2-24-2011 the Bank of England, lodged in the heart of the City (but not, it has to be said, regulated by it), in effect encouraged tax havenry in British outposts of the Caribbean and elsewhere. By the 1980s, the City was at the centre of a great, secretive financial web cast across the globe, each of whose sections – the individual havens – trapped passing money and business from nearby jurisdictions and fed them up to the City: just as a spider catches insects. So, a complex cross-border merger involving a US multinational might, say, route a lot of the transaction through Caribbean havens, whose British firms will then send much of the heavy lifting work, and profits, up to the City.
The Crown dependencies of Jersey, Guernsey and the Isle of Man, which focus heavily on European business, form the web’s inner ring. In the second quarter of 2009, Jersey alone provided £135bn in bank deposits upstreamed to the City. Jersey Finance, the tax haven’s promotional body, puts the relationship plainly: “Jersey is an extension of the City of London.” The next ring of the web contains the British overseas territories, such as the Cayman Islands and Bermuda.
So, the (City of London) Corporation has two main claims to being a tax haven: first, as a semi-alien entity, floating partly free from Britain (just as the Cayman Islands are), and second, as the hub of a global network of tax havens sucking up offshore trillions from around the world and sending it, or the business of handling it, to London. -N. Shaxson http://www.newstatesman.com/economy/2011/02/london-corporation-city