George Turner ■ Guest Post – Snowstorm – tax havens and organised crime today


Organised crime has had a long association with tax havens, and tax evasion.  After All, Al Capone was imprisoned for tax evasion, and not any of the other crimes that it is said he committed. But how much do governments and police forces include tackling tax havens in their thinking of modern organised crime? Not much according to two experts on the issue Mary Young and Michael Woodwiwiss.

Currently the UK government spends a significant amount of its development aid in countering organised crime, but appears to have little scientific understanding about what exactly that is. There is also little transparency about where that aid money is going. Currently the issue is being considered by a UK Parliamentary committee, which often meets in secret, but even they are having difficulty getting to the bottom of the issue.

This article from Michael Woodiwiss and Mary Young discusses some of these issues and outlines the case they have been making on how to fight global organised crime more effectively. At the heart of their recommendations is the need to focus on tax evasion as form of organised crime, and for the UK to be doing much more to look at illicit flows of money passing though the biggest offshore centre of them all, London.


By: Michael Woodiwiss and Mary Young

The authors are based in the Department of History and Bristol Law School at the University of the West of England. Their research encompasses the interdisciplinary exploration of the conceptualisation of organised crime and its impact within norm making at the national, regional and international levels.

The authors are happy to be contacted directly at Michael.Woodiwiss [@] and Mary.Young [@]

It may seem surprising but the last scientific and objective government sponsored inquiry into organised crime in any country was undertaken by the U.S.’ Wickersham Commission between 1929 and 1931. The commission concluded that, ‘[i]ntelligent action’, on organised crime, ‘requires knowledge – not, as in too many cases, a mere redoubling of effort in the absence of adequate information and a definite plan’. Its primary recommendation was, ‘for immediate, comprehensive, and scientific, nation-wide inquiry into organized crime’ to ‘make possible the development of an intelligent plan for its control’. Sadly no such inquiry took place and the concept of organized crime was captured by a succession of opportunist politicians most notably Presidents Richard Nixon (1969-1973) and Ronald Reagan (1980-1988). During Nixon’s administration, a flawed and so far unsuccessful crime control policy template was set in stone by the Organized Crime Control Act of 1970. This was built on by the Reagan administration and exported first to Britain during the Thatcher years and, with British support, to the rest of the international community through U.N. Conventions and other mechanisms in the years that have followed.

The latest manifestation of this process was apparent on Monday 28th November 2016 when three representatives of the UK government’s security community gave evidence to the National Security Strategy Committee on the Conflict, Security and Stability Fund (CSSF). Since 2015 the UK government has been spending in excess of £1 billion every year through the fund, in an attempt to tackle conflict and build stability overseas, especially in conflict affected ‘fragile’ regions. A large part of this funding is intended to tackle ‘organized crime’ or ‘transnational organized crime’. The writers of this article believe that British tax-payers’ money is perpetuating an unwise approach to organised crime that, as the Wickersham Commission warned, will amount to ‘a mere redoubling of effort in the absence of adequate information and a definite plan’. The authors of this article submitted evidence to the Committee on the disaster looming if their points were not taken into consideration: their evidence to the Committee is available at CSSF Fund Written Evidence Young & Woodiwiss.

The case the authors made to the Committee was as follows:

1) If the government is against organised crime it should make itself aware of what actually constitutes organised crime. Why, for example, is tax evasion excluded from the range of illicit activities listed by the government’s National Security Strategy Review? Tax evasion clearly represents an organised crime threat that involves a range of legitimate world actors such as lawyers, bankers, accountants and estate agents who act as enablers.

2) Since the National Crime Agency as well as other sources has made clear that vast amounts of criminal money continue to be ‘laundered’ through the City and the Crown Dependencies, shouldn’t the UK government clean up its own house before it attempts to clean up conflict-afflicted situations?

3) Given the amount of money being dispensed through the CSSF fund shouldn’t the processes involved be more transparent and accountable than they currently are.

The authors recommended that the fund should be frozen until responses were made to these points and that the government urgently needs to appoint a commission of inquiry into organized crime. There has never been such an inquiry although a succession of U.K. governments signed up to numerous international conventions that committed our police to the thankless and unending task of combatting a phenomenon that is only dimly understood by our policy makers.

The three representatives of the national security ‘team’ were Sir Mark Lyall-Grant, the government’s new ‘National Security Advisor’, Mr Robert Chatterton Dickenson, Director of Foreign Policy, National Security Secretariat (NSS), and Ms Melinda Simmons, Head of the NSS Joint Programme Hub. At the 28 November hearing, the Committee chose only to engage with a third of the points we made. Notably, Conservative MP, Dr Julian Lewis, pertinently emphasised the point about the lack of transparency involved with regard to the $1.3 billion a year fund. The Committee exists to provide parliamentary accountability for taxpayers’ money yet the hearing was evidence that they are rarely privy as to how the money from the CSSF is spent.  Lewis issued an ultimatum, either the expenditure for this financial year be disclosed in full, ‘even if it has to sit in private’ or otherwise the Committee ‘should tear up the fiction that we are in anyway able to hold you to account as to how you’re spending this very large sum of money.’  Lyall-Grant replied that he was looking at ways to increase transparency.

Two years into the fund’s existence, it is clear, that there has so far been little of it. Worryingly, two out of the three panelists giving evidence were seemingly unaware of the details of the projects (including implementation and outcomes) that their CSSF bankrolls. Furthermore they were able to provide little insight into how exactly the fiscal decisions are made and by whom, with Lyall-Grant simply referring to ‘regional boards’ within Whitehall as ‘important’ for decision making. This laissez-faire attitude of Lyall-Grant towards transparency, accountability and general competency had overtones of Oliver Letwin’s earlier attempts at obfuscation when in May 2016, Letwin chaired a sub-committee of the National Security Council and gave evidence on the, ‘basis of guesswork rather than knowledge, because I have not gone into the innards of the £100 million that we are currently spending this year in Africa under the CSSF’.

There was also no discussion of the definitional issues of organised crime; a matter raised by the authors of this article in their written evidence. The CSSF’s spending decisions to combat the security threats identified as organized crime rest on undefined and opaque terminology that reflect only the influences and biases of whoever is using it at the time.  There was reference at the hearing, to one of the few organised crime control success stories that could be told about the fund. Lyall-Grant noted that he was able to hold up the funding of a UK criminal justice advisers trip to East Africa and the consequent seizure of £512 million worth of cocaine in UK waters.  He was not questioned, however, about the lack of impact this seizure made on the availability of cocaine for U.K. consumers, or about the ease with which successful cocaine traffickers can still launder their profits through British financial institutions. The assumption that the witnesses seemed to share with Committee members was that we British keep a clean house and can therefore intervene – usually covertly intervene – in the affairs of fragile and conflict affected regions around the world. Organised crime in other jurisdictions is thought to be a direct security threat to the U.K. while organised financial crime under our own jurisdiction remains something that is minimally tackled – despite the exaggerated rhetoric of increasing transparency, we know that ultimately nothing will be done to increase either the transparency of the CSSF’s spending decisions or the financial services industries operating in Britain’s secrecy havens.

Across the Atlantic, the record of American efforts to control organised crime is not impressive – despite most film and television accounts and the constant claims of the F.B.I.  The Wickersham commission’s plea that intelligent action, on organized crime, ‘requires knowledge’ was once ignored again at the hearing yesterday, just as it has been for decades by American politicians, and the bureaucratic empire builders they ‘enabled’. We continue to experience, ‘a mere redoubling of effort in the absence of adequate information and a definite plan’.  The Parliamentary Committee’s failure to engage with the failure of organised crime control in this country is another chance missed. The Committee is due to meet the government’s national security representatives next on 12 December in a ‘Private Meeting’. It seems likely that they will continue to provide a fig leaf of accountability and transparency for the billion dollar fund. To use Dr Lewis’ apt description, when things go wrong the Parliamentary Committee will be a useful ‘patsy’.

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