
City of London: Tax haven in the heart of Britain (2011) - lowmemcpu
https://www.newstatesman.com/economy/2011/02/london-corporation-city
======
sprafa
An enormous amount of money going through Britain appears to be money
laundering. Look into real estate in london. An absurd situation.

Anecdotally - I spoke to a Goldman Sachs guy who quit - he made software to
flag “suspicious” transactions. He said it flagged millions everyday. Money
coming in from Saudi Arabia, Gibraltar, Panama, Jersey etc.

I asked him why did he quit? This seemed like a useful thing. Stopping such
transactions is a good thing, no?

He said “you don’t understand. All the software did was flag the transactions.
It didnt stop them. It just marked them as ‘suspicious’”

I was blown away. “Why have a piece of software that just flags the
transactions and does nothing??”

He said “Because that’s what the law demands. And so that when we get caught,
we can go to the Parliament in the inquiry and say ‘you’re absolutely right,
our software did mark this as a problem!’”

~~~
xxpor
Wasn't one of the theories why the UK wanted to get Brexit done by New Year's
this year that there was a new EU financial transparency directive coming into
effect that might have exposed a lot of Conservative MP's financial dealings?

~~~
DaiPlusPlus
I'm a die-hard remainer, but I know that's untrue:
[https://fullfact.org/online/brexit-not-concealing-
offshore-a...](https://fullfact.org/online/brexit-not-concealing-offshore-
accounts/)

~~~
rjmunro
That is specifically true, but I suspect being out of the EU will make the UK
easier for money launderers and similar in the long term.

------
hpoe
For those interested in learning more about the City of London there is a
youtuber, CGP Grey, who has to great 10 min vids on what it is why it exists
and how it operates. Link here:
[https://www.youtube.com/watch?v=LrObZ_HZZUc](https://www.youtube.com/watch?v=LrObZ_HZZUc)

~~~
twic
If you think the City is wild, wait until you find out about the Temples - a
couple of office complexes for elite lawyers, descended from a Templar church,
which are their own local authority, carved out from the City:

[https://www.middletemple.org.uk/about-us/freedom-
information...](https://www.middletemple.org.uk/about-us/freedom-
information/local-authority-functions)

[https://londonist.com/london/things-to-do/middle-temple-
hist...](https://londonist.com/london/things-to-do/middle-temple-history-
explore)

------
Havoc
>usually with secrecy as their prime offering.

lol. The only ones selling bank secrecy these days is Hollywood action movies.
It died out in the real world years ago. All the major offshore locations
report holdings to the US tax authorities (FATCA) and the EU tax authorities
(CRS).

~~~
zymhan
and yet

> Then there is the City’s Cash, “a private fund built up over the last eight
> centuries”, which, among many other things, helps buy off dissent. Only part
> of it is visible: the Freedom of Information Act applies solely to its
> mundane functions as a local authority or police authority. Its assets are
> beyond proper democratic scrutiny.

Tax laws aren't the sole way of ensuring financial transparency.

~~~
Havoc
Well yeah - if you grant someone autonomy you do lose a fair bit of control.
To some extent it's a case of can't have your cake and eat it too.

It's not exactly a coincidence that the City is in the center of London. Or
rather the rest exists around it. London's prosperity is linked to it's
existence to some extent. Services account for 77% of London exports & a big
chunk of that is financial services.

------
slashdotdash
The Spider’s Web is a documentary film which covers this subject in detail.
Well worth watching if you have an interest in finding out more.

“An investigation into the world of Britain’s secrecy jurisdictions and the
City of London. Today, up to half of global offshore wealth may be hidden in
British offshore jurisdictions and Britain and its offshore jurisdictions are
the largest global players in the world of international finance.”

[http://spiderswebfilm.com/](http://spiderswebfilm.com/)

------
boring_twenties
This book from around the same time goes into detail into global tax havens
(including lots on CoL and its history), and the insidious ways that system
has integrated itself into the "legitimate" global financial system.

I'm not an expert on the topic but I found the book hard to put down.

edit: The book: [https://smile.amazon.com/Treasure-Islands-Uncovering-
Offshor...](https://smile.amazon.com/Treasure-Islands-Uncovering-Offshore-
Banking/dp/0230341721)

~~~
waterfowl
The book is by the same author as the article.

~~~
boring_twenties
Good catch.

------
juskrey
UK got one thing right: it is not only beneficial, but also rightful to help
other people part with dirty money. Pretending that all money can fit some
"clean" model and fully feed the economy at the same time, like (part of) EU
tries to do, is a dangerous fallacy. Switzerland got that too, but they fell
prey to US long before that banking privacy defeat.

So now, like in old good times, UK plays on par with US.

~~~
Barrin92
It's neither beneficial nor rightful. First, it's not rightful because
laundering money for corrupt states aids their oligarchy or corrupt regimes,
which directly harms the people in said countries. I'm not sure what moral
standards you have that somehow sees supporting corruption as good.

Secondly, it's not beneficial to the UK in the mid and long term because this
money flows into assets like London real-estate without providing any actual
jobs or innovation, thus not providing any value to ordinary British citizens
while pricing them out of the city.

It's endemic corruption on both sides, and a direct result of the lack of
British competitiveness in most other fields for decades now. The UK is well
on its way from being the world's most inventive nation to an oversized Canary
Islands.

~~~
raverbashing
> Secondly, it's not beneficial to the UK in the mid and long term because
> this money flows into assets like London real-estate without providing any
> actual jobs or innovation, thus not providing any value to ordinary British
> citizens while pricing them out of the city.

So, it will increase rents for the landlords. Good for the UK overall? No.
Good for people on the real-estate business (a lot of them very well connected
politically)? You bet)

~~~
imtringued
Foreign investors aren't renting apartments. They are buying them and this
means they are the landlords.

~~~
raverbashing
Yes, that's what I'm saying

> it will increase rents (received by) the landlords

might be a better wording

------
dang
Discussed at the time:
[https://news.ycombinator.com/item?id=8181308](https://news.ycombinator.com/item?id=8181308)

------
twic
This article weaves together lots of weird and wonderful historical detail to
depict the City as a malign and unstoppable force, but it's all bollocks. It's
a pile of allusion and errors, written for an audience who will accept this
stuff uncritically.

Some examples:

> The term “tax haven” is a bit of a misnomer, because such places aren’t just
> about tax. What they sell is escape: from the laws, rules and taxes of
> jurisdictions elsewhere, usually with secrecy as their prime offering.

There are no laws, rules, or taxes which apply everywhere else in the UK which
don't apply in the City.

> A few examples illustrate the carve-out. Whenever the Queen

The queen is a purely ceremonial figure.

> The Remembrancer, whose position dates from the reign of Elizabeth I, is the
> City’s official lobbyist in parliament

That particular official is unique to the City, but other local authorities
have their own lobbyists in parliament:

[https://www.local.gov.uk/parliament](https://www.local.gov.uk/parliament)

> The City Corporation is different from any other local authority. Here, hi-
> tech global finance melds into ancient rites and customs that underline its
> separateness and power with mystifying pomp. Among the City’s 108 livery
> companies, or trade associations

The livery companies don't play any role in the government of the City.

> They were astonished to find that the corporation was a big shareholder in
> the development - a public authority acting as a private company, outside
> its jurisdiction.

I can believe that this was something unique back in 2002, because that was
before local authorities were granted the "general power of competence". But
they got that in 2011, and now it's routine for them to make investments in
all sorts of things.

[https://www.local.gov.uk/sites/default/files/documents/gener...](https://www.local.gov.uk/sites/default/files/documents/general-
power-competence--0ac.pdf)

> Unlike any other local authority, however, individual people are not the
> only voters: businesses can vote, too.

Nope. Businesses can appoint some of their employees as voters, and the voters
can then vote. The businesses get to chose who is a voter, but votes are by
secret ballot as usual, so they have no real influence on the actual voting.
You can read the rules here:

[https://www.cityoflondon.gov.uk/about-the-city/voting-
electi...](https://www.cityoflondon.gov.uk/about-the-city/voting-
elections/Documents/wardmote-book-june-2014.pdf)

> Political parties are not involved - candidates stand alone as independents
> - and this makes organised challenge to City consensus all but impossible.

It's not that political parties are banned or anything, just that they so far
haven't managed to unseat independents. Mostly - Labour won five seats in the
2017 elections.

> This “missed time” is significant, Glasman says, because it means the City’s
> rights pre-date the construction of modern political Britain, and this has
> placed it outside parliament’s normal legislative remit.

The City has various rights and privileges that don't stem from legislation,
because they're so old. But that doesn't mean they're outside parliament's
legislative remit. If parliament passed an act changing something in the City,
that thing would change. It's a similar situation to royal prerogative powers.

> 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.

Neither of which make it a tax haven in any sense at all.

> 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”.

Yes, in much the same way as every local authority will work to advance the
interests of its local businesses - including Cornwall:

[https://www.cornwallti.com/about-us/](https://www.cornwallti.com/about-us/)

Honestly, this article is sensationalist nonsense.

~~~
tomcam
That was a great reply. A couple of nits: I believe the queen can technically
veto any bill from Parliament and can also appoint the Prime Minister.

~~~
twic
Decline to sign rather than veto as such.

Those are indeed formal powers the crown has, but in practice, they are used
strictly in accordance with convention, rather than at the queen's discretion.
The crown is a sort of legal machine which operates through the physical body
of whoever the monarch happens to be at the time. It would be much better if
all that was properly set down in law, but in practice, it works smoothly
enough that nobody has bothered.

Except in Australia:

[https://en.wikipedia.org/wiki/1975_Australian_constitutional...](https://en.wikipedia.org/wiki/1975_Australian_constitutional_crisis)

~~~
mcv
In 1990, the Belgian parliament declared the king "unable to govern" for day
because his conscience didn't allow him to sign a law. So Belgium was a
republic for a day, the government signed the law in absense of a king, and
the next day the parliament voted to declare the king fit to govern again, and
everybody was happy.

------
amiga_500
The UK is the biggest enemy to western democracy.

[http://spiderswebfilm.com](http://spiderswebfilm.com)

~~~
devmunchies
i'd say hedonism and emotional control is more of a threat.

~~~
amiga_500
I'd say The City siphoning off tax money from governments who are cutting
services is a bigger problem.

------
oxAAAFFB
By the way, I just arrived in London for holiday and am in self quarantine.
Any suggestions on what I should do when I get out?

~~~
throwaway_12351
\- A morning stroll through Hyde Park, by far the best health activity ever,
especially in summer.

\- Paddle boarding in Camden, one of my favorite summer activity while social
distancing!

\- Borough Market for food!

------
linuxftw
The presumption is that this area deserves to have less autonomy. Perhaps the
author should consider the reverse: the rest of the country deserves more
autonomy. If you are so concerned for the city's special privileges, perhaps
you should vote (ha!) for the same privileges to be applied to yourself.
Instead, predictably, the author wants the states power to expand ever
further.

