Opening a debate on finance
Wednesday 26th January 2011, 3:00PM GMT.
THE founder of the Tax Justice Network, Richard Murphy, is one of this Island’s harshest critics – or, to be more accurate, a regular, vociferous and dogged critic of the Island’s principal economic activity of offshore financial services.
Earlier this week he addressed Islanders at a meeting organised by the Jersey Democratic Alliance and the pressure group Time4Change. He did not, however, come here to harangue anyone or to launch a tirade of abuse. Unlike some who attack Jersey, he appears to be interested in genuine debate about the nature of offshore centres, though it is clear that the starting point of his argument is that such centres exercise a malign influence.
As a figure fuelling debate, Mr Murphy can, in fact, be seen as a counterweight to those who brook absolutely no criticism of the financial services sector. If the idea that all is rotten in the state of Jersey fails to stand up to scrutiny, the same can be said of the idea that every facet of finance activity is utterly beyond reproach.
To his credit, Mr Murphy came here with a template for change which he believes would not only remedy the deficiencies that he detects in our finance industry, but would also secure our economic future. In short, he has a ‘Plan B’ for Jersey.
The trouble is – at least from the point of view of those who insist that the Island is playing a tainted game – that there is a great deal of common ground between Mr Murphy’s Plan B and the Plan A that our industry and its regulators are already following.
The Murphy line is that Jersey can become a beacon of probity by encouraging honesty, accountability and transparency. On the understanding that reputation is everything, the political and regulatory drive of recent years has been in the direction of openness and the exchange of tax information with other jurisdictions.
The Tax Justice Network still judges the Island harshly, but time and again external authorities have examined what our industry and its regulators do and how they do it, only to conclude that we are, to use an expression much loved by finance specialists, ‘best of breed’.
Mr Murphy might argue that best is still not good enough and that the very basics of offshore business are fatally flawed, but does he really believe that the ideal, pristine conditions that he envisages will ever be a practical possibility in this
imperfect world?
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Just who in their right mind can be opposed to the following?
Support sustainable finance for development
Support international co-operation on tax, regulation and crime
Support transparency and oppose corruption
Support a level playing field in competitive markets
Support progressive and equitable taxation
Support corporate responsibility and accountability
Support tax compliance and a culture of responsibility
There is much hypocrisy in support of a selfish lifestyle. Think before you post!
And where do you stand Mr JEP Editor? Do you have a problem with any of the above?
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Now lets get straight to the point. The only people that attend meetings by the TJN have little or in most cases no experience of working in the finance industry so to see some deputies going along should concern workers/voters within the industry.
Now the reason for this is simple and its because all TJN views in real terms are outdated and actually ignorant of all the glowing reports we have had to date from organisations such as the EU who even white listed us for goodness sake.
Now Mr Murphy may see himself as an influencer of our business but he has no weight or influence as to whats going on here in real terms and thats because the Finance industry already protocol laid out in law.
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This man will only rest when finance has gone from Jersey. I would like to see what happens then
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Mark, I am confused.
As far as I am aware Jersey follows all the proposals in your e-mail yet I get the impression that you think not?
There have always been critics of Jersey’s main earners. When I arrived here over forty years ago nobody had a good word to say about the tourists. I’m quite sure before that people moaned about (or would have given our peculiarly acquired talent for feeling guilty about whatever we do) the Newfoundland cod fishing, knitting woollen jumpers or making cider!
I certainly thought before I posted, did you?
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#2 & #3 – Please read #1
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Tony 2
You are talking out of your hat. Many in the campaigns to eradicate the illicit capital flows are those that work in the industry – be they lawyers, accountants or niche financial ‘experts’.
What you are saying is that because you don’t like the inference that Jersey and other secrecy jurisdictions maintain the necessary frameworks for financial immorality to prevail, then they must be wrong.
Whereas you may believe that adminstering a vehicle for, let’s say, an African state controlled mineral company to the tune of billions, is perfectly acceptable, what you are also saying that their despotic rule over grinding undemocratic poverty is also acceptable.
Believe me, Jersey and Guernsey are rife with this filth.
But hey, just because you don’t care, you are able to accuse others of ignorance that make it THEIR WHOLE LIVES to investigate the injustice and report it.
It is the likes of you, matey, that are trite and unworthy of comment on these structures.
And that’s the tip of an iceberg of corruption and immoral transactions that we on these islands promote as some sort of manna.
Anyway, if you knew a bit more about what these campaigns were really about., you would be surprised how little ill-will is directed at the locals in these jurisdictions. It is the people that have captured our systems of governance – “regulatory capture”, the banks, the spivs and the greedy that are the focus.
Like it or not, the finance industry needs cleaning up. If not just for the opacity that created contagion a few years back. How long will it take to fix, do you think, and at what human cost.
Blinkered shortsightedness is ugly. The islands are beautiful. You do no justice to your environment.
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Hilary 4
You are joking, aren’t you? Look, learn, and think again.
No one wants any hardship anywhere. But the islands have enough ‘entrepreneurial skill’ and well educated ‘motivated individuals’ to surely make something work that isn’t related to scamming around other jurisdictions tax regimes.
If not, then why believe the nonsense portrayed by Jersey/Guernsey Finance.
Is it really the case that the people that are holding the power only know one trick? What sort of faith am I supposed to have in that?
So sad that repeated cliches are used to defend an unsustainable economy based on extorting fees and tax dodging from other places that are in far worse economic positions – without knowing exactly why.
That is what Murphy, and the dozens of campaigning groups around the world, are on about. A bit of enlightenment.
It is not Jersey’s fault that it has been taken over by the nonsense some of these posters believe. But it is Jersey’s responsibility to act as a first world nation with massive privileges to ensure there is NO corruption or damaging financial provenance coming through the island.
It is my experience that the MDs and FDs of these structures care only about potentially damaging PR rather than the greyscale immorality of their clients.
Jersey, or Guernsey where I’m from, has NEVER been a ‘bad’ place to live. But as we grow older and wiser, the industry becomes grubbier and more opaque.
Stop being stupid, everyone.
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6. Arnauld,
Are you Richard Murphy by any chance??
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Jouhn Raumbo 8
Nope.
Are you Sylvester Stallone?
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#8. As Mr Murphy isn’t from Guernsey, no. And I’m not Richard Murphy, either. Are you Colin Powell? (perhaps not – he’s a bit long in the tooth for an all action hero handle like yours)
Getting back to the meat of the story:
In 1990 there were a few fringe companies who sold Fairtrade goods. Many people regarded them as cranks; some thought they were getting poor-quality goods but bought anyway on the sympathy vote. In 2009 retail sales of Fairtrade
goods were about £800m: several supermarkets have 100% Fairtrade ranges of tea and coffee
In 1980, a few fringe businesses thought that it mattered to stress the ecological credentials of their goods. These days, no-one can afford to ignore that angle in their advertising. Sales of organic food have grown exponentially in the last two decades.
In 1780, most Britons thought that slavery was a natural part of the social order. In 1807, trading in slaves was outlawed: in 1833, slavery was abolished in the British empire.
I could go on. Attitudes change: and the attitude that avoidance of tax for self-enrichment at the expense of others is being challenged for the folly it is. When the tide turns – and it will – the present Jersey finance industry will evaporate. Plan B is a creative alternative. It probably has flaws, but I think it represents an opportunity, at least as a beginning.
Jersey was fantastically lucky once before: in the mid 1880s the cod trade and the banks collapsed – but at that moment the Royal arrived, and prosperity was maintained. This is not a time for relying on luck or wishful thinking (are you reading, Phil Ozouf): this is a time for forward thinking.
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8. Rambo: No, but he does writes similar abusive nonsense in the Guernsey Press. Not sure if a Murphy or a donkey is worse! Everyone who takes an alternative view to his is “stupid” to use his words…
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11
Where have I called someone stupid?
And where am I wrong?
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Our finance industry certainly give out some mixed messages about what they are doing here. One minute they are promising us it is all squeaky-clean, then the next they protest that there would be nothing left if the scams and shams were stopped. Maybe that makes perfect sense in the context of inside knowledge, but the three-quarters of Jersey people outside the loop can’t help suspecting that we are being lied to at least half of the time.
When I first heard of Murphy, I dismissed him as another ffoulkes or Mitchell. However, not having psychic powers, I have to read things before I know whether I disagree with them. And if you do bother to read him, you find coherent, principled arguments from somebody with rather more impressive credentials as a finance industry professional than whoever John Rambo is, even if they are uncomfortable from a Jersey viewpoint.
Moreover, Murphy has taken the complaint “Where would that leave Jersey, then?” on board, and come up with a constructive proposal for how Jersey can continue to play a major role in a reformed international tax and accounting regime.
Engage with him. Analyse how easy or hard it would be to manage the transformation. Correct his details. But do not simply dismiss him; it is not only at your own peril, but at the peril of all of us living on the money that finance initially brings in.
The disasters of the last two years have ploughed the field for Murphy and his fellow campaigners seed. We need to be looking to harvest that crop, not the one that is failing now.
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4. Hilary – well said.
11. Farmer Geddon – yes, the reason why the finance industry ignore Richard is that it is impossible to engage him in debate, as he just brandishes non-believers as ‘stupid’ or ‘spouting nonsense.’
6,7. Arnald. You just come out with the same rhetoric as Richard, making unfounded allegations of ‘corruption’ and questioning the integrity of all those people who work in the finance industry in the islands. You use words such as ‘filth’, ‘nonsense’ and ‘stupid’ – hardly encouraging a grown up debate. I’m afraid that like Richard, despite all his self-important puff, you do not know what you are talking about.
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I too work in the industry in Bermuda.
The debate as to whether Jersey or Bermuda is a tax haven and opaque etc. is over.
The discussion regarding tax evasion is over. The current conversation should be about tax avoidance and how big a part that plays in the business model of these countries offshore.
Because with GAAR and the additional resources that different governments are throwing at this issue as well as the old nutmegs is phenominal.
The main reason for using an offshore domicile will be gone.
Then what?
You should get on with discussing…then what!
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12
Do you give to charity?
You have to ask the question: why would someone who lives in Guernsey feel so passionately about the kind of business that the CI legislative structure could allow, and does allow, in my experience?
Most people, it seems, accept the cash and do not question. No problem there.
But when defending the detail of the position we hold in the global market, honest questions get shot down as extremism.
Can you see where I’m going here?
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Arnald
When you say you are “from” Guernsey, could you just clarify whether you were born there or not?
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14. Arnald,
I like that you have changed the tone of your argument. No one objects to you asking ‘honest questions’. We are fortunate that we live in a democracy (although Richard would have it that we don’t) where you can ask these questions.
For what it is worth, I am a Jerseyman working in the Finance industry which I honestly believe to be a force for good in the world and in Jersey. I would not work in it if I did not believe in it.
I’m not going to put any more posts on this article, but as the JEP gives so much coverage to Richard (again, you wouldn’t expect that if you believed the TJN / Geoff Southern who describes the Jersey media as ‘like Soviet Russia’) that I am sure we will have the opportunity to correspond again. I look forward to continuing the debate.
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Mac slavery was a legal enterprise in the 18th century, would those arguing on a legal basis for tax avoidance also have accepted this position as well? Some on here think a legal branding makes the package acceptable.
Just because something is legal doesn’t make it right. Massive tax avoidance is wrong, the money drained out of the system should go to where it was meant to go. If everyone adopted this method very little tax would be paid.
What would happen to Jersey if much of Jersey’s tax went offshore to Guernsey, would those running the show be happy or not? Would Geoff be saying this was a good idea?
People need to think ahead to post tax avoidance times and get out before the whole pack of cards comes tumbling down. Head in sand attitudes get you nowhere.
Arnald if someone gives say £100k to charity out of the millions he has saved on tax every year is this really giving to charity?
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There does seem to be a touch of hypocrasy here. I hope those of you who think that Jersey’s finance industry is corrupt check to see where their clothes are made(China)furnature and food comes from etc etc Phillipines Indonesia,Africa etc etc. Sadly the world is far from ideal, if you want to do something about it then there are lots of organisations you can support financially or with your time.
The finance industry here is much cleaner than it used to be thanks to Goverment and the JFSC. Inflows of funds from corruption are now a thing of the past. Whether you think legitimate tax avoidance is immoral it is not illegal! The finance industry is also adapting to changes in attitude by developing new skills and new markets.
Like all successful business Jersey will always have critics.
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Tax avoidance is legal, immoral? Possibly.
There are definitely some instances where tax avoidance is cutting a fine line to tax evasion and these are without doubt questionable activities.
However, the islands do play a valuable part in the investment management industry by, for example, providing vehicles which themselves are not taxed and operate in such a way that each individual investor is responsible for their own tax payments in their home jurisdiction.
This means that each home jurisdiction of the investors is getting their fair slice of the tax take from those investing activities.
Strictly, the use of a vehicle in this way is tax optimisation or possibly avoidance depending on how you look at it, but morally isn’t it more correct that the tax revenues generated are shared between the countries where the original investment capital originated?
I think there are clear examples of where the islands have contributed to questionable activity in the past but as far as I am aware, all of this has been stamped out, at least in part due to the ever increasing regulation. Should our activities today be influenced by where we think legislation will go in the future? I honestly don’t know.
As pointed out by previous posters, the attitudes of society are ever changing, what is acceptable today may be abhorent to future generations. That is the way of the world and all we can do is to move with the times and ensure that perceptions are of the channel islands as a good place to do business, not of some rock inhabited by tax dodgers and their minions.
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We keep on hearing how Jersey is in the top tier for its transparency – but of course we only hear this from Jersey.
So if this is the case then how come the UK Customs and Revenue has NOT put Jersey in tier one (unlike Guernsey and the IOM which are in tier one) but rather in tier two???
See this just published:
“New penalties to tackle offshore tax evasion”
http://www.hmrc.gov.uk/news/offshore-penalties.htm
and Jersey is NOT tier one!!
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