Execution of global anti-corruption plan a tough task

UK might lose massive capital; experts warn billionaires could take capital out of London if offshore anonymity not ensured; no progress possible unless US tackles its own tax havens; nothing wrong in wealthy people’s wish for private life

LONDON: A global plan to help recover stolen assets has been announced at the global anti-corruption summit here, sparking fears that hundreds of foreign and local businesses will pull their wealth out if their anonymity is not protected.

The Global Forum for Asset Recovery will bring together governments and law enforcement agencies to discuss returning assets to Nigeria, Ukraine, Sri Lanka and Tunisia, Prime Minister David Cameron announced at the global anti-corruption summit in London.

The conference has been hailed as the first of its kind, bringing together governments, business and other organisations - around two weeks after PanamaLeaks rocked the world. But a leading estate agent predicted that some billionaire clients will sell property if no longer able to keep identity secret via offshore firms. Property experts have said that super-rich international investors in London property are likely to sell off some of their mansions and penthouses after the introduction of anti-corruption rules cracking down on offshore secrecy.

Privacy-hungry oligarchs, media owners and tech billionaires from around the world could also abandon plans to buy homes in Britain because they would no longer be able to keep their identity secret by purchasing them through offshore companies, Trevor Abrahmsohn said. Trevor Abrahmason’s firm has famously sold properties to billionaires from Russia, Nigeria and China. He has said that about half of his customers buy through offshore companies.

The new rules, announced by David Cameron, will also apply to companies which already own property in the UK, meaning the ownership details of tens of thousands of people will soon become public.

Surveys have said that one in three of the mansions on the richest stretch of The Bishops Avenue, known as “Billionaires’ Row”, in north London are owned offshore.

“They may sell up if they can,” Abrahmsohn said. “Privacy is important for some of my clients. They have their own good, legitimate reasons, for example to safeguard their families. These are not just oligarchs but perfectly good people who just don’t want the limelight.

“It could be a US media owner or internet billionaire who doesn’t want to be exposed. This (policy) is like calling everyone who wants privacy, a criminal. We can’t afford to do this and repel the wealth creators,” he said.

Craig Hughes, tax director in offshore services at Menzies accountancy firm, said the new UK policy “could impact investment in UK property” and argued that “high net worth, high profile individuals do have a right to a private life”.

“It is categorically wrong to target legitimate taxpayers with the same brush as those who are corrupt, who launder and hide illicit funds,” he said.

Tom Bill, head of residential research at the estate agent Knight Frank, said, “In a minority of cases of offshore ownership, anonymity is the main attraction, and for those people this measure may make them think twice about buying.”

Ahead of the conference, controversy erupted when it emerged that David Cameron had described Nigeria and Afghanistan as "fantastically corrupt", while meeting the Queen and the Archbishop of Canterbury while telling them of the summit.

Campaigners have raised fears for a long time that the UK, particularly London, had become a place where rich foreigners could buy properties but hide their true ownership. It’s estimated that over 60,000 expensive properties in London alone are owned by rich foreigners whose identity in most cases remain anonymous whereas in England and Wales the total number could be as high as 130,000. David Cameron has now said that to stop Britain from becoming haven of offshore investors, foreign firms which own property in the UK must declare their assets in a public register.

Downing Street has said Cameron's plans would include those who already owned UK property as well as those seeking to buy it but it has not been explained how far back the register will be maintained. It said the register would mean "corrupt individuals and countries will no longer be able to move, launder and hide illicit funds through London's property market, and will not benefit from our public funds".

It is estimated that a minimum of over 500 Pakistani nationals own properties in Britain directly or indirectly, most of these in London. Tax havens with UK links, including Bermuda and the Cayman Islands, were represented, but the British Virgin Islands was not at the summit. The British Virgin Islands has not yet signed up to the automatic sharing of it register, but the prime minister defended Britain's overseas territories saying they had come a long way. Jersey, the Cayman Islands, Bermuda, Anguilla and the Isle of Man have agreed to join a group of several dozen nations that share their registers with one another.

Alan Bell, the chief minister of the Isle of Man, told the conference that progress could not be made unless the US did more and tackled its own tax havens such as the state of Delaware. American administration has said it will introduce financial regulations designed to force companies to disclose more information about their owners.