Public registers showdown can be avoided

  • Practical relationship: Lord Ahmad, UK Foreign Office Minister for the Overseas Territories, speaks with David Burt, the Premier (Photograph supplied)

    Practical relationship: Lord Ahmad, UK Foreign Office Minister for the Overseas Territories, speaks with David Burt, the Premier (Photograph supplied)

A legal battle over Britain’s demand that Bermuda establishes a public beneficial ownership register will most likely be avoided.

That is the view of Lord Tariq Ahmad, Britain’s Foreign Office Minister for the Overseas Territories, who said the UK was pushing for public registers to become an international standard by the 2023 — the same deadline being imposed on Bermuda.

In an interview with The Royal Gazette, Lord Ahmad also explained why the UK had not used its veto power to keep Bermuda off the European Union tax blacklist at a meeting of European Union finance ministers last month. He also expressed confidence the island would come off the list next month.

Lord Ahmad was speaking during his one-day visit to the island on Thursday when he met with government and business leaders and other members of the community.

David Cameron, the former British Prime Minister, first called on the OTs to introduce public beneficial ownership registries some six years ago.

The Bermuda Government has opposed that ever since, on the grounds that if other countries are not required to do it, it would cause the island economic damage.

Also, the island has maintained a beneficial ownership register for more than 70 years and has tax information exchange agreements with many countries, including Britain.

Britain will issue an Order in Council in December 2020, requiring OTs to establish public registers. The Bermuda Government has argued that the order would breach the Bermuda Constitution.

Lord Ahmad said Britain’s Conservative government had been opposed to taking this course of action, but was obliged to do so after Parliament passed an amendment to the Sanctions and Money Laundering Bill.

“It was a clear government view that we did not want this amendment to carry,” Lord Ahmad said. “It was defeated in the House of Lords where I was navigating this Bill.

“Regrettably, the opposition to the Government’s position, including from the Conservative benches, meant it was clear that the numbers would not have stacked up, which was why the amendment was carried in the House of Commons.”

He said the British Government had to “respect the will of Parliament” and that meant issuing the Order in Council at the end of 2020 for any OT without a public beneficial ownership register by then.

“We then have defined that timeline to 2023 which will give those territories time to establish a public register,” Lord Ahmad said.

Mr Cameron had first voiced the idea of an international standard for public ownership registers in 2012.

Lord Ahmad said: “I’m very cognisant of the consistent position Premier [David] Burt has taken that we shall establish a public register when we have an international standard.

“We have set a timeline that reflects our ambition and are lobbying to get an international standard by 2023.”

On Bermuda’s constitutional argument, Lord Ahmad said: “There is undoubtedly a difference between the constitutions of different OTs. The Bermuda Government’s interpretation and advice is that they themselves would have to issue this Order in Council.

“As I said to the Premier, we do not believe we will get to the stage where we have to get into some sort of confrontation with Bermuda over legal opinion and advice.

“Certainly there is precedent for both positions in terms of recent history. We will work constructively with Bermuda to get a solution that is reflective of Bermuda’s desire.”

He said Britain was setting up technical working groups to help each territory to meet the deadline.

“We will ensure that as we work towards that 2023 deadline, we will do so in a very inclusive way, a way which is consensual, and Premier Burt was very accepting of that.

“If we continue working in this way, I don’t think we’ll get to the point where we have to test issues of a constitutional point, because I think that would be unhelpful to both sides.”

In March, EU finance ministers voted to add Bermuda to the bloc’s list of noncooperative jurisdictions on tax matters. Britain could have vetoed that decision, but did not.

Asked why, Lord Ahmad described Britain’s traditionally cautious use of vetoes and added that the problem, related to Bermuda’s economic substance regulations, had been rapidly dealt with.

“There was an anomaly which came to the fore very late in the day on the issue of intellectual property,” Lord Ahmad said. “That issue has been addressed.”

He added: “Vetoes are there as a matter of last resort and they should be exercised at times when a resolution cannot be found.

“We regret that the resolution was not found in the first instance, but we have worked together with Bermuda to find a solution with the EU and the European Commission and I believe that’s been found.”

He added: “If you have the right to veto, exercise it with care and caution — that’s our view on vetoes wherever we are able to exercise them in the international community.”

Lord Ahmad is the minister responsible for the United Nations and said Britain had not used its veto as one of the five permanent members of UN Security Council in decades. The last time that happened was in 1989.

Britain had reached out to help its territories legislate for economic substance requirements, lending the diplomatic resources of the Foreign Office and the technical assistance from the UK Treasury “to ensure we could get all the territories in the right place”, Lord Ahmad said.

So is he confident Bermuda will come off the list at the next meeting of EU finance ministers in May?

“The issue that was identified by the commission has been addressed by Bermuda so I can see no reason why they would remain on the list,” he said.

The island is frequently labelled as a “tax haven” around the world. Combating that perception requires a collective effort, from public and private sectors, Lord Ahmad said.

“It’s very easy to label things,” he said. “Sometimes when you don’t want to delve into the detail, that’s an easy thing to do.

“That’s what’s happened with the Overseas Territories. We need to move away from the narrative that is not a picture of the reality.”

He saw Bermuda having “a crucial role to play in terms of its business opportunities and offerings to the world” as well as a “member of the British family”.

“Yes, there are some in the UK and Europe who need some insight and basic education on what our OTs represent,” Lord Ahmad said. “And the best people to sell that concept are the people themselves.

“It’s not the responsibility of the Bermuda Government alone; it’s also the responsibility of the businesses that define Bermuda today.

“I, as the minister responsible for the OTs, am seeking to do my bit in ensuring that we communicate and convey the correct nature of how our OTs, including Bermuda, operate and the fact they are seeking to build open, progressive economies and are committed to seeking new opportunities.”

Reflecting on the modern relationship between Britain and its OTs, Lord Ahmad said it was “based on partnership”. He added: “This is not about us telling them what needs to be done.

“It’s about having practical and pragmatic working relationships, recognising the needs and what can be delivered in each territory.

“There are times when we disagree, but when we do, we do it in a very respectful manner.”

The OTs are “part of global Britain in 2019” and “bring incredible diversity in terms of people, resources, industries, perspectives — and that’s something that we in the UK value greatly,” the minister added.

With Britain due to leave the EU, some in Bermuda are concerned that the island will lose its voice at the EU table and that the Brexit agreement will fail to regard the island’s interests.

“Brexit will change the way Britain is defined within the European context,” Lord Ahmad said. “We still will have strong and important relationships with our European partners. When I say that, that includes our OTs.

“We have represented the interests of the OTs in terms of their access to EU markets. Whatever relationship and final agreement we have with the European Union, it will reflect the priorities that have been identified with the OTs.”

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Published Apr 29, 2019 at 8:00 am (Updated Apr 28, 2019 at 10:56 pm)

Public registers showdown can be avoided

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