Thursday, 12 February 2015

City’s ‘extraordinary level of corruption’

From the Big Issue in the North magazine. Please buy a copy when you see a seller.
The best-known international ranking under-estimates the level of state corruption in the UK, according to campaigners.
The annual Corruption Perceptions’ Index (CPI) survey of 175 countries rests on expert opinions of public sector corruption. It ranks states from least to most corrupt. In 2014, the UK was ranked twelfth with Switzerland in fifth. North Korea and Somalia finished in the bottom two. The survey is compiled by Transparency International (TI).
The Tax Justice Network (TJN) began life at the World Social Forum in Portugal in 2003. It maps and analyses tax evasion, avoidance, competition and havens.
Tax havens
According to TJN executive director John Christensen: “The CPI index, by focusing
on bribe-taking, fails to convey how corrupt practices generally involve several players. These include sophisticated financial and legal intermediaries who facilitate the hiding of large sums behind offshore structures, typically in secret jurisdictions.
“Additionally, CPI is perceptions-based, drawing on the business community and related thinktank opinions. Not surprisingly they take a rather a narrow view. Switzerland, a notorious tax haven, features among the least corrupt.”
TJN publishes a Financial Secrecy Index (FSI) of the friendliest locations for tax evaders, money launderers and the financially corrupt.
In its latest table, covering 82 jurisdictions, Switzerland pips Luxembourg for top spot as the most corrupt while the UK is at 21, one spot behind the British Virgin Islands and well down on ninth placed Jersey.
According to TJN, the UK ranking is based on a combination of its secrecy score and a weighting derived from its 18 per cent share of the global market for offshore financial services.
Of the 82 jurisdictions identified in the FSI, almost half are connected to Britain, including Jersey. Financial secrecy, low or zero tax, tolerance of criminality and lax financial regulations are identified across many of the jurisdictions.
TJN says the UK has claimed to be clamping down n corporate tax avoidance yet still promotes the use of British-linked tax havens by multinational businesses.

“Tax dodging has become endemic through much of the corporate sector. Yet the Serious Fraud Office (SFO) budget has been cut,” claims Christensen.
The executive director of TI in the UK, Dr Robert Barrington, responded to Christensen’s views, saying: “We are not stating the CPI index snapshot of affairs is perfect and we would always urge people to look at a wide range of different sources to get a really good picture. However, I don’t think anyone would quibble that the quality of life of the average citizen in North Korea or Afghanistan is severely undermined by corruption.
“I think public sector corruption in the UK is low compared to other countries. But it’s also true the UK has been too complacent about corruption.
“TI is concerned that the UK has become a safe haven for corrupt capital and rich individuals from around the world using stolen money to buy property here, including football clubs.
“We are very worried that the SFO budget has been so significantly cut. If the government fails to tackle corruption the UK could slip down the CPI.”
‘Blatant criminality’
Christensen believes that, whoever wins the next election, there is no immediate possibility of any UK government tackling the “extraordinary degree of corruption in the City of London that has demoralised people while also wrecking the economy and capturing the political processes, leaving us all with the sense that our politicians are impotent to act against blatant criminality”.
He added: “We have reached a moment when radical steps are needed to restore our confidence in democracy.”

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