The following two articles show that the Corporation of London controls most of the ‘offshore banking’ regimes where billionaires, crime syndicates and other dubious characters put their money to avoid paying any tax as well as not coming under any financial regulations, thus depriving most countries the source for financing the infrastructure needed to run a nation (eg hospitals, police, roads, schools, etc). This is particular true for most countries of Africa where their leaders embezzle their country’s money which is put into tax havens, most of whom are ‘controlled’ by the UK. Also, the multi-nationals who mine in Africa, do not pay much tax and have appalling working conditions.
The medieval, unaccountable Corporation of London is ripe for protest
It’s the dark heart of Britain, the place where democracy goes to die, immensely powerful, equally unaccountable. But I doubt that one in 10 British people has any idea of what the Corporation of the City of London is and how it works. This could be about to change. Alongside the Church of England, the Corporation is seeking to evict the protesters camped outside St Paul’s cathedral. The protesters, in turn, have demanded that it submit to national oversight and control.
What is this thing? Ostensibly it’s the equivalent of a local council, responsible for a small area of London known as the Square Mile. But, as its website boasts, “among local authorities the City of London is unique”. You bet it is. There are 25 electoral wards in the Square Mile. In four of them, the 9,000 people who live within its boundaries are permitted to vote. In the remaining 21, the votes are controlled by corporations, mostly banks and other financial companies. The bigger the business, the bigger the vote: a company with 10 workers gets two votes, the biggest employers, 79. It’s not the workers who decide how the votes are cast, but the bosses, who “appoint” the voters. Plutocracy, pure and simple.
There are four layers of elected representatives in the Corporation: common councilmen, aldermen, sheriffs and the Lord Mayor. To qualify for any of these offices, you must be a freeman of the City of London. To become a freeman you must be approved by the aldermen. You’re most likely to qualify if you belong to one of the City livery companies: medieval guilds such as the worshipful company of costermongers, cutpurses and safecrackers. To become a sheriff, you must be elected from among the aldermen by the Livery. How do you join a livery company? Don’t even ask.
To become Lord Mayor you must first have served as an alderman and sheriff, and you “must command the support of, and have the endorsement of, the Court of Aldermen and the Livery”. You should also be stinking rich, as the Lord Mayor is expected to make a “contribution from his/her private resources towards the costs of the mayoral year.” This is, in other words, an official old boys’ network. Think of all that Tory huffing and puffing about democratic failings within the trade unions. Then think of their resounding silence about democracy within the City of London.
The current Lord Mayor, Michael Bear, came to prominence within the City as chief executive of the Spitalfields development group, which oversaw a controversial business venture in which the Corporation had a major stake, even though the project lies outside the boundaries of its authority. This illustrates another of the Corporation’s unique features. It possesses a vast pool of cash, which it can spend as it wishes, without democratic oversight. As well as expanding its enormous property portfolio, it uses this money to lobby on behalf of the banks.
The Lord Mayor’s role, the Corporation’s website tells us, is to “open doors at the highest levels” for business, in the course of which he “expounds the values of liberalisation”. Liberalisation is what bankers call deregulation: the process that caused the financial crash. The Corporation boasts that it “handle[s] issues in Parliament of specific interest to the City”, such as banking reform and financial services regulation. It also conducts “extensive partnership work with think tanks … vigorously promoting the views and needs of financial services.” But this isn’t the half of it.
As Nicholas Shaxson explains in his fascinating book Treasure Islands, the Corporation exists outside many of the laws and democratic controls which govern the rest of the United Kingdom. The City of London is the only part of Britain over which parliament has no authority. In one respect at least the Corporation acts as the superior body: it imposes on the House of Commons a figure called the remembrancer: an official lobbyist who sits behind the Speaker’s chair and ensures that, whatever our elected representatives might think, the City’s rights and privileges are protected. The mayor of London’s mandate stops at the boundaries of the Square Mile. There are, as if in a novel by China Miéville, two cities, one of which must unsee the other.
Several governments have tried to democratise the City of London but all, threatened by its financial might, have failed. As Clement Attlee lamented, “over and over again we have seen that there is in this country another power than that which has its seat at Westminster.” The City has exploited this remarkable position to establish itself as a kind of offshore state, a secrecy jurisdiction which controls the network of tax havens housed in the UK’s crown dependencies and overseas territories. This autonomous state within our borders is in a position to launder the ill-gotten cash of oligarchs, kleptocrats, gangsters and drug barons. As the French investigating magistrate Eva Joly remarked, it “has never transmitted even the smallest piece of usable evidence to a foreign magistrate”. It deprives the United Kingdom and other nations of their rightful tax receipts.
It has also made the effective regulation of global finance almost impossible. Shaxson shows how the absence of proper regulation in London allowed American banks to evade the rules set by their own government. AIG’s wild trading might have taken place in the US, but the unit responsible was regulated in the City. Lehman Brothers couldn’t get legal approval for its off-balance sheet transactions in Wall Street, so it used a London law firm instead. No wonder priests are resigning over the plans to evict the campers. The Church of England is not just working with Mammon; it’s colluding with Babylon.
If you’ve ever dithered over the question of whether the UK needs a written constitution, dither no longer. Imagine the clauses required to preserve the status of the Corporation. “The City of London will remain outside the authority of parliament. Domestic and foreign banks will be permitted to vote as if they were human beings, and their votes will outnumber those cast by real people. Its elected officials will be chosen from people deemed acceptable by a group of medieval guilds …”.
The Corporation’s privileges could not withstand such public scrutiny. This, perhaps, is one of the reasons why a written constitution in the United Kingdom remains a distant dream. Its power also helps to explain why regulation of the banks is scarcely better than it was before the crash, why there are no effective curbs on executive pay and bonuses and why successive governments fail to act against the UK’s dependent tax havens.
But now at last we begin to see it. It happens that the Lord Mayor’s Show, in which the Corporation flaunts its ancient wealth and power, takes place on 12 November. If ever there were a pageant that cries out for peaceful protest and dissent, here it is. Expect fireworks – and not just those laid on by the Lord Mayor.
The corporation’s part-escape from Britain is just one element of the offshore story. It is no coincidence that the capital of what was once the world’s greatest empire – with the City as “governor of the imperial engine”, as the historians P J Cain and A G Hopkins put it – has become the centre of a big part of the modern global offshore system.
As my book Treasure Islands describes in detail, the Bank of England, lodged in the heart of the City (but not, it has to be said, regulated by it), in effect encouraged tax havenry in British outposts of the Caribbean and elsewhere. By the 1980s, the City was at the centre of a great, secretive financial web cast across the globe, each of whose sections – the individual havens – trapped passing money and business from nearby jurisdictions and fed them up to the City: just as a spider catches insects. So, a complex cross-border merger involving a US multinational might, say, route a lot of the transaction through Caribbean havens, whose British firms will then send much of the heavy lifting work, and profits, up to the City.
The Crown dependencies of Jersey, Guernsey and the Isle of Man, which focus heavily on European business, form the web’s inner ring. In the second quarter of 2009, Jersey alone provided £135bn in bank deposits upstreamed to the City. Jersey Finance, the tax haven’s promotional body, puts the relationship plainly: “Jersey is an extension of the City of London.”
The next ring of the web contains the British overseas territories, such as the Cayman Islands and Bermuda. Like the Crown dependencies, they have governors appointed by the Queen and are controlled by Britain in myriad ways, but with enough distance to allow Britain to say “There is nothing we can do” when it suits.
The web’s outer ring contains an assortment of havens, such as Mauritius in the Indian Ocean, Hong Kong and the Bahamas, which Britain does not control but which still feed billions in business to the City from around the world.
So, the corporation has two main claims to being a tax haven: first, as a semi-alien entity, floating partly free from Britain (just as the Cayman Islands are), and second, as the hub of a global network of tax havens sucking up offshore trillions from around the world and sending it, or the business of handling it, to London. These are possibly the biggest reasons for the City’s wealth and power – yet how many Britons understand this?
“Don’t tax or regulate us or we’ll move to Switzerland,” the bankers and hedgies cry; and all too often the politicians quail and cut taxes on the wealthy, deregulate finance further, and hand yet more freedoms to the City.
Nearly every multinational corporation has offshore subsidiaries (not counting those in London) – and the biggest users of offshore finance are banks. Financial Mail recently counted over 550 offshore subsidiaries just for Barclays, RBS and Lloyds – each of which far outstrips any other multinational. This isn’t just about tax: banks go offshore to escape certain financial regulations, and can grow faster as a result. So, offshore is a big part of the Too Big To Fail story – another element strengthening the City’s power through the grip these banks have on our elected leaders and boosting the breathtaking chutzpah of the Barclays chief executive, Bob Diamond, who told the UK Treasury select committee on 11 January that he didn’t know how many offshore subsidiaries his bank had, and that the “period of remorse and apology” for banks should now end.
The corporation loves financial deregulation – globally. Deregulation is a bit like shaking (or, perhaps more accurately, removing a net from) a tree full of insects: the more you do it, the more business floats around, ready to be caught in the nearby web. As such, it is hardly surprising that the Lord Mayor of London is evangelical about it. In fact, his role is officially, as the City explains, to “expound the values of liberalisation” and provide “support for innovation, proportionate taxation and regulation”. (On his 20-odd foreign trips a year, he makes clear that “proportionate” means “limited”.) Not only that, but the Lord Mayor and colleagues promise to “take up cudgels on behalf of the City anywhere in the world on any subject which is of concern to the City”.
Thus, the role of the City of London Corporation as a municipal authority is its least important attribute. This is a hugely resourced international offshore lobbying group pushing for international financial deregulation, tax-cutting and tax havenry around the world.
It is easy to be daunted by the City and the offshore system. Some reviewers of Treasure Islands were so disturbed by the scale of it – Peter Preston’s defeatist review in the Guardian is a case in point – that they advocated, in effect, capitulation. Given that the financial services sector has just been exposed as having provided over half of the Conservative Party’s funding last year, and that the Chancellor of the Exchequer, George Osborne, has just urged Britain to move from “retribution to recovery” over the banks, reform looks distant.
But the doubters are wrong. Yes, we still need a vision of how to confront the corporation and its offshore satellites. Few people in Britain can see the corporation, let alone understand its importance. However, widespread public education, a precursor to reform, can now begin. One of the biggest, most silent players behind so much offshore activity has been identified: a Teflon-like, medieval institution, wrapped around the neck of Britain and dedicated to keeping finance strong and free.
Already I see efforts around the world to constrain the offshore system that feeds the City. UK Uncut, the spontaneous protest movement opposing offshore tax avoidance by multinationals, has had an impact and now pledges to move against the banks. A big “One London” campaign to merge a divided capital into a single democratic entity may seem far off, but groups such as London Citizens are now thinking about the fairer division of London. The Tax Justice Network, and others, are helping build an intellectual edifice for understanding tax havens. Some of their goals – such as country-by-country reporting by multinationals – are already being partly met. The unions, too, and big NGOs, especially those working in international development, are engaging with the matter. An anti-haven mobilisation is under way in France; something similar may be starting in the US. The IMF, the Organisation for Economic Co-operation and Development, the EU and other agencies are now at least debating issues they ignored before. Around the world, legislators, regulators and ordinary people are starting to see the toxicity of Britain’s role in protecting offshore business that drains billions out of developing countries each year.
The City of London Corporation – this heart cut out from the body of our vibrant, multicultural metropolis – is no longer so invisible. Now we must figure out what to do about it.
If you believe in prayer, especially spiritual warfare, then we need to pray against the evil that is prevalent in the organisation
- pray that every aspect of the life of the City will be exposed showing the extent of the tax avoidance, corruption and mis-management;
- pray that all the monies that should have gone to the tax coffers of all the countries affected will be re-paid in full;
- pray that legislation will be put in place by all countries that outlaws tax havens/offshore banking;
- pray that the key leaders of the City of London Corporation will be open to make it accountable to Parliament, and all special privileges will be annulled;
- pray that Governments will not be swayed by the financial world, and that the City will come under the jurisdiction of the Greater London Authority;
- pray that all the members of the Corporation, financial institutions, the rich and other businesses (including criminals) who use tax havens, will be repentant of their greed and arrogance;
- pray that all criminal elements will be brought to justice, their earnings and assets seized – drug trafficking, human trafficking, the arms trade, money laundering, etc – as they are exposed through the banning of tax havens;
- pray for a full recovery of the financial system so that it is clear who are the beneficial owners of every business, that all monies earned go the right people, there is full transparency in all business transactions, and that the criminal world is strangled by not being able to hide their assets;
- pray against any new way of corruption, tax avoidance, and avoiding transparency be introduced
Any other action will be dependent on the results of the above prayer strategy – it will take time. Prayer needs to very as specific as possible to defeat satan and his plans as it is all about God being given the glory; so after each prayer, there must be a time of praise and worship to make sure your focus is on God and not satan and his cronies. General prayers do not work.