How Britain's Bankers Made Billions From The End Of Empire | Timeline

the British soldier all around the globe you'll find him from Gibraltar to Hong Kong everywhere he stands against the threatening years stock symbol of our common will to order [Music] [Music] the British Empire the largest empire 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 [Music] 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 call it the governor of the imperial engine all these countries in the Empire used to use the stirling currency and the city of london was kind of the financier of this so not just inside the stirling zone but outside the stirling 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 expiration Britain's warplanes are winging their way to Egypt and it's bombers attacked 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 Romney a UK pound 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 vaguely the banks or their representative made a presentation to the Bank of England which in itself was dominated by representative from the banking in the strain it seems that they have reached an agreement which was never written that if the bank's 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 [Music] 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 were 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 there 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 both holds 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 is 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 [Music] 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 classical miss he's the only unelected person they're all other lobbyists have to stop here in the lobby and 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 it should have attracted many political scientists protocol column is an economist but I don't know of anyone who has studied systematically the corporation London and its 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 stable 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 ten years BCCI 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 that 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 he 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 jail they 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 and 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 centers with strong secrecy legislation in order to attract capital from across the globe Swiss banking secrecy is the most famous and most well-known you know put the money as 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 off and fight in 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 settler the night 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 for other 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 which we are talking about maybe as much as 50 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 lies at the core of the British secrecy model they don't use banking secrecy the Swissy of banking secrecy the British of course are only too willing to kill a banking secrecy because they've learned capture a larger market share that's why the Brits are doing this [Music] 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 choice think so you 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 they might own you know a bank account for racehorses a yacht are painting a portfolio of 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 but looking on the amount of money being administrated from tax havens you see that the Disick herb 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 bird 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 benefited from it and these are in person thank you 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 the 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 lie 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 what places like Jersey so happens are more subtle sort of way you can go talk to someone either the Home Office or the Treasury as 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 say 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 no 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 became an is not a 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 and that message is 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 we'll 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 his really dirty work outside London they might happen for bid via 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 will ever 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 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 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 use the Empire's currency for trade and financing as the Empire declined so too did the City of London the establishment of the London euro market enabled City of London banks to continue to exploit their empire era 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 Orient 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 and 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 countries elites had moved offshore between 1970 and 2008 is estimated at 944 billion dollars over five times their foreign debt 944 billion dollars do the maths far from being a net debtor Africa sub-saharan Africa is a net creditor to the rest of the 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 luding 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 the 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 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 [Music] 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 closely watching all anti-war activity in the 1960s u.s. 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 so mitad 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 movement in the balance of payment statistics and Congress got very upset 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 8 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 a 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 offshore 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 from 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 was 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 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 base 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 didn'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 they're the instruments of suppression are relatively sophisticated you won't get promotion by doing this 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 Senator 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 had lied senator shard has now admitted that on another occasion he did tell senator Stewart sebrae 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 specialists data search police officers on hand and also another two police officers in full body armor on those battering rams they can 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 of 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 prosecuting Stewart's array was prosecuted under the days of protection Lord 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 that effectively destroyed [Music] in reaction to this the magistrates ruled that Stewart should raise defense case that he had leaked the report and 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 Savera 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 prostitution system looks like it's got a court and a legislature 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 or actually functioning properly the experience that Stuart shivery had is you know he's perhaps at the at the blunder and the product of the scale he was simply suppressed and taken to court on trumped-up charges [Music] this is the kind that this is kind of how oppression happens in Jersey see 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 in terms 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 he said 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 to 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 alamin 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 occupies 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 are 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 tonton 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 that this Court has 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 in 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 business people irresponsibly the political parties who are using these offshore services themselves 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 if you 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 the or whose assets are hidden whose financial transactions are conducted anonymously offshore you know this is a bad direction 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 cover 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 fells 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 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 next day accountants eh 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 firm stand report on the company accounts and tell us all as well when I argue this with a price waterhouse 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 [Music] you 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 pounds BT's chief executive Ben Foveon 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 persuade people to pay by strength of argument alike [Music] after protests erupted in 2011 the Treasury select committee questions Dave Hartnett Dave Hartnett claimed he could not give any information due to taxpayer confidentiality instead she prevents you for disclosing information to comment all my advice mr. Barkley so far has been that I am prevented my colleagues are prevented by the act and 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 cash and 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 by an emissary interrupts like female to decline here tonight presented a reward is the Lifetime Achievement Award services tax planning [Applause] 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 at Vodafone you know it saved us billions of our tax bill and our friends at Goldman Sachs as well we've also saved as million twenty twenty-five we set the dogs [Music] you're trampling skunker [Music] 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 Liam ministers acting as advisors to accountancy firms accountancy firm 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 it's not 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 view that I don't trust most bankers and entrust most laws 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 that even after they are publicly revealed they are not widely recognized for what they are an example of this is PFI 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 wire central government over a period of 30 or 40 years the amounts of kind of payment costs will be sort of three or four times higher overall than if you borrowed it from a central government in the first place so it's basically adjoint accounting skin once the PFI policy has been set up and you find that the big or accountancy firms were actually paid members of staff within the Treasury Department who were then actually going around and selling it advising upon the implement eight implementation of PA 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 inferred 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 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 the only motivation is to spread the reach of financial services and to new markets that's all being promoted 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 received 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 [Music] you [Music] [Music]

Channel: Timeline - World History Documentaries

Views: 448,143

Rating: 4.8563566 out of 5

Keywords: History, Full Documentary, Documentaries, Full length Documentaries, Documentary, TV Shows - Topic, Documentary Movies - Topic, 2017 documentary, BBC documentary, Channel 4 documentary, history documentary, documentary history, the spiders web, tax havens, britains second empire, tax justice network, nicholas shaxson, city of london, peter cain, british empire, john christensen, origins of offshore, what is financial crisis, the financial crisis, history of the world

Id: -YgFDZNXPyg

Length: 76min 21sec (4581 seconds)

Published: Tue Aug 20 2019