"As the British Empire entered the sunset, bankers, lawyers and accountants from the City of London set up a spider web of secret offshore jurisdictions that would capture wealth from around the world and channel it to London."
With this statement, Michael Oswald's powerful and accessible film starts.
Pictures accompanied by a narrative voice show the decline and fall of the British Empire – troops and local police unleashing protesters; a maneuvering tank with a human head mounted on the armor – and clearly expresses the film's timely thesis.
"As British elites saw their fortunes, privileges and empire disintegrate, they began the search for a new role in a changing world and found one: in the financial world."
"This is a film about how the UK transformed from a colonial power to a modern financial power, and how this transformation has shaped the world we live in," continues the narrative voice.
With this as a starting point, the film employs a number of experts on offshore tax havens, finance and accounting to chart how the British elite – and its political servants in Parliament – have created a shockingly economically unfair system, which today is responsible for many of the world's global problems. .
Post-imperial decay and pressure on the pound prompted the establishment of a dual accounting system, which made the City of London the leading center for international financial transactions.
This was done via a system called the eurodollar market, which directly led to the creation of offshore tax havens.
"The City of London generally prefers to carry out its shady business outside London."
The sophisticated development of an ancient Anglo-Saxon system of secret trusts to conceal the ownership of assets through a network of complex legal schemes, shell companies and delegates is easily summarized by Alex Cobham, an advocate for fair taxation from the Tax Justice Network:
"It's about facilitating a legal area where you pretend that [the activity] doesn't take place where it actually takes place – so you move activity from the area where it's regulated and taxed, and pretend it's happening in another area."
A parallel development is directly related to the recent revelations The Panama Papers. The establishment of so-called 'secret jurisdictions' in the fly-over islands that remained British overseas territories – such as the Cayman Islands – was used by smart British lawyers and bankers as legal tax-free areas where companies could create branches or shell companies.
Creation of "bona fide tax havens"
As the author and former FT journalist Nicholas Shaxson – whose book Treasure Islands: Tax Havens and the Men Who Stole the World (2011) represented an early attempt to lift the veil that surrounds international finance – points out:
"What the Cayman Islands did was simply illegal: Drug money came in, tax evasion ... you could get whatever you wanted."
Shaxson adds that of the 14 remaining British overseas territories, seven of them (including Bermuda and the British Virgin Islands) are "bona fide tax havens" – and all are former members of the British Empire.
The Eurodollar market was a huge success for those who created and utilized it: In 1997, more than 90 percent of all international loans were channeled through them in a market worth literally trillions of dollars.
"The British Empire was a fairy tale but the City of London adapted and survived," the narrator says.
The role of the City of London – a medieval entity that embraces a tiny part of central London (the "square kilometer" that more or less corresponds to the ancient Roman city limits) – is explored in detail.
The district is exempt from many laws and regulations that other Londoners must follow, and is still dominated by medieval guilds and corporate interests.
The district is run by a company – The Corporation of London – and have their own courts and their own police. According to the film, this unique factor was the driving force behind the creation of a global network of secret financial jurisdictions and the massive tax evasion they faced.
Banker: A protected species
But according to the film, tax evasion – a business that enjoys the Bank of England's active support and blessing – is just one of many covert schemes the City of London facilitates.
Banks such as BCCI – which became the seventh largest bank in the world within a decade after obtaining its license from Bank and England – collapsed in bankruptcy and disgrace in 1991.
It had then managed to finance terrorism, channel CIA money into secret operations and facilitate money laundering.
“In Britain, banks never end up in prison – they are a protected species. It's part of the business model, ”Shaxson points out.
“In Britain, banks never end up in prison – they are a protected species. It's part of the business model. ”
In practice, the weak tax regulation that the UK operates in its tax havens means that most of their activities are controlled by the City of London, even though they are nominally independent jurisdictions.
"The City of London generally prefers to carry out its shady business outside London," according to economist and activist John Christensen, who adds: "I see these [tax havens] as Frankensteiner created by the City of London."
Today, perhaps as much as half of the world's offshore wealth is hidden in Britain's secret jurisdictions – which contributes to the misery of many of the countries where wealth is illegally relocated.
The losers of this scheme. . .