, and have moved up the OECD league table in tackling bribery. During the coalition government, we also adopted EU measures to improve transparency. In 2013, Cameron led the calls at the G8 Summit for registers of beneficial ownership which – crucially - show who actually owns a company. My department, BIS, made it happen in the UK and insisted that the register be open to public inspection. But when the Prime Minister asked the Crown Dependencies and overseas territories to do the same, they effectively blew a loud raspberry.
This isn't good enough. These territories boast the Union Jack on their flags and their citizens are given UK passports. Our global reputation is at stake and Britain's overseas territories will soon look isolated. Australia, the Netherlands, South Africa and Norway have already announced that they are setting up public registers of beneficial ownership, and others will soon follow. Britain should require Crown Dependencies and overseas territories to do the same. If Cameron is going to call Nigeria 'corrupt' in front of the Queen, he should also be aware that Her Majesty's overseas territories play a role in facilitating its corruption.
Vince Cable was the Secretary of State for Business, Innovation and Skills from 2010 to 2015.