From Royal Gazette

Finance minister Bob Richards insisted yesterday that Britain could not “unilaterally tear up Bermuda’s constitution” and impose direct rule on the island to make it obey UK tax law.
He told The Royal Gazette that a suggestion from British Labour Party leader Jeremy Corbyn for the British Government to consider intervening in the running of its overseas territories in the wake of the leaked Panama Papers “sounds like a lot of rhetoric that’s meant to impress a certain audience in the UK”.
Mr Richards also claimed Bermuda had robust regulations regarding financial transparency which were, in many cases, better than Britain’s.
In particular, he cited the decades-old registry of beneficial company ownership held by the Bermuda Monetary Authority but rejected the idea it should be public so that “every Tom, Dick and Harry” has access to “private information”.
The Panama Papers are a massive data leak — said to be the biggest in history — of 11.5 million files from the database of the offshore law firm Mossack Fonseca. The documents show how the law firm set up some 200,000 offshore companies to benefit the rich, with 12 national leaders among 143 politicians, their families and close associates from around the world now known to have used tax havens. More than half of the offshore companies were registered in the British Virgin Islands, with another 3,200 in British Anguilla. Mr Richards revealed that the BMA was checking to see if any of those named in the Panama Papers had a connection to Bermuda but none had been found so far.
“It’s early days,” he said. “Nobody and no system is perfect and our mousetrap isn’t perfect. But I can tell you one thing: it’s a heck of a lot better than any other system I have seen.”
Opposition leader Mr Corbyn told the BBC in an interview yesterday that the British Government should consider imposing “direct rule” on British overseas territories and dependencies if they do not comply with UK tax law, adding that it could be done “almost immediately”.
But Mr Richards said: “The UK can’t unilaterally tear up Bermuda’s constitution and they also can’t unilaterally tear up conventions that have been in place that are parallel to our constitution for many years. You just can’t tear these things up legally.
“I don’t believe that it’s a real threat to Bermuda. The mistake that many UK politicians make — and quite frankly in Bermuda it has been made as well — is to assume that all of the overseas territories have the same constitution. They do not. Bermuda’s constitution is quite different to that of Turks and Caicos, BVI and Cayman.”
The minister said a case in point was when the UK was unable to extend its Order in Council on the abolition of the death penalty for murder to Bermuda, because of the island’s autonomy, though territories in the Caribbean were compelled to comply.
“The constitution does not allow them to do that,” said Mr Richards. “The notion that just because you can do something for other overseas territories, it applies to Bermuda, it’s just not on. Our constitution is much more advanced.”
Mr Corbyn claimed the territories, including the Cayman Islands and BVI, were encouraging tax avoidance on “an industrial scale” to the detriment of public services in the UK.
Asked if direct rule was the solution, he said: “If the local government is simply going to condone this level of … tax avoidance and tax evasion of money that has been made in Britain … then that’s something that has to be considered.
“They’re not independent territories. They are self-governing, yes, but they’re British Crown dependent territories. Therefore surely there has to be an observance of UK tax law in those places. If they’ve become a place for systemic evasion and short-changing of the public in this country, then something has to be done about it. Either those governments comply or a next step has to be taken.”
The BBC quoted 10 Downing Street as saying that Bermuda, along with Gibraltar and Jersey, had complied with three requests from the UK on financial transparency: the automatic exchange of tax information with other countries, a common reporting standard for multinational companies, and central ownership registries.
But Mr Richards bristled at the idea that those things were “forced on us, particularly by the UK”, saying they were implemented for the protection of the island and for Bermudians.
“We have had this register in Bermuda for over 70 years,” said the minister. “We have to give our forbears credit. They figured this out in 1947.”
He said the UK had only recently begun creating its own register and it would show company owners with shares of more than 25 per cent, whereas Bermuda’s register was well-established and listed anyone with more than a ten per cent share.
“Even when the UK eventually amasses their register, it won’t be as accurate as ours,” said Mr Richards. “It’s very interesting that someone who doesn’t have a register is trying to pressure folks to have one.”
He said the Bermuda Government had no plans to make its register public and the BMA would continue to share information with overseas authorities “under controlled circumstances”. “What we are not likely to do and we are not in favour of is people trawling through this information for personal purposes. There is such a thing as privacy. This information is shared to protect the international community against tax evasion, money laundering and that kind of thing. What we are not here to do is share people’s private information with every Tom, Dick and Harry.”
Mr Richards described Bermuda as “streets ahead” of other places on financial transparency, having tax-sharing relationships with more than 90 countries.
He said multinational companies in Bermuda, like elsewhere, would soon have to comply with new “country-by-country reporting” requirements on financial transactions from the Organisation for Economic Co-operation and Development.
The Minister said he was “displeased” that Bermuda’s name was getting thrown into the mix by commentators on the Panama Papers, despite it not being mentioned in the leaked documents. “That is, quite frankly, wrong and annoying.”
The Bermuda Business Development Agency said in a statement: “Some of the recent reporting on the ‘Panama Papers’ perpetuates the myth that all offshore financial centres are the same. The fact is: Bermuda is different. While there may be businesses, service providers and lax regulatory environments around the world that enable illegal tax evasion, Bermuda is not one of them.”
Mr Richards was also interviewed by BBC Newsnight’s Kirsty Wark last night.
He told her: “We would screen [companies], approve them and discard the ones that didn’t meet our standards and that is the reason you don’t see Bermuda mentioned in those Panama papers. I have to remind you that the UK was mentioned in those Panama papers but not Bermuda.”

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