Treasure Islands - Nicholas Shaxson [64]
As with the Cayman Islands and other Overseas Territories, the Crown Dependencies have an ambiguous, half-in, half-out relationship with Britain that allows them to retain a controlling hand and say, “There is nothing we can do” when somebody complains. Britain handles Jersey’s foreign relations and defense, and his Excellency the lieutenant governor represents the Queen; Jersey financial regulation goes up for approval to the venerable Privy Council in London. Jersey is outside the European Union, though it cherry-picks the European laws it likes and discards the rest.
John Christensen, Jersey’s economic adviser from 1987 to 1998 and now a fierce critic of its tax haven status, remembers that when Britain got embarrassed about something Jersey was doing, its civil servants would engage in a kind of theater, to get things to change but without being seen to force Jersey to change. “A lot happens around winks and nods,” he said. “They would say, ‘This is all a bit of a bother, but the Europeans are putting pressure on us and we don’t want to put ourselves in a position where we are required to make you do this.’ Forcing Jersey to do something would reveal that Britain has the power to make Jersey change—we all knew it. These are highly intelligent people and these things don’t need to be said.”
Though Jersey feels exceedingly British, this facade hides an alien political system in which medieval politics combines with futuristic, high-speed offshore finance. There are no political parties, and the government is absolutely captured by global financial services. This ambiguous relationship with Britain dates back centuries. When the Prince of Wales fled via Jersey into exile in France in 1649, he was given refuge by George Carteret, a major landowner. Later the prince became King Charles II and gave Carteret a large tract of land in North America, known today as New Jersey. The original Jersey became a refuge and hothouse for European radicals, many of whom had fled first to England to escape persecution, then were shuffled off to this strange quasi-English place, partly to provide the plausible deniability that enabled Queen Victoria to avoid embarrassment in front of her various cousins in France, Belgium, Russia, Hungary, and beyond. Karl Marx and Friedrich Engels were regular visitors. In the twentieth century, officials returning from the colonies brought new colonial connections to help Jersey bankers build networks in Africa, the Middle East, and the Far East. People either moved to Jersey or kept their money there, in a trusted British environment where they could bank secretly and avoid tax. Expatriates who did not declare their income to their countries of residence, often poverty-racked African nations, knew they would never be caught.
It was not only poor countries suffering, of course. Britain’s own taxpayers were too. A letter sent in 1975 to Tony Benn, a well-known British member of parliament, describes the cynicism. “I am somewhat surprised to see a Mr. Gent from the Bank of England giving advice on how to avoid paying tax—I wonder if this is really part of the Bank of England’s duties?” Mr. Gent, Benn continues, “suggests that the Bank of England will not be prepared to pass on information required by the Inland Revenue! Does the UK Treasury have no control over the Bank of England? Surely Bank employees should not be working against Government Policy? And just what sort of arrangements and deals are made at these events ‘behind the scenes’? It really is just a bit too sordid to be true.”25
Martyn Scriven, secretary to the Jersey Bankers’ Association, illustrated how Jersey’s network grew over time.26 He ran the Barclays operation in Jersey, which he said catered to about one hundred thousand British expatriates. Smaller packets—up to £25,000, say—were saved in the clearing banks, while bigger packets went into the more secretive trust companies. “The biggest business developer is