ourEconomy: Opinion

Oligarchs stash dirty money in Britain because of its colonialist laws

Ministers patronise those who call for decolonisation. But UK financial loopholes are a product of the imperialist legacy we don’t want to face

Kojo Koram
15 March 2022, 12.17pm

Black Lives Matter activists dump the statue of Edward Colston in Bristol Harbour, June 2020

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PA Images / Alamy Stock Photo

Since the statue of slave trader Edward Colston was pulled down in Bristol during Black Lives Matter protests in 2020, government ministers have mocked calls for ‘decolonisation’ in Britain as immature identity politics ruining a once-great country.

The government’s universities minister, Michelle Donelan, dismissed student campaigns for ‘decolonisation’ as examples of ‘Soviet Union style’ censorship. Equalities minister Kemi Badenoch declared: “I don’t care about colonialism.” Boris Johnson scorned ‘decolonisation’ as an attempt “to edit or censor our past”.

During Liz Truss’s first speech as foreign secretary, she responded to a question about the global legacy of the British empire by saying: “Let’s stop fighting about the past, let’s start fighting for the future… we have to move away from the introversion and introspection.

Truss insisted that Britain’s adversaries “are not thinking about what happened in the past”, a perspective echoed by Tory party co-chair Oliver Dowden, who argued that a confident country would not be wasting time “seeking to decolonise mathematics”. Dowden blamed this “painful woke psychodrama” for stopping the UK challenging autocrats like Vladimir Putin.

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Just a few days after Dowden’s statement, Putin did indeed engage in an act of horrific aggression by invading Ukraine. As a result, there has been an unprecedented interest in the mountain of Putin-linked Russian oligarch wealth that has taken up residence in London.

Unfortunately for politicians ridiculing conversations about ‘decolonisation’, to look seriously at the issue of Russian oligarch wealth in the UK means confronting one of the main legacies of empire: the extensive offshore and financial secrecy protections provided by the City of London and its spider’s web of overseas territories.

In February, think tank Transparency International estimated that around £830m worth of property bought by Russian oligarchs was registered in Britain’s overseas territories. So when Johnson writes of his desire to “peel back the facade of dirty Russian money in London” or Truss threatens to “come after” the kleptocrats, their words cannot be respected unless they are willing to revise their earlier statements about the irrelevance of the legacy of Britain’s empire. Quite simply, this legacy sits at the heart of the secrecy provisions that oligarchs the world over come to the UK to exploit.

The ghost of empire

British overseas territories are perhaps the most overt signs that the UK’s decolonisation of its empire is still an incomplete project.

Fourteen small pockets of land, sprinkled around the globe from the Indian to the Atlantic Ocean, during the latter half of the 20th century, Britain’s overseas territories became the new faces of financial offshoring.

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According to a 2019 index produced by the Tax Justice Network, the world’s top three corporate tax havens are the British Virgin Islands, Bermuda and the Cayman Islands. All became offshore financial centres precisely by staying under the protective umbrella of British sovereignty, just as the rest of the colonies were seeking independence. The Cayman Islands, for example, became a colony in its own right only once its parent colony of Jamaica gained sovereignty in 1962.

And despite territories such as the Cayman Islands or the British Virgin Islands often being presented as remote tropical paradises whose murky dealings have little to do with us, in reality, they are as much British territory as Sheffield or Swansea.

If Westminster really wants to intervene in their affairs it can, as the Chagos Islands and Turks and Caicos Islands can attest. The British overseas territories have become the ultimate hideouts for kleptocratic wealth because successive governments have allowed this part of the imperial legacy to live on.

Beyond the statues of Colston or Rhodes, it is the old imperial legal provisions that now ‘must fall’

Another way oligarchs have exploited the legacy of the British empire is through the non-domicile tax rule. The non-dom rule, completely alien to most other jurisdictions in the world, means wealthy individuals can be resident in Britain, work in Britain and own property in Britain – and yet list another country as their ‘true’ home for tax purposes. This means they do not have to pay UK tax on any of their overseas earnings unless they remit that money back to the UK.

The origin of Britain not taxing foreign incomes lies in the late 18th century, when, to encourage imperialism, the government refused to tax wealth in the colonies unless it was brought to Britain. Later this idea matured into the ‘non-dom’ rule, which helped British imperialists return to the motherland without having to pay tax on all the property they had accumulated overseas. Today, not just Russian, but Nigerian, Saudi, Chinese and British billionaires are able to take advantage of this hangover imperial rule to live in Britain while protecting their global property.

The recent focus on oligarch wealth in Britain has shown how, far from being just the latest front in a never-ending culture-war, the ghost of empire continues to haunt our lives in very material ways. Beyond the statues of Colston or Rhodes, it is the old imperial legal provisions that now ‘must fall’. Decolonisation is not just a question for our universities and museums but also for our legal and financial system. There must also be a reckoning with the primary reason that empire was created in the first place: to materially enrich some people at the expense of others. Its afterlife isn’t an issue of ‘identity politics’ but a key contributor to global inequality and its corrosive impact upon democracy.

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