British Labour Party Attacks Belize In Election Ploy

by Jeremy Hetherington-Gore, Tax-News.com, London

06 June 2001

Even though the US has made it clear that it will not support any attempt to force offshore jurisdictions to 'harmonise' their taxation regimes, and even though the OECD has had to pretend deceitfully that it never intended such an outcome from its 'harmful tax competition' initiative (what else could the words mean?), nothing stops the fiscal militants of Britain's left from pursuing their vendetta against offshore jurisdictions in general and Belize in particular.

In a blatant piece of old-style bash-the-rich electioneering, Britain's International Development Minister Clare Short chose her moment just two days before the UK poll to attack Tory treasurer Lord Ashcroft's tax free status in Belize. In a series of calculated 'leaks' this week, she let it be known that after the election she will press Belize to rescind the tax-privileged status of his companies there. Her argument will be that Britain should not have to cancel debt repayments due from Belize if it is consciously allowing tax to go uncollected.

This is outrageous. Like many other offshore jurisdictions, Belize offers low- and no-tax regimes to companies which bring it investment and employment, often using such schemes to replace income lost when traditional markets for bananas, sugar and other tropical products shrivelled as the once-imperial Great Britain turned into a lap-dog of Brussels and its pernicious Common Agricultural Policy.

The UK's Guardian newspaper, a reliable ally of the Fiscal Tendency in the UK and US governments, yesterday dragged out a tired, old story about money-launderers flourishing in secretive tax havens, and also said that 'Ms Short, expected to stay in her post after the election, is reported to be furious that KPMG, the accountants appointed by Whitehall to investigate the tax exemption, have failed to come up with any new information about the scale of Lord Ashcroft's offshore activities in their revised report sent to her department last week. This is despite a request to KPMG to rewrite the report after they claimed it was outside the terms of reference to examine Lord Ashcroft's company, Carlisle Holdings.'

' Questions have also been raised,' goes on The Guardian, 'about the role of KPMG itself in carrying out its investigation into Belize's tax affairs. The accounting firm runs its own business in Belize advising people on how to take advantage of the country's offshore sector. It also acts as external auditor to Lord Ashcroft's bank, the Belize Bank. The company said the investigation was carried out by separate consultants from its Leeds branch who visited Belize to gather the information. A spokesman said that 'Chinese walls " applied to the investigation to ensure that it was impartial and independent.'

'Ministers were said to be unaware about KPMG's involvement in Belize when they appointed the company to undertake the inquiry, and have asked Sir John Vereker, the permanent secretary at the Department for Internationl Development, to raise the matter with them.'

This is even more ludicrous: how could the Government not be aware that KPMG has offices in its own ex-colonies? That's why KPMG was chosen in the first place, because it has knowledge about these jurisdictions. The Guardian's piece is a cynical piece of disinformation, if not an outright invention, and the story was immediately denied by the Tories.

At yesterday's Tory election press conference, William Hague was asked to comment on the US suggestion that Lord Ashcroft - though doing nothing illegal - had helped to create a banking climate in Belize where such activities were possible.

He replied: 'We will fight this election on what is happening in Britain, not what is happening in Belize. I did not see anything in this morning's article which was either new or made any substantive allegations against the party treasurer. We are not in charge of affairs in Belize."

The Belize government, not surprisingly, is also worried about the pressure from the UK. One senior official said: 'It is unfair. We are caught in a very difficult position, whichever way we move.' He feared that if the country was forced to curtail Lord Ashcroft's business activities then it would be vulnerable to legal action which could destabilise the country's economy - just what the doctor ordered for Labour's loonies, who can't see further than the ends of their jealous noses.

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