Labour’s frontbench has asked its MPs to support a backbench amendment that would force Theresa May to tell Britain’s overseas territories to introduce public ownership registers in an attempt to prevent them from being exploited by the global super-rich.
The party’s three line whip backing for the amendment, which has attracted the support of 20 rebel Conservatives, makes it more likely that the government will be defeated on the transparency measure in the Commons on Tuesday.
The shadow chancellor, John McDonnell, said the government needed to show it was “serious about clamping down on tax avoidance and taking on the vested interests of the super rich” by supporting the backbench amendment to the sanctions and anti-money laundering bill.
Its proponents, Conservative MP Andrew Mitchell and Labour MP Margaret Hodge, argue that if the British Virgin Islands and Cayman Islands are forced to introduce public ownership registers it will stem the flow of “dirty money” around the world and into the UK.
They say that “transparency is vital in the fight against money laundering and tax avoidance by crooks, kleptocrats and terrorist gangs” in a joint article for the Evening Standard. Campaign group Global Witness estimates that £68bn flowed out of Russia via the UK overseas territories between 2007 and 2016.
David Cameron and George Osborne promised to introduce public ownership registers in the overseas territories in 2013 but the measure was dropped when May took over as prime minister. The amendment, which has the support of Ken Clarke, Nicky Morgan and Anna Soubry, as well as the SNP Westminster leader, Ian Blackford, and the Lib Dem leader, Vince Cable, asks the 14 territories to comply by the end of 2020.
Number 10 has said it will study whether the proposed amendment will be effective, although government whips had suggested that implementation could be delayed until 2025 in an attempt to peel off the rebels that Mitchell insisted had not been successful.
Opposition to the measure in the overseas territories has been led by the British Virgin Islands. The Organisation of Eastern Caribbean States (OECS), of which the BVI is an associate member, said it was unfair to target the BVI at a time when the region is recovering from the impact of Hurricane Irma.
Allen Chastanet, the prime minister of Saint Lucia and chairman of the OECS, added there was an an “ongoing frustration” among member states at “having to continually battle the unilateral shifting of goal posts on the financial services front”.
The OECS also complained that the amendment did not target the UK crown dependencies of Jersey, Guernsey and the Isle of Man, and so appeared to “specifically target the Caribbean” – although MPs supporting the amendment said they hoped to turn to the crown dependencies in due course.
Labour also said it intended to campaign further on the issue and unveiled a series of “internet posters” with the strapline: “Hostile Environment? Not for Tory donors” which it intended to promote online in the belief that it can successfully attack the government on this issue.
Duncan Hames, director of policy at anti-corruption campaign group Transparency International UK, added: “Without leaks like the Panama and Paradise Papers, it is increasingly clear that only public registers can provide the accountability to expose corrupt individuals seeking to hide their identities and sources of wealth.”