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London’s palace of mirrors

13 May 2016

A troubled start to this week’s anti-corruption summit revealed some home truths about Britain, writes David Hayes in London


Poise regained: British prime minister David Cameron and Nigerian president Muhammadu Buhari at Thursday’s anti-corruption summit in London. Facundo Arrizabalaga/EPA/Pool

Poise regained: British prime minister David Cameron and Nigerian president Muhammadu Buhari at Thursday’s anti-corruption summit in London. Facundo Arrizabalaga/EPA/Pool

Is David Cameron losing his touch? The question was being asked even before the British prime minister was filmed at a reception in Buckingham Palace citing Afghanistan and Nigeria as “possibly the two most corrupt countries in the world.” As much as the location, it was Cameron’s timing, two days before the global anti-corruption summit he was hosting on 12 May, that ensured he would be in the crosshairs of yet another media storm, this time with an extra diplomatic front. And the audience for his remarks, an establishment holy quartet (queen, archbishop, parliamentary speaker, and lord chancellor), subtly magnified the offence.

Within minutes, Kabul’s and Abuja’s responses were on the wires, one protesting “unfairness,” the other regretting an “old snapshot of Nigeria.” President Muhammadu Buhari, already in town for the Commonwealth’s pre-summit conference, Tackling Corruption Together, dismissed any talk that an apology was sufficient for Cameron’s incautious remarks. Instead, he demanded something “tangible”: the return of billions looted from Nigeria and deposited in London. Having had his honour defended during the conversation by Justin Welby, the Anglican communion’s head priest (“This particular president is actually not corrupt. He is trying very hard”), the president reaffirmed “the good relationship between our two countries.” More pointedly, Buhari – who is making impressive efforts to tackle the scourge – said that the “hydra-headed monster” of corruption “does not differentiate between developed and developing countries.”

Inevitably, the fallout from Cameron’s reference to “the leaders of these fantastically corrupt countries coming to Britain” soured the mood. Dino Melaye, a populist senator, declared that “Nigeria is a sovereign nation and can’t be insulted in the manner David Cameron insulted us.” And presidential adviser Femi Adesina echoed his boss’s point that assets stolen from Nigeria, hidden through the kind of vehicles revealed in the Panama Papers and then recycled into (for example) high-end property in London, should be repatriated. José Ugaz, the Peruvian lawyer and chair of Transparency International, estimated that US$150 billion has been spirited out of Nigeria in the past decade alone, though the total amount – and the roots of the problem – go much deeper. Africa as a whole has lost over US$1 trillion from illicit financial flows, more than all the aid and foreign investment it has received.

Yet Cameron’s blunder proved opportune, instantly propelling the event and the issues around it to top news status. And these issues included the colour of Britain’s money. A letter sent to the prime minister in April by ninety-five Nigerian reform groups, for example, won a fresh airing. This called on him “to take serious action to end the UK’s role as a safe haven for our corrupt individuals, who steal our wealth for their own private gain.”

Cameron jumped into this imbroglio straight from another. Only a day earlier he had warned that Britain’s exit from the European Union would raise the risk of war in the continent. And that speech came in the wake of a sustained parliamentary attack on the Labour leader’s amicable links with Hamas and Hezbollah. Both were calculated: the speech powerful, the attack cruelly effective. But each provoked disquiet even among sympathisers, mainly over extravagance of language and impatience of tone. (“Once acclaimed for his insouciant charm, Mr Cameron has become a ranter… gratingly scornful of opponents, brusque with one-time confidants,” wrote one.)

The Commons barrage was mounted the day before London’s mayoral election, and included a reference to an imam in Tooting (the Labour candidate Sadiq Khan’s south London base) who, Cameron alleged, was a supporter of the Islamic State. It sounded crass, but also turned out to be inaccurate, forcing a low-key half-apology a week later.

It seemed as if Cameron’s greatest asset, his repertoire of political skills, was deserting him. Perhaps topmost among those skills is his feel for the occasion. Undiplomatic blabbering, or charging at the merest knot of Jeremy Corbyn’s beard, doesn’t qualify. Nor does smearing political opponents under parliamentary privilege and, to compound the lapse, getting the detail wrong.

Cameron does have form in the field of high-grade political gaffes, notably when he revealed the monarch’s pleasure at Scotland’s “no” to independence in 2014. (“She purred down the line,” he told the media mogul Michael Bloomberg.) Perhaps, as the Wall Street Journal’s Rebecca Byrne suggests, “he falls apart when he meets the queen”? Nor is he a stranger to displays of temper; sketch-writers especially have observed his tendency to turn puce under pressure. Given his near constant availability to media through eleven years of prominence, though, such departures from his routine shrewdness and equability have been rare. Yet for a leader whose virtuosity is a big part of the deal with the public, regularly hitting false notes could prove fatal. Margaret Thatcher’s slide in 1989–90 is an ominous precedent.

The domestic context explains much. Cameron is a second-term prime minister with a small majority, a split party, and a crowding policy agenda, who has pre-announced his departure close to the next election. Above all, he knows that defeat in the “Brexit” referendum on 23 June would wreck that timetable and define his legacy. In short, he is fighting for his political life, and for his reputation before history. Little wonder if the pressure were getting to him.

Regarding the palace incident, Cameron may well have been aware that his comments would be circulated. At the same event, the Queen confirmed to a senior police officer that Chinese officials had been “very rude” to her ambassador before Xi Jinping’s state visit in October. Britain’s media admired her frankness, China’s shut it down (though some netizens invoked the opium wars as a reminder of imperial knavery). Yet deliberate or true as they may be, each utterance was lowered by its context. Add John Bercow’s ingratiating follow-up to Cameron, referring to the Afghan and Nigerian presidents – “They’re coming at their own expense one assumes?” – and an unflattering picture of elite superiority is not hard to draw.

Again, however, Cameron’s false start acted as a klaxon for the anti-corruption summit, guaranteeing the latter prime airplay even beside the same day’s unveiling of the BBC’s new blueprint and a Brexit paroxysm over Bank of England forecasting.

The scene was Lancaster House, a sumptuous diplomatic mansion in west London where Malaya and Rhodesia were negotiated out of colonial history. The issue had briefly entered public and media consciousness in early April with the release of the Panama Papers, the archive of 11.5 million documents that revealed a huge amount of information about the long-term use of tax havens, several of them overseas territories or crown dependencies of the United Kingdom. Around half of the companies listed in the documents were registered in places with a British connection. At a massive 2600 gigabytes, the papers bring newly abundant resources in tackling what Jason Sharman of Griffith University calls “illicit global wealth chains.”

In Britain, the initial impact was channelled into a manic focus on David Cameron’s own tax affairs, following the news that his late father had operated a (legal) investment fund with Mossack Fonseca from 1981. A series of defensive and partial statements from the PM’s office on the matter fuelled the drama. After a pack-hunting week that produced barely a revelation of note – only a flurry of politicians’ tax returns, for all the good that will do – little air was left for bigger stories, including Britain’s own role in the global industry of money-laundering. A month on, the coalescing of governance agencies, civic activists, journalists and academics in London offered a fresh chance for momentum on anti-corruption, this time including the megacity as a nexus of tainted lucre made “clean.”

Cobus de Swardt, managing director of Transparency International, summarised the charge sheet by saying that “Britain is part of the world’s corruption problem, by providing a safe haven for corrupt assets.” Where, after all, do funds pillaged from systemically corrupt states go? In many cases, as mapped by Nicholas Shaxson’s incisive book Treasure Islands, they go into shell companies and opaque funds in those offshore territories whose ultimate jurisdiction is Britain. Along the way, they are multiply transferred and layered to conceal their origins, then recycled into apparent legitimacy via the global property, investment and futures markets. And all this facilitated by, among others, British (or at least UK-based) accountants, lawyers, advisers, brokers and bankers.

Surveying the evidence in light of David Cameron’s “fantastically corrupt,” the Times’s economic editor Philip Aldrick turned the phrase back on the jewel in Britain’s economic crown: “Behind its gleaming façade and sharp suits, the City is a slush fund for dirty cash. Accountants, lawyers and bankers play enabler for drug barons, terrorists and venal politicians, flushing vast fortunes through London’s property, art, and, above all, financial markets.”

This strengthens Muhammadu Buhari’s point about the interdependency of rich and poor states, and validates a laser focus on the former. Sharman, author of the forthcoming Chasing Kleptocrats’ Loot: The International Campaign Against Grand Corruption, says that by definition New York and London, the top two financial centres in the world, handle the largest amounts of illicit money and thus deserve prime attention from investigators.

Britain’s Conservative-led government has since 2010 talked tough and undertaken some reforms. In 2014 it published a sixty-page anti-corruption plan, covering all areas of domestic policy, including the finance sector; a chapter on recovering stolen assets and tackling the illicit financial flows linked to corruption highlighted the case of James Ibori, former governor of Nigeria’s oil-rich Delta State, whom the Metropolitan (that is, London) Police’s proceeds-of-corruption unit nailed for embezzling the equivalent of US$250 million of state funds.

In 2015 the government created an intelligence-sharing body, the Financial Sector Forum, pooling the expertise of police, banks and regulators; bringing tax havens in from the heat was part of its remit. In 2016 an International Corruption Unit was formed under the National Crime Agency, whose remit includes “money laundering by corrupt foreign officials and their associates.” In recent days, the City of London police – working in the heart of the financial sector – have announced the arrest of two men on suspicion of laundering vast sums through the futures market (US$22 million has been frozen); investigations point to “a suspected Russian organised crime group.”

There is more. But clearly it is not enough. The huge scale of the problems, in London and elsewhere, has been amplified by the globalisation of finance, under-regulated or non-regulated. Rigorous cooperation, both rooted and mobile, is needed to match and defeat the problem, always learning from best practice. Transparency is important, but its limitations are also becoming clear, suggests Tom Burgis, investigations correspondent of the Financial Times and author of The Looting Machine. There are “growing questions about whether advancing transparency is the same thing as combating corruption.” He points out that breakthrough investigations in Brazil and Malaysia, and within FIFA, “all came about through the courage and cunning of judges, prosecutors, investigators and witnesses, not voluntary disclosures.”

No mention of summits there, though such gatherings of energy and expertise can still play an important cohering role. In London, the dignitaries included US secretary of state John Kerry, who warned, with the abandon of the nearly departed, “We are fighting a battle, all of us. Corruption, writ large, is as much of an enemy, because it destroys nation-states, as some of the extremists we are fighting or the other challenges we face.”

A series of “country statements” committed individual states to their own remedial courses. Six states agreed to publish registers of property and company owners, and six more to consider this step (Australia being one of the latter); another eleven pledged to join a group that confidentially shares such lists, bringing the number to forty. The first group contains Britain, Afghanistan and Nigeria; the second, two of Britain’s territories (Bermuda and the Cayman Islands) and two of its crown dependencies (Jersey and the Isle of Man). David Cameron advocated these “beneficial ownership” registers in 2013 at Davos and the G8 summit. This is not a step the United States, with its own, onshore tax havens such as Delaware and Nevada, is prepared to take.

Cameron himself, poise regained, closed the event. No one makes a new body sound so impressive: a London-based International Anti-Corruption Coordination Centre, a Global Forum for Asset Recovery, the beginnings of an International Sport Integrity Partnership. No one does the establishment reformer act better: “What we are talking about is stopping the corrupt hiding their loot from the authorities… It means that when people steal money from your country and hide it in mine, we can expose them and return the money to you… It means cleaning up our property market right here in London.”

After all, Cameron’s touch is still there, though recent performances have a ruthless, shameless and careless streak. More in doubt is the time that remains to him, and his capacity to deliver. If he survives the Brexit vote, the day of judgement will be postponed once more. For now, it’s on to the next show. Anti-corruption? That was yesterday. •

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