Over the weekend, my friend Sancho, who as regular readers here may know, blogs over at Tilting at Windmills had a pop at Gibraltar's offshore status... which I must admit took me aback a little.
I say 'my friend' Sancho loosely, as we've never met... indeed we've never even spoken or had a conversation online... not even an exchange of emails... but I hope you and Sancho will pardon me if I describe him as 'my friend' because despite that, this is how I like to think of him, as a fellow blogger and friend. I hope it's mutual... but I have no idea.
The fact is that I enjoy reading Sancho's blog and by and large... enjoy his views and share his traditional British values of what is often termed these days as 'middle England'... something which curiously, is actually not that unusual to find on Spain's Costa del Sol where Sancho lives and blogs from!
Anyhow... the fact is that our communications have alway been 'one way traffic' with me commenting regularly on his blog posts... and sending him the occasional email 'chivving' him (as happened this weekend) when he's a little slow in approving blog post comments (me thinking he's decided not to post them). To his credit... he's always approved my comments (they've never been particularly controversial or conflictive). But... he has never acknowledged any of my emails or replied to either them or my blog comments... and that's fair enough. I have no problem with that... I'm just mentioning this as background... in order to explain this, somewhat curious (perhaps) relationship.
Anyway... getting back to Sancho's pop at Gibraltar over the weekend, I was a little surprised... as he is not one of those who constantly find one or other reason to harangue Gibraltar. My impression is that he just enjoys making observations at a distance and I have to say they are usually quite well informed, balanced and dare I say... even sympathetic.
Which is why I was a little taken aback when Sancho wrote "Gibraltar signed an accord to meet the OECD’s standards in 2002 then sat on its hands for seven years and did nothing."
Sancho's blog post was spurred by a letter sent recently by UK Prime Minister Gordon Brown, to all the British Overseas Territories and UK’s Crown Dependencies who operate offshore finance centres or so called 'tax havens', which are included in the OECD (Organisation for Economic Co-operation and Development) list of 'jurisdictions that have committed to internationally agreed tax standards' but that have not yet substantially implemented these agreements. The list includes Gibraltar, along with six other UK overseas territories, Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos. This OECD list also includes the UK crown dependencies of Jersey, Guernsey, and the Isle of Man who, whilst listed, have been accepted as having already 'substantially implemented the internationally agreed tax standards'... unlike Gibraltar and the other British Overseas Territories.
Gordon Brown's letter, which followed the G20 Summit, 'warned' these jurisdictions to "meet international transparency standards within six months or face sanctions".
In his blog post, Sancho wrote:"The facts are these: Gibraltar signed an accord to meet the OECD’s standards in 2002 then sat on its hands for seven years and did nothing. Ahead of the G20 meeting it hurriedly signed a tax agreement with the USA but has seen itself demoted down the OECD’s list of “Good Guys”. Under the threat of sanctions the British Government has now given the Rock till November to get its house in order."
Sancho also questioned Gibraltar Chief Minister, Peter Caruana's confidence that he would meet Brown's timetable saying it would be "a miracle – 13 agreements in seven months after seven years of doing nothing", and concluded:"So it still begs the questions why did Gibraltar sign the agreement in 2002 then do nothing when it could have acted and been the pace-setter amongst off-shore tax havens?
Hmmm... whilst it wrankles me to hear it... I DO have to admit that Sancho has a point... in as much as I too share a discomfort in the way it seems that Gibraltar keeps giving its detractors the opportunity to have a pop at us... BUT... there ARE mitigating circumstances, as I explained to Sancho and his readers in my comment on his blog post on Sunday:
Why has it given the strong critics of tax havens a sitting target – because even if it now complies it will be the threat of sanctions that is held up as the reason – when it could have been"
Good day Sancho...A couple of Sancho's readers also commented on his post. I thought they were rather ill-informed so I answered them too!
I have to say I find your insistence on singling out Gibraltar, castigating it in the manner you do, accusing Gibraltar of "sitting on its hands" on the issue of tax transparency and bilateral agreements... a little (if not very) unfair and rather unbalanced.
Excepting the Isle of Mann and the Channel Islands, who do not depend wholly on themselves for funding their economies, Gibraltar, has done as much if not more than many other jurisdictions, in making sure they adhere to international standards as best it can, within the framework of the OECD and in the context of very competitive markets of offshore tax jurisdictions.
Gibraltar does not have a manufacturing base or the ability to earn revenue externally from agriculture or other means of production and exporting. It therefore has to rely for its income largely from two sources, tourism and the offshore financial centre.
Gibraltar is also not able to rely on other funding (nor does it wish to) from any outside sources, such as the UK as the Isle of Mann and the other Channel Islands jurisdictions in Jersey or Guernsey can do.
It is therefore hardly surprising that Gibraltar has not run around signing up to bilateral agreements with others thereby putting itself in a less attractive position... when compared to other jurisdictions, that also have not adhered to the OECD list (of 'jurisdictions that have committed to the internationally agreed tax standards' but that have not yet substantially implemented these agreements)... and not signed up to tax transparency agreements... countries such as Austria, Belgium, Luxembourg, Switzerland, Singapore and Bermuda. Nevertheless, on tax transparency issues, as I posted the other day, Gibraltar IS committed to the OECD 'tax haven' delisting and tax sharing agreements!
Issues on tax transparency are not the 'be all and end all' on offshore finance centres. In order to offer a more balanced view On Gibraltar's Finance Centre, you should also note other matters that the Gibraltar authorities are in the forefront of, as an offshore finance jurisdiction.
Far from "sitting on its hands", through the Financial Services Commission, Gibraltar has ensured it runs a very effective and well regulated Finance Centre... probably better than most. Have a look for yourself on the issue Gibraltar is most often wrongly criticised for... Gibraltar Financial Services Commission > Anti Money Laundering Provisions. On this page, you will see how the FSC openly addresses questions such as:
- What is Gibraltar’s record in the fight against money laundering?
- Does Gibraltar comply with international standards?
- What areas need updating?
- Does the fact that Gibraltar has a large company and trust management industry make it vulnerable to money launderers?
- Isn’t Gibraltar soft on some money laundering such as tax evasion?
- What are the main risks to Gibraltar from launderers?
- How have Gibraltar’s anti-money laundering provisions been verified?
- How does Gibraltar work with others in the fight against money laundering?
- Summary of the anti-money laundering provisions
You will see from this page and from a lot of other information provided 'transparently' on the Gibraltar Financial Services Commission > Anti Money Laundering Provisions, that Gibraltar, far from 'sitting on its hands' does a great deal to ensure it provides a effective and very well regulated Offshore Finance Centre, recognised as such by the IMF and other international regulatory bodies, including the OECD!
Whilst I believe it is right, in a democratic system of free enterprise, that it is a good thing to keep the regulators under scrutiny and of course Governments, I also think in fairness, these issues need to be put into context and any criticism should be a little more balanced than that normally aimed at Gibraltar.... perhaps unlike you have done on your post here today. Which is why I thought I would take the opportunity to redress this... with my comment... and I thank you for allowing me to do so! :)
Mark Tanner said:
"Now Gibraltar has received a warning from Brown it will be used to highlight the Rock's lack of transparency when it could have avoided this deadline by compliance."In reply I responded that Gordon Brown's letter was directed at ALL British AND UK offshore jurisdictions or so called 'tax havens', NOT JUST Gibraltar. Namely... the seven UK overseas territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos. Brown's letter also included the UK territorites as he sought to increase pressure on Jersey, Guernsey, and the Isle of Man – UK crown dependencies also on the OECD list.
Source: FT.com / UK / Politics and policy - Brown warns tax havens to comply
Another reader named Anthony said:
"Gibraltar was encouraged to develop its off shore financial centre as compensation for the closure of its naval dockyard. The British Government largely turned a blind eye to the lack of supervision and now that albatros is coming home to roost."I thought this comment was a particular load of tripe and I said so. In reply to Anthony, I chose to ignore his affirmation that Gibraltar was "encouraged to develop its off shore financial centre as compensation for the closure of its naval dockyard"... couldn't be bothered with that one, it's so crass! But I did address his other point... and I'll share it with you here... as I thought my ending remark was quite amusing (well it amused me!).
With the greatest respect Anthony...that's a load of ill-informed rubbish!! If you bothered to check your facts you would have found that Gibraltar's offshore finance centre is constantly under a great deal of scrutiny in the UK Parliament. All you have to do is visit Parliament.co.uk and search their archives. A casual check for "Gibraltar Offshore" showed up over 300 instances of questions in BOTH Houses of Parliament regarding Gibraltar's finance centre in the recent past.
In the EU... if you bother to check, you will find many many instances, including cases that have gone to the European Courts of First Instance (where Gibraltar has mainly won nearly all cases) and again been very much scrutinised by the EU... under the auspices of Gibraltar's EU membership through the UK's own membership! Now... no one (at least no one well informed) would categorise this hardly as... "turning a blind eye"!
The reality is that Gibraltar (and many of the other British and UK crown dependent jurisdictions) have largely been accepted by a number of successive (I incorrectly wrote 'respective' in my original comment) UK Governments, including the present Administration, to run efficient and well policed jurisdictions. In his recent letter... Brown also stressed the importance of the tax information sharing deal reached between Gibraltar and the US, and acknowledged that Gibraltar was in well-advanced negotiations with other countries, so again, clearly not "turning a blind eye"!
If anything, what Brown is up to is covering his ass (as per usual) in the context of his pretence at leadership for the G20 countries... in the face of the difficulties all countries are facing in the Global economy and in the fight to avoid further global recession!
That.. is more what Brown's letter is about... sleight of hand spin that takes the focus away from his own Government's largely self created difficulties... and much less concern about how Gibraltar's (or other British and UK) offshore jurisdictions handle themselves.
Oh and Anthony... no 'albatross is coming home to roost' in Gibraltar. As a major world centre for bird migration, we are well used to these and other 'crows' just passing through... and moving along quite harmlessly and peaceably... even though, in their passing, they occasionally do sh**t on us from a great height!
