London to probe the money trail


M Ziauddin

MOST likely today, London itself, where our robber barons have stashed away their loot in the shape of real estate and property would make it legally impossible to hide the names of the real owners of these properties and also identify whether or not the resources with which these properties were bought were siphoned off from tax payers’ contribution by the present and former public office holders in Pakistan including laundered tax evaded or avoided money
So, Pakistanis need not waste their breath and energy trying to find out who actually owns the flats and mansions in London registered in the name of off shore companies and whether or not they were bought with tainted money.
Draft legislations are expected to be presented today at a conference on corruption being convened in London.
Through these proposed laws foreigners suspected of using London’s property market to launder ill-gotten gains will be forced to declare where they got their money from.
The UK government seems determined to fight global corruption under new proposed legislation.
This is happening in a bid to end Britain’s reputation as a haven for dirty money. And under these new laws any overseas politician or public servant who makes notably lavish purchases in the UK could be forced by police to explain the source of their income.
The measures, known as “unexplained wealth orders”, will form part of the agenda on Thursday as David Cameron hosts an international anti-corruption summit in London.
According to Colin Freeman, Chief Foreign Correspondent of Telegraph (Corrupt foreigners who launder money through luxury London homes face crackdown—May 11, 2016) this comes in the wake of the publication of a second tranche of the so-called Panama Papers, which have highlighted concerns that offshore tax havens have been used to launder hundreds of millions of pounds through London’s booming property market.
Quoting the anti-corruption group Transparency International, Mr Freeman said some 36,000 homes in London 33 boroughs are currently registered as being owned by firms in offshore tax havens such as the British Virgin Islands, ‘which do not have to reveal the buyers’ real identities.’
Further quoting the TI the news report said, in Westminster, this accounted for 9.3 per cent of properties, or nearly one in ten, while in Kensington and Chelsea – London’s wealthiest borough – the figure was 7.3 per cent.
‘While most such purchases are thought to be legitimate, anti-corruption campaigners say there is little doubt that some have been bought using the proceeds of embezzlement or other crimes. ‘The National Crime Agency believes that such is the scale of the problem that criminal money from overseas has artificially boosted London house prices.’
In view of the above the UK government is said to be under pressure to introduce new legislation that would force any tax-haven registered firm to declare who its true beneficiary was before being allowed to purchase property in the UK.
‘Under the “unexplained wealth orders”, anyone who was suspected of purchasing a property that was well beyond their apparent means would also have to tell the authorities how they obtained the cash.
‘The new rules would apply in particular to “politically exposed persons” – those who are known to have held public office either currently or in recent years as a politician or civil servant.
‘Past cases include the likes of James Ibori, a former governor of Nigeria’s Delta State, who was jailed for 13 years in 2012 after pleading guilty at a court in London to money laundering and fraud offences involving up to £150m from the Nigerian public purse.
‘He allegedly bought four homes in Britain, including a £2m mansion in Hampstead and properties in St John’s Wood and Dorset.’
Quoting Rachel Davies, Head of UK Advocacy and Research at Transparency International, The Telegraph story said: “This would allow law enforcement to look closely at a politician or one of their associates who had, say, bought two £4m houses in Hampstead despite being only on a salary of £100,000.”
She is said to have insisted that rules requiring firms in offshore tax havens to declare who the real owner of a home was were much overdue in Britain, where the booming property market in London made home ownership a very attractive investment.
“We are not saying that every property bought by a firm registered to an offshore tax haven is a money laundering vehicle, but the sheer number of them in London creates an environment where it is very easy for the corrupt to hide, and there is most likely no smoke without fire.”
The Telegraph story said the measures are part of an action plan that the government has put out ahead of Thursday’s conference, which seeks the creation of “a new power to require individuals to declare their sources of wealth”.
As well as those suspected of stealing from the public purse, it could also be used against corrupt businesspeople and those involved in drug trafficking and terrorism financing, the story added. The move is said to be still at the consultation stage, and may face legal hurdles, but Alan Sheeley, a civil fraud and asset recovery expert at the law firm Pinsent Masons, was quoted as saying, he was hopeful that the government would press ahead with it. “If someone cannot identify where their money is coming from, why should they be able to keep that money if it comes from ill gotten gains?” he asked. “It is a real opportunity.” Mentioning the legal hurdles in the way of such orders the Telegraph story said they may, however, enjoy only limited success in practice if those who are targeted by them challenge the figures in the courts, which can lead to lengthy and expensive assets hearings. The UK Home Affairs Select Committee’s review of the Proceeds of Crime Act is said to have heard evidence that for estimated £100 of criminal profits, only around 0.25 pence was regained through assets recovery hearings. The Thursday’s conference is being attended by a number of world leaders, including the Nigerian president, Muhammadu Buhari, who has made an anti-corruption a key feature of his time in office. According to Mr Freeman on Tuesday, Mr Cameron faced embarrassment after being caught on camera telling the Queen that both Nigeria and Afghanistan were “fantastically corrupt”.

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