Jersey - Tax Haven

 Jersey’s population is no bigger than that of Dover. And yet companies and people on the Channel Island invest more money into the UK than those in China or Germany – £112bn a year. It has £1 trillion sitting in its trusts, companies, funds and foundations. Jersey‘s governance system has more in common with a medieval fiefdom, than a modern democracy.   The main sway of power in Jersey is held by un-elected Crown Officers. Although they are officially appointed by The Queen, they are essentially self-selecting. For several decades, those officials have been former offshore lawyers whose previous bread and butter was the trust industry. Jersey judges and prosecutors are often examining cases in which they, knowingly or not, have previously worked for one of the parties.   

Jersey has staked its reputation on being a better-regulated and more transparent tax haven than other offshore jurisdictions. A huge leak of secret files from a prominent Jersey trust company tells a different story.  The La Hougue group advised numerous clients, many of them based in the UK, on how to minimise their taxes, both through legal avoidance measures and occasionally bordering on tax evasion. But behind the scenes, it used client money for personal expenses by borrowing from clients under the guise of investments and onboarding new clients to repay the existing ones. It sometimes fabricated paper trails, for itself and for clients, some former trustees admitted in a US court. All of these are breaches of trust law.

In one instance it helped a Canadian company evade a CA$10m tax bill by engineering a fake bankruptcy, the records show. Its practices were so rotten that when La Hougue’s executives moved its operations to a new sister company in Panama, the regulator there banned the firm, fearing it could tarnish the country’s “good name”. A US court sanctioned the then managing director for perjury and the SEC secured a $58m fine against his deputy for an unrelated stock fraud. 

 Jersey’s authorities have not taken any action, despite being handed some of the documents and details of the accusations. The UK government’s responsibility for Jersey’s integrity is well established. Although as a Crown Dependency Jersey runs its own administration, a royal commission in 1973 concluded that the UK bears ultimate responsibility for its “good government”.

There are plenty of examples of how Jersey has remained a favourite destination for suspicious funds. In April, Israel’s largest bank pleaded guilty in the US to conspiring to hide $7.6bn in US taxpayer money, in part by using a Jersey subsidiary to establish offshore corporations and trusts. Last year, Lloyds Banking Group reportedly froze 8,000 offshore bank accounts in Jersey, because customers had not provided enough information to confirm their identity. In a 2018 report, the House of Commons foreign affairs committee warned that the amount of dirty money entering the UK via Overseas Territories and Crown Dependencies posed a national security threat.

Full story here

https://www.thebureauinvestigates.com/stories/2020-10-05/lost-trust-leaked-files-expose-jerseys-inaction-on-fraud-scandal