Regulating Global Finance and the Impact on Developing Countries
I don't think I will embarrass any of the speakers when I say that there was broad unanimity that effective regulation of the global financial system would be possible without the abolition of the banking secrecy afforded by the offshore sector. Indeed some impatience was expressed about the idea that in order to establish effective financial regulation it might be necessary to abolish the offshore sector - as though it was a distraction from the serious business of regulation.
This reluctance to recognise the role that offshore centres play in undermining financial regulation struck me as both interesting and ill-conceived. The offshore sector facilitates and encourages capital flight and enables kleptocrats to operate with a reasonable expectation of impunity. If financial regulation is to have any positive impact on the developing economies then it must surely address the massive problem of illicit capital flows into the Western banking system.
Furthermore, given the proven failure of state regulators to identify and defend the public interest, the continued existence of a machine that might be used for the furtherance of grand corruption in the developed world might be considered pertinent to a discussion of effective regulation. How do we know our politicians and regulators are honest if the means exist by which they might be bribed under conditions of perfect secrecy?
With that in mind, I started to wonder about the relevance of offshore holdings to the UK Parliament's Register of Members' Interests. The purpose of the register is "to provide information of any pecuniary interest or other material benefit which a Member receives which might reasonably be thought by others to influence his or her actions, speeches or votes in Parliament, or actions taken in the capacity of a Member of Parliament". The receipt of benefits from offshore trusts or other financial vehicles would seem at first glance to constitute something that might reasonably be thought by others to influence a politician's actions, as they pertain to the offshore sector in particular and to financial regulation in general (pace the speakers at last week's meeting).
If we are to love and trust our elected representatives again - and how we long to do so - then it is necessary for us to know whether they have assets parked offshore, regardless of their provenance. Reasonable people can disagree as to whether the use of offshore facilities is consistent with working as a representative of the British people, but we must be able to go about our business secure in the knowledge that our MPs are not being bribed by shadowy business interests.
I am not saying that they are - I am just saying that we have a right to know whether our representatives are taking advantage of a system that facilitates tax avoidance and evasion on an epic scale, given that their involvement in the offshore economy might reasonably be thought to influence their actions.