Campaigners against corruption are hailing a “huge win” after the government caved in to pressure to end the secret hoarding of dirty money in UK tax havens.
The names of the super-rich who launder their funds in the likes of the British Virgin Islands and Cayman Islands will now be published, in what was widely seen as a humiliating climbdown for ministers.
Theresa May had tried to block the push to reveal who owns assets held in complex shell companies in British overseas territories – but gave way in the face of a significant Tory revolt.
The U-turn was seen as direct consequence of the poisoning of the former Russian spy Sergei Skripal, in Salisbury – which prompted renewed outrage about the behaviour of corrupt oligarchs.
Foreign Office minister Sir Alan Duncan told the Commons that a consensual approach working with overseas territories would have been preferred by the government.
But with defeat looming and a last-ditch bid to avoid it failing, Sir Alan conceded to the demands outlined in a proposal backed by both Labour and Tory MPs.
He told the Commons: “We do not want to legislate directly for them, nor do we want to risk damaging our long-standing constitutional arrangements which respects their autonomy.
“However, we’ve listened to the strength of feeling in this House on this issue and accept that it is without a doubt the majority view of this House that the overseas territories should have public registers ahead of it becoming the international standard, as set by the Financial Action Task Force.”
“We will accordingly respect the will of the House and will not vote against new Clause 6.”
However, he went on to warn that the move from the government could “provoke” a response from the territories, which are certain to protest over the UK interfering in their internal affairs, ignoring their own sovereign parliaments.
David Cameron backed down after such a protest five years ago, delaying the introduction of public ownership registers.
On Tuesday around 20 Conservatives were ready to vote with Andrew Mitchell, the former Conservative international development secretary, to force transparency by the end of 2020.
In alliance with Labour and the other opposition parties, that was comfortably enough to defeat the government – forcing ministers to throw in the towel.
Margaret Hodge, who led the move from the Labour side, said a staggering £68bn had “flowed out of Russia into the overseas territories” over the past decade – seven times as much as had come into the UK.
Secrecy that has existed up to now allowed the money to be hidden, then transferred “into the legal system”. Some £122bn of property in England and Wales is thought to be owned through offshore companies
Ominously for the prime minister – with Commons revolts looming on key Brexit votes – Mr Mitchell said the cave-in laid bare the power of the Commons in a hung parliament.
The government has also agreed to demands for a “Magnitsky amendment”, following countries such as the US and Canada in targeting people accused of human rights abuses with visa bans.
He told The Independent on Tuesday: “It’s now time to staunch the illicit flow of secret tainted money and make clear we will not allow it under our flag.”
A delighted Naomi Hirst, of anti-corruption group Global Witness, branded the announcement “a huge win”, adding: “The UK’s tax havens have featured in countless corruption and money laundering cases – ending their corporate secrecy will throw a huge spanner in the works of corrupt dictators, tax evaders and organised criminals.”
Duncan Hames, director of Policy at Transparency International UK, said: “Corrupt individuals everywhere will be deeply concerned that they are about to lose the secrecy afforded by the British overseas territories.”
And Jon Date, of ActionAid UK, said: “These measures will help flush out the corruption and tax evasion that keeps the most vulnerable people in the world – including women and girls – locked in poverty.”
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