This morning’s front pages make grim reading for the prime minister, but he is in a mess of his own making. More than 140 political figures – including 12 current or former heads of state – have been named in one of the biggest leaks in history. People around the world are asking their political leaders legitimate questions about their tax arrangements. And yet, in the case of David Cameron, it is his failure to provide complete answers that has aroused the desire for further scrutiny.
The questions facing our own prime minister should have been easy enough for Downing Street to answer – and certainly less damaging than those facing Iceland’s prime minister, Sigmundur Davíð Gunnlaugsson, who quit as a result of public outrage at his own family’s financial arrangements. Cameron was only drawn into the scandal on Monday when it emerged that his late father, Ian Cameron, ran an offshore fund that avoided having to pay British tax.
Reasonable people would not expect that Cameron should be held accountable for the tax arrangements of his father. Politicians can’t be expected to answer for the actions of their relatives. They would also not be surprised if Ian Cameron sought to use the personal wealth generated through his business affairs to provide for his children and grandchildren in the future. But they do expect their political leaders to be open and transparent about potential conflicts of interest, particularly in an area like tax policy, which is notoriously complex.
Throughout Tuesday, the prime minister and his spokespeople made a series of statements that appeared to provide only qualified answers to questions about whether he, or his immediate family, have benefited, are benefiting, or will benefit in the future from offshore tax arrangements. He initially insisted it was a private matter. He then issued a statement about his own tax arrangements, which made no reference to whether he or his immediate family had benefited in the past or stand to benefit in the future. Pressed further, he made a statement concerning his wife and children’s present arrangements. Finally, on Wednesday, Downing Street clarified that: “There are no offshore funds/trusts which the prime minister, Mrs Cameron or their children will benefit from in future.”
By issuing a statement on Tuesday night calling on those asking reasonable questions of him to “put up or shut up”, the prime minister has been poorly served by his advisers. If Mrs Smith in Ilford was asked questions about her tax affairs by HMRC and wrote back with a note saying “put up or shut up” there would be a reasonable suspicion that she had something to hide. I also doubt that Mrs Smith would get away with it. Mrs Smith is also not the prime minister – and it is not for the prime minister to tell the public and the press to zip it, particularly when the absence of openness and transparency lies at the heart of the problem presented by offshore tax havens.
It looks like the prime minister and his team are obfuscating because they are obfuscating. Tax arrangements can be incredibly complicated and are sometimes made deliberately so, which is why some people pay vast sums of money to put their funds in offshore tax havens like Panama, which is notoriously secretive. So when tax experts say that the prime minister has yet to answer all the important questions, it is reasonable to insist on clear responses. Has Cameron ever benefited from offshore trusts or funds? If he has benefited in the past, when did that arrangement end?
The answers to these questions matter for two reasons: first, to determine whether there is a conflict of interest and secondly to determine whether the prime minister is sincere when condemning aggressive tax avoidance and offshore tax arrangements.
Sunlight is the best disinfectant. The sooner Cameron can draw a line under this, the sooner the debate can concentrate on the bigger and far more important issue of tax havens and the role played by UK overseas territories.
It has taken more than 100 journalists a year to wade through 11.5m documents from Mossack Fonseca, the Panama-based firm used by a whole range of wealthy individuals and corporations to set up shell companies on their behalf – which is not illegal. Investigations announced by HMRC and the Financial Conduct Authority are an important step in the UK’s response to the evidence brought to light by the Panama leak, but our own government needs to set out a clear plan for the UK, including action to deliver greater transparency and to tackle British overseas territories engaged in practices that are morally and practically corrupt.
Our prime minister will be better able to lead that response if he is less defensive and more open about his own interests.
