Corporate transparency crackdown unecessary in Gibraltar
Today’s Gibraltar Chronicle leads with this story from editor Brian Reyes.
A controversial UK move to force its Overseas Territories to make public company ownership information was this week branded “unnecessary” and “inappropriate” in the case of Gibraltar, which already complies fully with international rules on corporate transparency. As it stands, the Sanctions and Anti-Money Laundering Bill will see the House of Commons in effect legislate – through a mechanism known as an Order in Council – for all its overseas territories, including Gibraltar.
The practical effect of the legislative move in Gibraltar’s case is largely academic because the measures it seeks to implement will already be in place here well ahead of the deadline envisaged by the UK. But the constitutional implication of the UK seeking to legislate directly has raised deep concern in the Overseas Territories including Gibraltar.
Chief Minister Fabian Picardo described it earlier this month as “A more than retrograde” and “unacceptable act of modern colonialism”.
Those concerns were echoed loudly on Monday evening in a debate in the House of Lords. Retired judge and independent crossbencher Baroness Butler-Sloss, vice chair of the All Party Parliamentary Group of Gibraltar, branded the proposed legislation as “unnecessary, unhelpful and inappropriate”.
“Gibraltar is entirely compliant with all the current requirements,” she said. “It is bringing a public register into its law early next year.”
Lady Butler-Sloss added: “It is not an appropriate way to deal with a country which has its own constitution and is entirely compliant.”
“It’s very sad to find countries such as Gibraltar should be under a proposed regime, which would interfere with its constitution.”
During the debate, peers warned of catastrophic consequences for Britain’s overseas territories over the decision to force greater financial transparency on them. The UK Government backed down earlier this month in the face of a potential Tory rebellion by accepting a cross-party move to ensure the overseas territories publish details of the true owners of firms. Sir Alan, the Minister for Europe at the Foreign and Commonwealth Office, insisted at the time that British overseas territories were separate jurisdictions with democratically-elected governments, responsible for their fiscal matters and unrepresented in the UK Parliament. He said a consensual approach with the territories would have been preferred to make the registers publicly available and warned that legislating without their consent “effectively disenfranchises their elected representatives”.
But with defeat looming, the UK Government conceded to the demands. This week the climb-down over the adoption of public registers of company ownership, which has sparked anger among the territories, prompted a backlash in the Lords. Tory Lord Naseby warned the amendment to the Sanctions and Anti-Money Laundering Bill would mean “catastrophe” for financial services in the overseas territories. Lord Naseby blamed “maverick” MPs for driving the change through the Commons and an argument between the Whips’ Office and the Foreign and Commonwealth Office (FCO) for it getting passed.
“Why should men and women in our overseas territories suffer because of an argument between the Whips’ Office and the FCO,” he demanded, before criticising Commons Speaker John Bercow for not calling the Government’s own amendments. “I fear the overseas territories are being hung out to dry,” he said.
Tory former shadow minister Lord Flight said it was “shameful” that the UK had a far worse record than the overseas territories in this area and asked the UK Government to think again. Former Supreme Court president and independent crossbencher Lord Neuberger of Abbotsbury was scathing of the move, which he argued “would run contrary to the established distribution of powers”.
He said: “There’s been no consultation with the democratically elected governments of any of the territories about this legislation. There’s been no investigation of the effectiveness of this law in relation to any of the territories. There’s been no inquiry as to the economic and social consequences of this legislation on any of the territories. This proposed law, I regret to say, appears to be old-style colonialism at its worst. Damaging legislation which has no cost for the legislating country, but which will cause hardship to the victim countries and does so not merely without representation, but without consultation or full investigation.”
Tory former justice minister Lord Faulks said: “This is an ill-thought out amendment, borne no doubt out of the entirely proper desire to stem the flood of corruption, but in so doing damages our relationship with the British overseas territories. And this at a time when we need all the friends we can get outside this country.”
As Labour and the Liberal Democrats backed the change, Overseas Territories minister Lord Ahmad of Wimbledon echoed Sir Alan’s words and said that while the UK Government respected the will of the Commons, ministers would have preferred a very different approach. Lord Ahmad said legislating for jurisdictions without their consent effectively disenfranchised their elected representatives, and voiced concern about some of the “intemperate” language used by MPs in the Commons debate. He said the change risked the “flight of business” from the overseas territories to other less regulated jurisdictions but pledged to work constructively with them to try to achieve the best possible outcome.