Panama Papers: London the 'beating heart' of the tax empire

April 7, 2016

The beating heart of the tax avoidance practice and industry is the city of London, Mark Donne, director of the award-winning documentary UK Gold told TeleSUR English in light of the recent Panama Papers scandal.

Donne emphasised that the practice has cost the Global South trillions of dollars in plundered resources and wealth.

“You really have to think of the Cayman Islands, the British Virgin Islands and all those territories as branches, nothing more than just branches,” Donne told TeleSUR English in an interview on April 4.

“They are only physical spaces because there has to be a physical territory where one can register an activity which is not really going on. What needs to be discussed is the City of London.”

To highlight the significant and essential role of Britain and the City of London, Donne stressed that the Mossack Fonseca law firm in Panama is just one law firm among many. He underlined the fact that it does not even make it to the list of top 10 companies supporting the proliferation of tax havens.

“To illustrate the scale of what this global problem is: if you look at the top 10 tax avoidance law firms in the planet, Mossack Fonseca is not in the ... 10. Every single one of the top tax haven law firms are headquartered in London or headquartered in a UK overseas territory.”

The former journalist further highlighted how owners of these huge law firms are themselves part of the political establishment and elite in the country.

Maples and Calder, the biggest tax avoidance law firm in the world, according to Donne, was set up by the late John Mabels, a former vice chair of the British Conservative Party.

“Those people have effectively run the second British Empire for the past 30 years,” he said. “And the cost, particularly for the Global South as well as for the UK and other countries too, is phenomenal.”

For decades, successive British governments have allowed the practice to not only exist but flourish, said Donne. He pointed out that in 2013, British Prime Minister David Cameron pulled a huge media stunt by calling all the heads of Britain's overseas territories to London for the G20 summit, announcing that he would make them sign a deal to crack down on tax avoidance.

Media outlets in the country and abroad saw that as a breakthrough. In reality, there was no deal and no clampdown.

“There is no deal,” the head of the Cayman Islands told reporters after returning from the G20 summit, according to Donne.

Donne said that British tax avoidance policies have helped replace the colonial plundering of resources in Latin America, Africa and Asia. The measures were implemented after the decline of the British Empire in order to meet the challenge of rising Western powers, such as the United States and Germany.

“If you look at some of the things the British Empire achieved and some of the planning when the UK was a colonial power when it went around plundering resources in Asia, Latin America and Africa, what the UK managed to do in the 1960s with its overseas territories when the empire was in decline was just as skilful as those colossal robberies of the past.”

Although sceptical of any change after the Panama Papers leak, Donne called it a “historic moment because of the amount of the information”. He pointed out that “all media outlets are being forced to report on this at one particular time”.

However, the reality is that “despite all the media coverage and despite all the public debate, we are seeing no meaningful repatriation of funds from tax havens to sovereign countries”, Donne added.

The tax avoidance practice will continue to take a financial and political toll on countries in the Global South. Donne emphasised the many mining conglomerates headquartered in London that are performing no material work in the city, but are located there to avoid paying taxes in their home countries.

“For every pound that Africa receives in aid it loses three pounds in tax avoidance” through British-based tax havens, said Donne.

Over the past few decades, the practice of tax avoidance has taken over every aspect of life in Britain added Donne.

Even those media outlets reporting on the issue “such as News UK and the Murdoch empire have more than 192 shell companies in tax havens,” Donne said. “The messengers that are telling you the story are absolutely using tax avoidance.”

[Abridged from TeleSUR English.]

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