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By Root 280 0

next, intermediate ring involves Britain’s 14 overseas territories, the last surviving outposts of Britain’s formal empire. With just a quarter of a million inhabitants between them, they include some of the world’s top secrecy jurisdictions: the Cayman Islands, Bermuda, the British Virgin Islands, Turks and Caicos, and Gibraltar.20 Like the Crown Dependencies, these places are partly independent from Britain—though Britain controls events behind the scenes. In the Caymans, for instance, Her Majesty the British Queen appoints His Excellency the Governor, the most powerful person on the island. He (never a she, so far) presides over a cabinet of local Caymanians who are elected locally but who have almost no power over the stuff that matters—the money. The governor handles defense, internal security, and foreign relations; he appoints the police commissioner, the complaints commissioner, the auditor general, the attorney general, the judiciary, and other top officials. The final appeal court is the Privy Council in London. MI6, Britain’s Secret Intelligence Service, is highly active here21 (as are the CIA and several other intelligence services).

The Cayman Islands is the world’s fifth largest financial center, hosting eighty thousand registered companies, over three-quarters of the world’s hedge funds, and $1.9 trillion on deposit—four times as much as in all the banks in New York City. And it has, at the time of writing, one cinema.

To indicate how murky things are here, the Cayman Islands reported in 2008 that institutions based there had $2.2 trillion in borrowings but had only lent out a third of that amount—even though these figures should match each other, more or less. The UK and Caymans authorities have not explained this $1.5 trillion discrepancy.22

The third, outer ring is a more diverse array of havens like Hong Kong and the Bahamas, which are outside Britain’s direct control but nevertheless have strong historical links to the empire and deep current links to the City of London. One authoritative account estimates that this three-layered British grouping accounts for well over a third of all international bank assets worldwide. Adding the City of London itself brings the total up to nearly a half.23

This network of offshore satellites does several things for the City of London. First, it gives it a global reach: These havens scattered around the world attract and catch mobile international capital flowing to and from nearby jurisdictions, just as a spider’s web catches passing insects. Money attracted to these jurisdictions, and much of the business of managing that money, is funneled through to London. A lot of U.S. business is attracted to the Cayman Islands, and this gives the City of London the chance to get a slice of the action. Second, the spiderweb24 lets the City get involved in business that might be forbidden in Britain, giving the financiers in London sufficient distance from wrongdoing to allow plausible deniability. By the time the money gets to London, often via several intermediary jurisdictions, it has been washed clean. The old City of London adage “Jersey or Jail” means that if you want to do a certain type of business but don’t want to get caught, you just step out into the Jersey part of the spiderweb and do it there. Sometimes, business too dirty for the Crown Dependencies is farmed out further into the spiderweb. John Christensen, formerly a Jersey financial sector professional, remembers the Overseas Territory of Gibraltar being one particular favorite. “We in Jersey regarded Gibraltar as totally subprime,” he said. “This was where you put the real monkey business.” Later, a Caymanian character who introduced himself to me only as “The Devil” will help illustrate just how dirty this business can be.

Britain’s understated, ambiguous, but ultimately controlling role in these nodes of the spiderweb is the bedrock that reassures flighty global capital and underpins their offshore sectors. The gesture toward local representation keeps Caymanians happy and gives Britain the chance to say