The impact of the so-called Paradise Papers on the Isle of Man

The so-called Paradise Papers are revelations that are placing a spotlight on the tax affairs of some of the wealthiest people and companies in the world. In particular their use  of jurisdictions with low or zero-tax rates as a means of tax avoidance. At this stage the allegations from the media has focused on tax avoidance rather than tax evasion. While tax avoidance involves companies and people using legal ways to reduce their tax bill, tax evasion is an offence and involves illegal ways of paying less tax than required. Nevertheless, a major point being made is that wealthy individuals and significant global companies have exploited offshore schemes to avoid tax. At the same time the jurisdictions that offer these low and zero-tax rates have been heavily influenced to adjust their own legal frameworks to accommodate those providing such schemes.

Following on from the Panama Papers, which were released about 18 months ago, the so-called Paradise Papers have again brought the whole issue back under global scrutiny. The majority of the data comes from papers leaked by Appleby, a Bermuda-based law firm specialising in offshore accounts and comprise a database of around 13.4 million documents. Many of the leaked files include emails, loan schemes and  bank statements from Appleby. They were obtained by German newspaper Suddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ) who sifted through the information. In Britain, for some reason, The Guardian newspaper and the BBC seem to have been mainly chosen to disseminate the revelations. 

The involvement of the BBC tends to raise suspicions at the best of times, given their news coverage is anything but impartial and they do little to try and cover their bias. At the same time the BBC is widely criticised for producing no real investigative journalism. This seems to have been confirmed by the poor standard of journalism in the Panorama documentary this week that concentrated on the Paradise Papers. Panorama being a BBC Television investigative current affairs documentary programme.  Although the BBC documentary made it clear that, “the vast majority of the transactions involve no legal wrongdoing”, there was a considerable amount of unspecified finger-pointing. For dramatic effect Panorama had the reporter being filmed sneaking down the street and speaking in hushed tones outside various  Appleby buildings as if there was a sniper on the roof ready to shoot him. There were also a few instances of seemingly pointless "door-stepping", a term used to describe trying to obtain an interview or piece to camera from a contributor without prior arrangement or agreement, usually by confronting them in a public space, such as outside their home or workplace.

There were some arranged interviews and for the most part the interviewees from the jurisdictions or those associated with the schemes, dismissed the journalists questions quite effectively. The exception being the Isle of Man Chief Minister, Howard Quayle. It was a bit like watching a rabbit in the headlights. His performance was, at times, very defensive and obsequious, which made many cringe and feel embarrassed for him. It led to criticism such as that aired on Manx Radio by Bernard Moffatt who is a member of Mannin Branch of the Celtic League. When I watched it I couldn't help seeing the difference between Howard Quayle's attitude to the Manx media (independent or otherwise), which is dismissive at best and his failure to cope with the BBC. However, it seems that many Manx politicians, for reasons known only to them and sadly for the Manx people, like to bow and 'doff their hat', to anyone from their bullying neighbour in Britain who feels like 'calling them to heel'. 

Taking aside the poor level of BBC journalism. Many Manx people have for a number of years been unhappy about the direction of successive Manx governments and the encouragement of unsavoury tax schemes to benefit wealthy individuals, oligarchs and global companies. Manx people who live on an island of great beauty, with its proud history, culture, language and traditions are angry to see the reputation of the Isle of Man tarnished.  That's not to say the Isle of Man should take any lessons from those British Labour politicians who have suddenly jumped on the bandwagon to attack the Isle of Man. As pointed out in a recent article in the Scotsman newspaper: "The Labour Party rents its London headquarters from a tax-exempt property unit trust fund based in Jersey. Shadow Chancellor John McDonnell’s pension investments are managed in Guernsey."

The solution to the issues now facing the Isle of Man is one of looking at new initiatives and ways to develop the economy and expanding those sectors that have proven to be beneficial to the island. Although the Panorama programme did not prove the Isle of Man to have done anything legally wrong, it is clear that international pressure is building for action against tax avoidance schemes. The Isle of Man cannot and should not look to the United Kingdom to solve its problems. The UK has not been and will not be a friend to the Isle of Man and the issue of Manx territorial waters is an example of that. In any case the UK is itself facing an uncertain future with a weak government in place at this time and all kinds of problems emerging in its negotions to exit from the European Union. 

It is  time for the Isle of Man (Mannin) to achieve national independence as a sovereign state. The Manx Government needs to take direct responsibility for its international affairs and negotiate its own relationship with the European Union. Policies need to be adopted that would allow for the development of the Manx economy that is not so dependent on the financial sector. An economy that is also not subject to the the changes and whims of future United Kingdom governments. The potential is there, the time is right, but sadly the political will and the ability of the present Manx administration appears sadly lacking. This needs to change and the present matter of the Paradise Papers is just another indication of the need for the Isle of Man to make that change.