Nick Holdsworth
Journalist, writer, author, filmmaker and film and TV industry expert – Central and Eastern Europe and Russia.
Email: holdsworth.nick@gmail.com
Published date: June 3, 2018

The Spider’s Web employs an array of experts in offshore tax havens to detail the degree to which the British elite has created a system of shocking inequity. This is a film all ordinary, tax-paying citizens should watch.

«At the twilight of the British Empire, bankers, lawyers and accountants from the City of London set up a spider’s web of offshore secrecy jurisdictions that captured wealth from across the globe and funnelled it to London.»

This on-screen statement opens Michael Oswald’s powerful and accessible film.

Voice-over images of the decline and end of the British Empire – troops and native police beating back crowds of demonstrators; tanks on exercises, a human skull mounted on the hull of one – enunciate the film’s timely thesis.

«As British elites saw their wealth, privileges and empire disintegrate, they began to search for a new role in a changing world and they found one: in finance.»

«This is a film about how Britain transformed from a colonial power to a modern financial power and how this transformation has shaped the world we live in,» the narration continues.

From this firm foundation, the film employs an array of experts in offshore tax havens, banking and accountancy to detail the degree to which the British elite – and its political servants in parliament – has created a system of shocking inequity that is today complicit in many of the world’s global ills.

The Eurodollar market

Post-Imperial decline and a run on the pound prompted the creation of a system of double accounting that allowed the City of London to become the leading centre for international financial transactions.

This was done via a system called the Eurodollar market, which lead directly to the establishment of offshore tax havens.

«The British Empire had sunk, leaving hardly a trace behind, but the City of London had adapted and survived.»

The sophisticated development of an ancient Anglo-Saxon system of secret trusts to hide the owner of assets through a web of complex legal relationships, shell companies and delegates, is neatly summed up by tax fairness campaigner Alex Cobham of the Tax Justice Network :

«It’s about providing a legal space in which you pretend is not taking place in the economy where it really is taking place – so you are taking activity from the place from where it is regulated and taxed and pretending that it is happening elsewhere.»

A parallel development is directly linked to the recent revelations in the Panama Papers: The creation of the so-called ‘Secrecy Jurisdictions’ where fly-blown islands that remained among Britain’s Overseas Territories – such as the Cayman Islands – began to be used by smart British lawyers and bankers as legally tax-exempt locations in which companies could establish branches or make use of shell companies.

The creation of «bone-fide tax havens»

Nicholas Shaxson

As author and former FT journalist Nicholas Shaxson – whose book Treasure Islands: Tax Havens and the Men Who Stole the World (2011) was an early shot in the campaign to lift the secrecy cloaking international finance – observes:

«What the Cayman Islands were doing was straightforward illegal: drugs money was coming in, tax evasion…whatever you wanted, you could have it.»

Shaxson adds that of the 14 remaining British Overseas Territories today, seven (including Bermuda and the British Virgin Islands) are «bone-fide tax havens»  – and all are former members of the British Empire.

The Eurodollar market became a huge success for those that had created it and those that took advantage of it:  By 1997 more than 90 per cent of all international loans were channelled through it, creating a market worth literally trillions of dollars.

«The British Empire had sunk, leaving hardly a trace behind, but the City of London had adapted and survived,» the narrator intones.

«In Britain no bankers go to jail – they are a protected species. That is part of the business model.» – Nicholas Shaxson

The role of the City of London – a medieval entity that describes a tiny part of central London (the «square mile» that more or less occupies the area of the old Roman city) – is examined in more detail.

Exempt from many laws and regulations that other Londoners have to observe and dominated by medieval guilds and corporate interests.

It is run by the company – the Corporation of London – and has its own courts and police force. It is this unique factor – as the film asserts – that had fuelled the creation of the network of secret financial jurisdictions worldwide and the massive tax-avoidance with which they are now identified.

Bankers: Protected species

But it is not only tax avoidance that the City’s clever schemes – actively aided and abetted by the Bank of England – facilitated, the film says.

Banks such as BCCI – that within a decade of being granted a licence by the Bank of England had become the seventh largest bank in the world – collapsed in bankruptcy and ignominy in 1991.

«The City of London, by and large, really likes to do its dirty work outside London.» – John Christensen

It was identified as having financed terrorism, and for channelling CIA money for covert operations as well as facilitating money laundering.

«In Britain no bankers go to jail – they are a protected species. That is part of the business model,» Shaxson notes.

The light tax regulation through which the UK governs its tax havens effectively means that most of their activity – though nominally in independent jurisdictions – is controlled from the City of London.

«The City of London, by and large, really likes to do its dirty work outside London,» says investigative economist, John Christensen adding: «I see these [tax havens] as the Frankensteins created by the City of London.»

Today as much as half of all global offshore wealth may be hidden in Britain’s secrecy jurisdictions – contributing to misery in many of the places from which that wealth is illicitly extracted.

Losers from this deal include Africa. The latter has massive capital outflow: although seen as a debtor to the developed world, with debts worth $177 billion at the end of 2008, it is effectively a creditor as an estimated $944 billion was moved offshore by African elites between 1970 and 2008.

Thus the offshore system enables the «looting» of third world countries by their elites, undermines democracy and contributes to global inequality and instability.

Public and private payment schemes

The film explores in greater depth the complex web of connections between offshore financial havens and British political and public activities.

It links the exploitation, for example, of Public Private Finance Initiatives (where private money is raised to pay for big public capital spending projects) that often mean spreading costs over 30 or more years at three or four the times the cost of simply paying for a hospital, new road or other public scheme directly from the treasury.

«The Spider’s Web is a film all ordinary, tax-paying citizens should watch.»

The film details the links between politicians, hidden wealth and influence peddling – focusing for example on the former head of the British tax office who developed a system of back room deals to resolve tax disputes with big companies and in retirement was hired for lucrative consultancy positions with leading accountancy firms.

It even reveals that the London headquarters of HMRC – the UK’s tax and customs collection agency – is owned by an offshore company that is pays no tax in the UK at all.

The extent to which the British government operates its financial policy more or less in collusion with the City of London – contributing to inequality at home and abroad – is revealed.

A plan to end the iniquitous system

Michael Oswald

Framed with strong images of the City of London, tax havens and set to a haunting original soundtrack, The Spider’s Web is a film all ordinary, tax-paying citizens should watch. Those who benefit from the global financial system may have money and power, but are vastly outnumbered by those of us who do a day’s work, earn a fair rate and pay our taxes.

The film closes with a five-point plan for ending this iniquitous system that has effectively allowed bankers at the heart of the British Empire to re-colonize the world through a web of secretive financial instruments.

The first 3 steps of the five-point plan are as follows:

  1. Stop public councils from issuing public contracts to companies operating out of tax havens.
  2. Create public registries of the beneficial owners of companies, trusts and foundations.
  3. Introduce full transparency of deals and secret agreements between companies and governments.

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Modern Times Review