This groupthink does not originate with the island havens, which are just fortified nodes in bigger global power networks led by Britain and other large powers. But they have, with their intolerant environments, come to host and protect cultural concentrations of antigovernment, kick-the-poor attitudes that originate elsewhere. In the absence of reliable dissent, these attitudes have flourished, unchecked.
John Christensen, Jersey’s former economic adviser who turned dissident, describes encountering extremist right-wing offshore attitudes when he returned to his native island in 1986 after working overseas as a development economist.
In this year of the City of London’s “Big Bang” of financial deregulation, he found a tax haven amid a spectacular boom. Old town houses, tourist gift shops, and merchant stores in Jersey’s beautiful capital St. Helier were being knocked down and replaced by banks, office blocks, car parks, and wine bars. An employment agency told him he could have any job he wanted; he had three offers the next day. He began employment with an accounting company, working with over 150 private clients.
The firm practiced reinvoicing: the practice I described earlier, where trading partners agree on a price for a trade but record it officially at a different price to shift money secretly across borders. Global Financial Integrity, in Washington, D.C., estimates that about $100 billion is drained from developing countries each year just from reinvoicing—about as much as all foreign aid from the rich world to the poor. It is just one part of a much larger picture of outflows of capital. “This was about capital flight . . . shifting capital out, and evading tax: the really nasty stuff,” Christensen said. “I saw this stuff coming in daily.” The accountancy firm provided a fax number, headed notepaper, a bank account, and a veneer of exceedingly British solidity and respectability.
Christensen worked there for 20 months, mostly handling clients based in South Africa (where much of the work involved evading antiapartheid sanctions), Nigeria, Kenya, Uganda, and Iran. Working undercover, he systematically combed through hundreds of client files and gradually put pieces together. He learned that a very senior right-wing French politician was using his political influence to secure planning permission on behalf of developers with whom he was involved, in a series of property deals. The Jersey link meant nobody in France could find out what he was up to. “You don’t get that information from a cursory look at the file,” he said. “I got hold of this guy’s name by talking to an office in France: they told me ‘I’ll have to speak to the Senator about that.’ If you work there long enough, they get to know you, and get comfortable telling you things. The market rigging, the insider trading: I was sitting there thinking, ‘Holy shit—this is dynamite.’ These were very prominent families; this would be on the front pages if it got out.”
But even today Christensen, like Krall, won’t tell tales about the particular secrets he encountered, having signed oaths and contracts for life. “If I transgressed those I could be thrown into a pit forever.”
Reinvoicing is just one more workaday business sector in the world of offshore finance, and his firm and colleagues saw it as good business practice. “They rationalized it in all sorts of ways: foreigners were protecting their money from political risk or unstable currencies. People in Africa are poor because they don’t work hard enough or they are corrupt; countries are poor so we send them aid money. That kind of thing. They didn’t want to think about economic systems.”
He moved through various jobs, and each time he expressed unease about the origins of some of the money, much of it from Africa, he was brushed aside. One Friday, ahead of the habitual office binge-drinking session, his section supervisor told him she didn’t want to discuss these things and didn’t “give a shit about Africa anyway.” Her attitude, Christensen said, was typical. “Profitability was sky-high, and nobody made the connection between their actions and criminality and injustice elsewhere. None of the financial intermediaries involved—banks, law firms, accountants, and auditors—bothered to report or even question illicit transfers.”
He met an old childhood acquaintance, now a chartered accountant, drunk in a pub, and told him all about his recent experiences in India and Malaysia. “No interest. He was in a bubble: last night’s party, which car I was driving, who’s screwing whom—that was it. I can’t tell you how much of a shock it was to come back. There were really extreme views I was picking up on in Jersey: deep racism; sexism; the repressive feel; the awful in-your-face and aggressive consumerism I’d never seen before—and an almost fanatical hatred of any progressive ideas.”
Progressive legislation takes years to seep to Jersey from outside. Britain abolished its antisodomy laws in 1967, but Jersey only repealed its law, under subtle pressure from an embarrassed Britain, in 1990. “There was this ‘don’t speak out’ mentality,” Christensen said. “In London, all my mates had taken antiracism, and stuff like that, as normal. Back in Jersey, I got, ‘You don’t do that here, sonny.’”
He turned up at a cocktail party on a motorcycle and was assailed by a guest, a senior Jersey business figure, who said his crash helmet was an infringement on his liberty. “He was anti-seatbelts, anti-tax, and anti-government. He would say apartheid was good for black South Africans; that we should reestablish colonialism; that ‘these people’ had been much better off under white governments.” Christensen clashed with Sir Julian Hodge, a pillar of the Jersey banking establishment: “a mega-apologist for apartheid; a mega-pusher for empire; a libertarian beyond anything I’ve met.” He remembers a stand-up row at a public meeting with the Reverend Peter Manton, a Jersey senator and Anglican minister who had also said publicly that “the blacks” in South Africa were better off under apartheid than anywhere else (Manton was subsequently prosecuted for sex offenses and later died).
Offshore can feel like an adolescent fantasy of the world, where white men sort things out over Scotch whisky and see the rest of the world as a consumable resource. At a government committee meeting exploring sexual discrimination and equal opportunities for women, Christensen remembers a senior politician made a show of falling asleep and snoring. Another politician, who ran his own business, went further. “He said, ‘If any of my girls got pregnant I would sack them immediately: nobody wants to see a pregnant girl behind the desk.’ That is how he referred to all women—girls.”
“The ruling classes realize they don’t need to worry about the Democrats coming to power in the U.S., or Social Democrats coming to power in Germany, or Labour coming to power in Britain,” Christensen continued. “They realized they didn’t need to fight the fight at home: they already had this flotsam and jetsam of the empire strewn across the globe, with their red post boxes and British ways of life, and incredible subservience to the English ruling class. In Jersey I was amazed by how fawning the local politicians were to outsiders with money. There was this idea, ‘We can take over our own little places, and the locals will be grateful to us. The checks and balances aren’t there; the press isn’t there; and they resent interference from outsiders.’ Happy Days: Wall Street and the City gentlemen had found a way around the threat of democracy.”
Offshore attitudes are characterized by amazing similarities of argument, of approach, and of method, and some striking psychological affinities, in a geographically diverse but like-minded global cultural community of offshore. A peculiar mixture of characters populates this world: castle-owning members of old continental European aristocracies, fanatical supporters of the American libertarian writer Ayn Rand, members of the world’s intelligence services, global criminal networks, assorted lords and ladies, and bankers galore. The bugbears for this zone are government, laws, and taxes, and its slogan is “freedom”—at least for wealthy elites.
And these attitudes fit seamlessly with another characteristic of small jurisdictions: collective inferiority complexes where residents see themselves as plucky defenders of local interests against the predations of big, bullying neighbors. From this worldview of mistrustful self-regard,
it is but a short step to a libertarian, leave-us-alone worldview that sees any self-advancement at the expense of outsiders as valiant resistance against tyranny. This worldview, of course, dovetails closely with offshore’s ethical framework, which holds the rights of citizens and governments elsewhere to be inconsequential, which sees democracy as a “tyranny of the masses,” and holds the very idea of society with disregard, even contempt. Providing facilities for foreign tax evasion clearly fits this framework, as does a general hatred of tax.
This concentration of extremist attitudes in Jersey was self-reinforcing, as Christensen explains. “Most liberal people like myself left,” he said. My socially liberal friends from school, almost all of them left Jersey to go to university, and almost all of them didn’t go back. I can’t tell you how dark it felt. I have never been a depressed person but I went into a big one there. Everything I valued seemed of no significance. There was no one I felt I could turn to.”
He almost left but was persuaded to stay by an academic researcher who was putting together a new framework for understanding tax havens, and who persuaded him how important it was to understand the system from the inside. “I went under-cover not to dish the dirt on individuals and companies, but because I couldn’t understand it—and none of the academics I spoke to could either. There was no useful literature.” He did not even tell his brother what he was doing and kept this cover for 12 years. He grew roots: He became president of the Jersey Film Society, raced high-speed catamarans, and started a family. He never made a secret of his distaste for the system, but his lighthearted capers, such as founding the island’s first and only Jean-Claude Van Damme Appreciation Society, helped politicians to see him as a lightweight and therefore not a threat.
When he was appointed economic adviser in 1987, he began to feel the full force of what it means to stand out against an accepted, all-embracing consensus. Occasionally, he said, the pressure was so severe that he physically lost his voice. “Tension gets me around my neck. At times, in meetings . . . there were moments when I was literally choking with anger. It took real strength to stand up and say ‘I’m sorry, I don’t agree with this.’ I felt like the little boy farting in church: I felt so lonely during those committee meetings; nobody ever supported me.”
Many people who came to see him as economic adviser wanted him to join their Masonic lodge, and he frequently received the secret signal. “It was a finger twisted back on itself in a handshake,” he said. “These were mainly people I knew vaguely, who would come into my office: ‘Blah blah,’ general talk, then quite openly: ‘Are you interested in joining this lodge?’ I always said I would consider it, and I never did. The type of people doing this were bankers, senior merchants, and senior politicians. You don’t look at people’s hands: you feel a lump there when you shake. For me it felt slightly dirty—covert, as if we were all part of some dirty deal; a schoolboy thing.”
“Their thinking is very much of the Old Boy network—you are either one of us, or you are against us,” he continued. “It means they can trust you to do the right thing without having to be told—an insidious meaning of the word trust.” He was labeled untrustworthy and was frequently called “Not One of Us.” The media was captured. The dominant newspaper in Jersey was owned for many years until 2005 by a company chaired by Senator Frank Walker, head of the powerful Jersey Finance and Economics Committee and one of the most vociferous cheerleaders for Jersey’s finance industry. As a Financial Times editorial said in 1998, “That is akin to [UK Chancellor] Gordon Brown or [Germany’s finance minister] Oskar Lafontaine owning all their country’s national newspapers. Few on Jersey see it as odd.”4 Walker left the newspaper in 2005, and it does carry dissenting views and plenty of decent reporting. Yet its overall editorial tone and content staunchly favor the tax haven industry.
Patrick Muirhead, an experienced former BBC radio journalist who spent time as the anchorman of Jersey’s nightly ITV news until 2004, described the atmosphere.
“In an island of 90,000 souls, one is only removed from another by the smallest step of separation,” he said. “My co-host’s home became a popular salon for politicians and decision-makers. In such an atmosphere of closeness, any meaningful challenge becomes impossible. ‘You rub people up the wrong way,’ she said, primly dismissing my methods. After I left, my integrity, professional ability and popularity were trashed by a hostile and defensive Jersey media and island population.”5
Unaccountable elites are always irresponsible, and I got my own taste of Jersey’s moldy governance on the very first day of a visit in March 2009, when I bought the Jersey Evening Post and read its front-page story, entitled “States in Shambles.”
“The States resembled a school playground yesterday as foul language and personal insults flew across the chamber,” read the text. Senator Stuart Syvret, a popular but controversial local politician, had complained publicly in the States assembly, Jersey’s parliament, that the health minister was whispering in his ear. Syvret, the newspaper reported, “stood up and said: ‘On a point of order, I am sorry to interrupt the minister. But the minister to my right, Senator Perchard, is saying in my ear “you are full of f*****g s**t, why don’t you go and top yourself, you bastard.” Senator Perchard immediately responded by saying: ‘I absolutely refute that. I am just fed up with this man making allegations.’ The BBC, which was broadcasting the sitting live, had to apologise for the language.”
Syvret has been a regular victim of efforts to suppress dissent. “Any anti-establishment figure here is bugged,” said Syvret.6 “There is a climate of fear. Anyone who dares disagree is anti-Jersey, an enemy of Jersey. You are a traitor, disloyal. There is all this Stalinist propaganda.” A few weeks after my visit, eight police officers arrested him and jailed him for seven hours while they ransacked his home and personal files, including his computer files. The next day Syvret’s blog administrator told him someone had clumsily been trying to hack his passwords. His blog describing his incarceration summed up the atmosphere. “Come to Sunny Jersey. The North Korea of the English Channel!”
In October 2009, having been accused of leaking a police report about the conduct of a nurse, Syvret fled to London and claimed asylum in Britain. He returned in May 2010 to fight an election and was arrested at the airport. Not long afterward, he outlined his views about Jersey plainly.
“It is an utterly lawless jurisdiction. Jersey is an environment under the grip of a wholly criminal regime. So absolute—and absolutely corrupted—is all meaningful power in Jersey that the island possesses less scrutiny and fewer checks and balances than a Balkan state.”7
Corruption could tarnish Jersey’s international reputation. Skittish financiers dislike places that are chaotically corrupt, as do onshore regulators elsewhere. Secrecy jurisdictions steeped in sleaze confront this by putting on a strenuous theater of rectitude that involves repeatedly projecting the essential message that they are clean, well-regulated, transparent, and cooperative jurisdictions—burnished by carefully selected comments and praise from toothless offshore watchdogs like the IMF’s Financial Action Task Force or the OECD.
It is hard to construct coherent intellectual justifications for hosting secretive offshore finance, so the usual technique is to engage the messenger, not the message. Attacks on dissidents mostly consist of mean-spirited little slurs and innuendoes: “This person is ignorant, motivated by envy, economically illiterate, unreliable, or mentally unbalanced; this person cannot be trusted.” Geoff Southern, a dissident deputy, said he now tries to avoid pointing in public: Last time he did he appeared in the Jersey Evening Post in a stunningly Hitler-like pose. He and his friend, Senator Trevor Pitman, wearily describe being tarred with terms like “Destroyers of Jersey” or “The Enemy Within”: They are accused in public of being driven by personal bitterness; hints are dropped about darker motives. When we spoke, both Southern and Pitman’s wife, Shona, another deputy, were being prosecuted for helping elderly and disabled residents fill in requests
to opt for postal votes, albeit in breach of an arcane electoral law. They were later found guilty and fined. The amorphous finance industry is, locals say, ultimately behind the attacks. “The finance industry is like an amoeba,” said another Jersey politician, who declined to be identified. “You attack it, and it absorbs that, and attacks back. It is the parasite in the island. It has taken it over; it controls us and decides on everything that happens here.”
John Heys, a tour guide at Jersey’s world-famous Durrell Zoo, and his friend Maurice Merhet, a former printer and pig farmer, now retired, tell a similar story. “We live in a dictatorship,” Heys said, jabbing his finger at the table. “This is not a democratic country. John Christensen is public enemy number one. We call them the Junta, and people are afraid to stand up against them.” Heys showed me an email sent by a government minister to a dissident friend who had, in a cheeky Christmas message, pointed out the large sums stashed in secrecy in Jersey, amid global poverty. The minister responded—mistakes included:
Hi Traitor
Please refrain from sending me your unsolicited garbage . . . I am surprised you still decide to live in this “tax haven” island.ifs its so bad why do you not leave to live somewhere else . . . good riddance I would say…. but perhaps NOT because you get a damm good living here no doubt perhaps funded by banks and your morgage lende r . . . in fact my family have lived in Jersey for several generations and I am so very proud of it but to listen to traiterous idiots like you makes me furious. .
I would not have the nerve to wish you a happy christmas in fact I hope you continue to to live a miserable existence in your traiterous world
Do not respond
In tiny states everyone knows everyone else, and conflicts of interest and corruption are inevitable. There are no independent think tanks or universities; a small and vulnerable civil service; no clear division among the legislature, the judiciary, and the executive; and no second chamber to scrutinize the States Assembly’s deliberations. When Christensen was Economic Advisor, the public could not attend committee meetings and there was no written record of parliamentary debates on major laws. These problems extend to the governance of the finance industry. In Jersey there are no credible and truly independent processes for internally scrutinizing or regulating offshore finance. A 2002 publication from the Association of Accountancy & Business Affairs, one of the most detailed academic analyses of Jersey’s politics, puts it concisely. “Most Jersey politicians are in business,” it said. “They lobby for business and promote business interests. They draft, refine and pass legislation. They have also sat on regulatory bodies, effectively acting as ‘gatekeepers’ adjudicating on complaints and malpractices. Politicians sit on the boards of the companies that they are supposed to regulate.”8
Treasure Islands: Dirty Money, Tax Havens and the Men Who Stole Your Cash Page 25