Geneva Bankers Have a Word for Brown’s Tax Attacks: Hypocrisy

By Simon Clark and Elena Logutenkova

March 25 (Bloomberg) -- In yet another sign that financial centers are losing each other’s confidence, Geneva bankers are insisting that Gordon Brown, the champion of deregulated markets in London and the British Isles, favors tax cheats at least as much as he says they do.

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“I would define Mr. Brown and the British government’s position as full of hypocrisy,” Mirabaud, who’s also senior partner of Mirabaud & Cie, a 200-year-old private bank in the Swiss city, said in an interview. “At the end of the day, we are engaged in an economic war for market share.”

Guernsey’s private equity firms, Jersey’s securitization vehicles, the Cayman Islands’ hedge funds, Bermuda’s insurers, and the British Virgin Islands’ holding companies are all incorporated on sovereign British ground.

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Michael Foot, a former official at the Bank of England and the Central Bank of the Bahamas, is leading the U.K. review of nine financial centers. Foot, who can’t challenge the islands’ freedom to set tax rates, said he will publish an interim report by April 22.

Politicians on Britain’s offshore centers said they channel billions of pounds into London’s financial district. “We are vitally important feeders into the United Kingdom,” Allan Bell, the Isle of Man’s finance minister, said in a January interview.

Jersey, located off France’s northern coast, is home to Granite Finance Trustees Ltd., through which U.K. mortgage lender Northern Rock Plc parceled home loans and sold notes to investors before the bank was nationalized. A unit of New York’s KKR & Co. is among private equity funds incorporated on Guernsey, an adjacent island in the Channel.

Cayman Companies

Cayman had 9,870 funds as of December. It’s also home to Ugland House, where 18,857 shell companies were registered as of last year. Bermuda had 1,481 insurers as of 2007. In 2003, British lawmakers criticized the Inland Revenue, the country’s tax collector, for selling government buildings to a Bermuda company that paid no U.K. tax.

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The British tax havens create trusts that hide the identities of beneficiaries, Mirabaud said. “I would only believe Mr. Brown is serious about addressing the question of transparency in offshore banking if he forces the real beneficial owners of any trust to be identified in all jurisdictions,” Mirabaud said. Geoff Cook, chief executive officer of Jersey Finance Ltd., which represents the island’s finance industry, said there isn’t a register of trusts on the island, though trust management companies must know who the beneficiaries are.

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