THE EDWARDS REPORT: A COMMENTARY
The Edwards Report was published on 19th November 1998. It contains
modest proposals for reform to the financial regulations in the Channel
Islands and the Isle of Man (hereafter referred to as the Islands). These
include a call for:
All Crimes Money laundering Legislation
Removal of prosecution time-bar
International co-operation legislation
Regulation of director services
Changes in Trust Law legislation
Regulation of nominee companies and directors
registration of companies
Information agreements with other authorities
Licensing and regulation of trust companies
Financial Services Ombudsman
Need for companies to publish information about their affairs
Fighting money laundering
Why have the Channel Island authorities failed to introduce such basic
legislation. The Report is an indictment of the corruption and conflict
of interests prevalent in the Islands institutions which spend the money
on PR and hot-air rather than real reforms. Edwards is silent on the political
institutions and their role in creating the present sleaze. Without institutional
and political reforms there will be no durable change.
Edwards ignores the conflicts of interest in Jersey e.g. the overlapping
of legislative, business and judicial concerns.
Fight against money laundering requires 'openness'. Edwards ignores the
fact that in Jersey 'dissenters' are ruthlessly silenced. There are no
institutional structures to help them or any whistle blower.
There is no moral reason for having 'secrecy' and 'tax evasion' facilitated
by the fiddle factories. The OECD has already argued that the tax havens
are responsible for harmful tax competition that means that the wealthy
elite escape taxes in their home countries and inevitably ordinary people
pay more taxes. Edwards does not even consider these aspects.
Tax havens encourage flight of capital and with it global market and political
instability. Edwards is silent on it.
The Channel Islands may have more than £400 billion but little of
it generates any meaningful economic activity of the Islands. It is used
to undermine other economies. It is used for speculation and undermines
Edwards does not say who he consulted during his consultation. The background
information is not available. Under pressure from a ruling elite, he has
clearly filtered or ignored some matters. He does not why he has done so.
For examples, considerable evidence was submitted about the Cantrade and
other scandals. But the report ignores the information.
The Jersey authorities have already stated (press conference, 19th November
1998) that they will ignore many of the rather modest Edwards proposals.
They will continue to facilitate 'secrecy'. This undermines the spirit
of the Report. There are no concrete proposals for implementing the Report.
None of the regulators proposed by Edwards would owe a 'duty of care'
to anyone. Therefore, they will have no economic incentives to do any job
The Edwards Report is full of contradictions. For example, he gives the
impression that things are not too bad and then says that 15,000 BCCI depositors
for the accounts held in the Channel Islands failed to come forward after
the fraud ridden bank was closed -down. Why?
He thinks there is reasonable openness (oh, really), but companies located
in the Islands were used to facilitate weapons to break the UN embargo
on arms to Rwanda and Zaire. None of the authorities in Jersey or the Isle
of Man investigated the money laundering which became known as the AGIP
affair (see our publications section).