Panama Papers: UK is the 'epicentre of sleaze' in a 'spider's web of corruption', says tax expert

'London is the epicentre of so much of the sleaze that happens in the world'

With 1,924, the UK is home to far more Mossack Fonseca intermediary companies than Panama itself (EDUARDO GRIMALDO/AFP/Getty Images)

The UK is the “epicentre of sleaze” with London at the heart of a “spider’s web of corruption”, a tax evasion expert has said.

Nicholas Shaxson claimed that while the UK itself is relatively transparent itself, Britain "farms out the seedier stuff" to its former colonies.

The British Virgin Islands, for example, are home to more than half of the companies listed as clients in the Panama Papers.

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The tax haven, an overseas territory of Britain, is nominally home to 113,648 clients of Mossack Fonseca – the law firm whose documents were leaked as the Panama Papers – even though only 28,000 people actually live there. More than a million companies are registered on the islands, where the British government has repeatedly refused to introduce regulation.

“London is the epicentre of so much of the sleaze that happens in the world," Mr Shaxson told AFP. "Usually there will be links to the City of London, UK law firms, UK accountancy firms and to UK banks."

Other former colonies at the extremities of Britain’s “spider’s web” of tax evasion include Bermuda and the Cayman Islands.

While the Caymans have a population of just 60,000 – slightly fewer people than live in Bognor Regis – it plays host to $2 trillion in banking assets, or one-fifteenth of the global total.

Mr Shaxson’s comments came as the Panama Papers revealed that the UK is home to more companies working with Mossack Fonseca than any country in the world bar Hong Kong.

According to the 11 million documents leaked by an anonymous employee, there are 1,924 intermediary companies in the UK who have used the services of the Panama-based law firm, including law firms, banks, and corporate middlemen.

The only country hosting more of these companies is Hong Kong, with 2,212. The South Asian tax haven also has the highest density of 'Ultra High Net Worth' residents in the world.

Considered in isolation, Britain is 15th on the Tax Justice Network's annual Financial Secrecy Index, which lists tax havens "according to their secrecy and the scale of their offshore financial activities".

But the TJN add that the UK would easily be ranked first on its Index if considered alongside all its overseas territories.