International Standards – Giving Them Due Consideration

Web photo 2Yesterday, the States of Guernsey voted to bring in a private, central register of beneficial ownership of legal entities.  This was an important decision for us to make although it was tacked on to a long day talking about rubbish!  Before you start thinking I was being derogatory of my colleagues, I am referring to the debate on the Implementation of the Waste Strategy.

As I feel it is important that Guernsey is seen to give due consideration to other important matters especially those that affect our international reputation, I proceeded to give my speech despite the fact I stood up at 5.45pm.  For those of you who are interested below is the text of my speech.

“Sir, I will be supporting the proposition to establish a register containing beneficial ownership information for all forms of legal person.  We need this because it is essential that our law enforcement is provided with the tools to access this information as quickly as possible so that we can comply with international standards, fight crime and support our finance and business services industries.  I stand to give my support but also to give the subject the weight it deserves.  This is such an important move to take in the times we live in.

The proposal is for the Register to be open to those who need it and not publicly accessible.  This is, in my view, a sensible proposal.   Whilst there are calls for such registers to be open to the public, this is not based on a need to follow international standards but because of calls from pressure groups and the media.

From my involvement with industry, it is clear that they want us to follow international standards but not excessively which would put Guernsey at a competitive disadvantage.  I do not think the proposals do so.  In fact, I think they are a positive move supporting our commitment to law enforcement.

The widely accepted international standard on the recording of beneficial ownership is the one developed by the Financial Action Task Force or FATF which was first published in 2003 and further strengthened in 2012.  It does not require a publicly accessible register only that countries should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities.

This international standard has also been incorporated into the Global Forum on Transparency and Exchange of Information for Tax Purposes and is also followed in principle under the 4th Money Laundering Directive coming into force on the 26th June 2017.  I say in principle because, whilst the EU are seeking a central register, it requires a more extensive list of those who can access it than the FATF recommendation although, interestingly, it does not require the register to be public it merely suggests it as an option.

Whilst we are obviously not in the EU, not complying with the Directive may affect our ability to work with EU countries in the future.  This is not addressed in this Policy Letter and I would like reassurance that this aspect will be considered.

It is also important to remember that there are, already, extensive regulations in place which require all local trust and company service providers and other prescribed businesses and individuals to know the identity of the beneficial owners of Guernsey entities.  Those regulations also require the same information to be obtained for owners of entities incorporated in any jurisdiction in the world.

The recent 2015 MoneyVal report was most complimentary about the regulatory regime here but indicated they felt there were insufficient measures in place where no such provider was involved and the proposals in this Policy Letter are intended to improve these measures.

We also have, under Company Law, the role of Resident Agent whose responsibility, amongst other things, is to collect the information about beneficial owners albeit they do not need to establish the underlying natural person unlike under the Anti Money Laundering and Countering the Financing of Terrorism or AML/CFT requirements although both have a percentage ownership value below which identification is not required.   Propositions 7 and 9 will strengthen their role and accordingly I support these Propositions.

With all these ways of collating the information on beneficial ownership, why should we consider a public register?  Some say this is the way forward and point at the UK who have established a register last year.  But they’d be wrong.  The UK MPs calling for us to have such a public register of beneficial ownership probably don’t realise that the new UK legislation has not created such a register.

According to FATF, a beneficial ownership register should identify the natural persons who ultimately have a controlling ownership interest in a legal person but the UK register does not do that.  It does not even create a register of those who have ultimate control.  It merely creates an unverified register of those who have immediate control of a particular entity.  In my view this doesn’t even comply with the international standards so, as I have said before, why should we follow the UK down yet another path going in the wrong direction?

As well as not being required internationally, there are good reasons for keeping the details of beneficial ownership private.  These include a fear of kidnap or commercial sensitivity.  Some investment strategies made public could be impaired if this information was made public.  And who will prevent abuse of the information?

Most importantly, we all are entitled to a basic human right – the respect for private and family life – this is not secrecy but privacy: confidentiality.  As we said in the debate on the P&R Plan, regulation should be appropriate and proportional and this is an occasion when regulation should be no more and no less than what the international standard requires. The papers by the FATF and the OECD to the G20 Finance Ministers late last year made it clear that the focus is not on revising the standard but on implementation of the existing standard.  So I say let the ones who need to have the information, the Bailiwick’s law enforcement, have that information as speedily as possible.

However, that information must be kept securely; an important consideration for all of us in this age of cyber insecurity as highlighted by Deputy Lowe yesterday morning.  I am pleased with the choice of the Guernsey Registry as it will not only have the appropriate mechanisms in place to ensure the information is kept securely but, unlike the Guernsey Financial Services Commission, it will not be subject to a potential conflict of interest.

We do also need to ensure there are suitable legal gateways for the sharing of that information with domestic and foreign authorities for specified purposes.  Part II of the Disclosure Law which was brought into force on the 17th December 2007 and updated in 2014 sets out these various purposes and include criminal investigations and proceedings in the Bailiwick and elsewhere. Again I support this approach.

We then have Proposition 5 – to agree that P&R and Economic Development can appoint the Registrar.  As there is no mention in the Propositions that the appointment will be the Registrar of Companies as indicated in the Policy Letter, please can I have the reassurance that the Committees will not change their mind and, say, appoint the Commission instead?

The remaining Propositions are sensible recommendations especially in respect of the Resident Agents and bearer instruments.  The introduction of a statutory definition of beneficial owner will also be useful as is the alignment, after suitable consultation, with the anti-money laundering regime.   Similarly, the introduction of the right of directors to ask the Resident Agent to provide the beneficial ownership information on request but this could be enhanced if the Agent also has to provide the verification of such information.  I also note there is no provision to deal with the record keeping requirements when Resident Agents change – should the previous Agent keep the records to show they had fulfilled their role or should the documents belong to the company but accessible to the Agent?

Then there is the continuation of the ability for a statement being made that no beneficial owner has been identified.  This is necessary due to the complicated nature of ownership but I would ask for consideration that an explanation of why the owner cannot be identified to also be provided.

I am also concerned about the funding of the Registry.  Why does it have to come from the Bond?  We heard earlier that the implementation of the waste strategy would be better funded by the Bond as otherwise it would be paid for by the taxpayer and it would be more expensive if a commercial loan obtained but the Registry is a success story with more than £9 million transferred to General Revenue in 2015 so why can’t the costs be paid from their profits rather than the Bond with the inherent costs associated with such a loan?  In fact, why can’t the £214,000 loan outstanding at the end of 2015 be repaid too?  Whilst the Policy Letter seems to justify this I am not satisfied that this is commercially sound and an explanation would be appreciated.

However, I have also raised several times through the consultations, my concern as to why we are not being innovative in this field.  Why we are not being ahead of the curve for what is already a FATF standard and will also be a requirement in the future?  That is the register of trusts and other legal arrangements.

Pascal Saint-Amans, head of tax at the Organisation for Economic Cooperation and Development or the OECD, has said existing efforts to improve the sharing of information between countries – championed by David Cameron – needs to go further.  In particular, he said countries should look again at new registers of company ownership as these registers should also show similar information for trusts.

The FATF Recommendations state that the information available for legal entities should also be available in a similar way for legal arrangements – including trusts – with a view to achieving appropriate levels of transparency.

The 4th Money Laundering Directive states that “In order to ensure a level playing field among the different types of legal forms, trustees should also be required to obtain, hold and provide beneficial ownership information”.

Although David Cameron championed the public beneficial ownership register for legal entities, he acknowledged the important differences between companies and trusts indicating his reservations on such a register.  I am sure there are some in industry who may be fearful of my suggestion however, we need to be realistic and acknowledge that FATF, MoneyVal, and the OECD will get their way so let’s be proactive and design a register that is fit for our purposes and not wait to be told what we should do.  Be told by those who understand our finance and business services industries least.

I also note that two days ago New Zealand approved the recommendations of a report to introduce a private register of foreign trusts – trusts without a New Zealand resident settlor.  However, they are implementing it by using a manual spreadsheet database – we of course could be more sophisticated than that.

I should add that we do most of the work already under the AML/CFT regime so it would not be a stretch to start giving due consideration now to the question of whether to provide beneficial information on trusts to a private central register.  I believe that there are opportunities for our businesses if we lead the way so let’s grasp them.

So, Sir, despite recording my concern that that the Registrar is not stated in the Policy Letter to be the Registrar of Guernsey Companies and my disappointment that we are not being more progressive, I ask members to support these propositions. By doing so, we can fulfil the promises we have made to follow international standards and show our finance and business services industries that we support them by introducing regulation that is proportionate and appropriate.”

Democracy at Work

Last week I had the pleasure of attending a talk by Sam Mézec, the chairman of Jersey’s only political party.  Sam spoke on a subject that is close to my heart – getting more people involved in politics – and afterwards gave the audience the chance to air their views about what they thought were the important issues for the Bailiwick.

Being a supporter of executive government (and not the current revised committee system), I was particularly interested to hear Sam’s views on how we could set up a political party here in Guernsey.  To put this in context, Sam explained that his party was set up as a group in 2012 but decided to reconstitute as a political party in 2014 in order to campaign for wider principles of social and economic justice.  Currently their party consists of three elected members of the States of Jersey and 300 ordinary members.

When I asked how we could set up a party here in Guernsey, he explained how theirs was formed.  He got together with a group of like minded people who had the “same system of values and came from the same place”.  They were able talk about their views openly and honestly and also, importantly, disagree when it came to certain topics.  Sam felt this was an essential feature because it also meant there was no need for a party whip – a means of forcing all three elected members to vote the same way – instead they worked out their differences and, more importantly, accepted them.

Having followed the changes to the structure of Guernsey government over the last few years and now experiencing the effects, I still support a form of party politics here in Guernsey.  I do not think we should replicate the UK system.  Indeed, I don’t think we need to mirror precisely what goes on in the UK as a rule.  Instead I believe a form of political party can be a means of improving the way we seek – and reflect – the views of the people of the Bailiwick in the decisions we make.

We currently vote for people on the basis of what they say in a manifesto. This can lead to Deputies feeling they have to vote a particular way even though they no longer believe in that view.  Whilst, on the other hand, it can see the electorate getting frustrated when a Deputy votes differently from the way they promised they would at the election.

Candidates can, of course, avoid this dilemma by expressing how they intend to vote by reference to their declared values as I did.  But I think it would also help if the electorate could see a group of Deputies identifying with certain values and consistently acting on them.  I believe that that would help in the decision as to whether to get on the Electoral Roll and then whether to go out and vote.  It will get more people involved in deciding what is best for the Bailiwick.

Getting people interested in politics can take many forms not just political parties.  For example, some say that formal political parties are not necessary as they have their own “party” with their membership being those who voted for them at the election.  That’s as maybe but wouldn’t it be better to have Island Wide parties not just the voters in one electoral district identifying with just one Deputy?

As well as the need to garner enough support, there is a more fundamental problem.  I believe those elected in April 2016 enjoy their independence of thought and can see pitfalls to allegiances.  So, whilst I know of many like minded Deputies, it may be difficult to find any who are happy to publicise such an alliance to the extent of forming a political party with which the people of Guernsey can identify.  We shall see if this proves a real problem – it is early days.

Perhaps the more likely way forward is for you, the public, to form the groups and then support the Deputy or Deputies who represent your views.  And, hopefully, in 2020 you will be able to support candidates with the same policies in an election Island wide.





Post Truth Times

TINDALL DAWN-CAMPAIGN-9After two weeks and what seems like an age since the start of 2017, we already have an indication of the way things are going.  The Motion of No Confidence, unfortunately, was defeated but questions still remain about what happens next.

I am hopeful that the Committee’s plans for the next 6 months will become clearer at the January workshop even if the agreed 3 school model is being joined on the agenda by examples of the 2 and 4 school models!

Looking back at 2016, one trend which does worry me is that the debates appear to reflect what has been described as the new Post Truth era of politics.

Posttruth as an adjective which was chosen as the Oxford Dictionaries Word of the Year for 2016.  It is defined as ‘relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief’.  Post-truth politics relies on the repeated assertion of talking points to which factual rebuttals are ignored.

I have to say that, in the debates since I became a Deputy, I fear that objective facts are less influential as ‘in this era of posttruth politics, it’s easy to cherry-pick data and come to whatever conclusion you desire’.

It concerns me that the arguments based on evidence are not being given their due weight.  Don’t misunderstand me, there are times when the evidence does not take into account the local circumstances and these occasions must be identified and dealt with in favour of the “Guernsey Way”.   But when certain decisions are made when the evidence points to the contrary, it is worrying.  In my experience, this form of decision making usually also means a delay in achieving a workable outcome.

In general,  I use my skill and judgement to make a decision based on evidence.  I said that this would be my approach when I stood for election and I will continue to do so. However, I had hoped that there would be more Deputies who did the same but, so far, I have been sadly disappointed.

Some may say that the way decisions have been made in Guernsey over the years has not changed and that Post Truth politics was created here.  If that is the case, as Princess Leia might say, I just hope The Experts Strike Back.





A Happy Christmas to Everyone

Image result for christmas tree free pictures

With the festive time upon us, I just wanted to wish everyone a merry Christmas.  I hope you all enjoy these few days with family and friends and keep safe and warm.

When tucking in to the feast, please do give a thought to those on their own and those who do not have the good fortune to have the bounty that most of us take for granted …. wherever they are.

Perhaps we can make a bit more of a difference next year.

With all good wishes.




Motion of No Confidence

Web photo 1Being a signatory to a Motion of No Confidence is a decision that should not be taken lightly.   I decided to do so after considering the pros and cons in the same way I did when considering how to vote on the question of selection on the 2nd December.
A Committee which is mandated to bring in a major change in policy needs strong leadership and unity of purpose.  Having heard the speeches of the Committee, including the comments made by the President Deputy Le Pelley during and after the debate, I am afraid I do not have full confidence that this Committee can bring in such an important policy in the manner required.
When asked by Deputy Yerby if I would consider supporting the Motion of No Confidence, I agreed with little hesitation.  I felt that we cannot wait until June 2017 to see if the Committee for Education Sport & Culture can put aside their differences – both with each other and others – and come forward with a strong message of how the changes will be brought in.  It is just too important a policy to wait to see if the errors of the past months will be repeated.
Like others I have tried to avoid the need to have a Motion of No Confidence and I do hope that the Committee will heed all the calls to resign.  Deputy Leadbeater has done so and I congratulate him on such a brave decision which must have been so much more difficult as he was the first.
In the same way the Committee felt that it was necessary to bring the question of selection back to the Assembly so they could get a fresh mandate, I call on them to do so again. I do hope that they will resign, re-stand if they so wish and the vote will happen as soon as possible.
The link to the wording of the Motion is here:

Working Towards a Better Education System

Web photo 1It was surely a great day for our future – for the future of the unborn children – who will see an education system which is not based on tutoring or dependent on the wage packet of the family into which they are born.  Well that is my aim at least.  However, it is now that the hard work really starts and we need to keep focused on this aim, to keep on track, to find the best way to introduce this system and, importantly, to bring along those who are either totally against this system or, at the very least, sceptical.

I spoke of a possible option in my speech yesterday – that of the introduction of the International Baccalaureate from primary school – something I hope will be given due consideration as indicated by Deputy St Pier in his speech.

However, one thing I have learnt during all this is that, whilst I am against selection, I know that the education system here in the Bailiwick is complex. I just hope that the Committee for Education, Sport & Culture will continue to work very hard to bring together all the concerns and problems highlighted.  I hope they will produce, by June 2017, a coherent, well-researched approach which produces a consensus of opinion amongst themselves.  An approach which they can then present in a unified manner to the Assembly which we can rely on, that the majority can support and which will not produce another battle of wills that I have just witnessed.

Please let us all work together for the good of the Bailiwick’s children as, in the end, that’s what is best for all of us.






A Great Education for All

Web photo 1I just wanted to thank everyone for contacting me regarding the Education Debate – I may not have replied to all your e-mails but I have been reading them and taking note of your views.

As you will see from my Page “The Future of Education”, I cannot see how we can justify the continuation of the 11+ and my views haven’t changed.  Also, I have not been persuaded there is a good alternative and so I will be voting against re-introducing selection.

I believe in inclusion and equality but the 11+ excludes many who are perfectly capable of academic achievement. However, I do want to ensure the 25% aren’t disadvantaged by ensuring excellent education for all by enshrining the quality of the Grammar School’s achievements across our schools – something I do think parents and teachers alike want and I do believe is possible.

I do not think following the UK’s example is the way forward but I believe in a new system which emanates from the Grammar School – the International Baccalaureate  – a system which starts from primary school, which has excellent results, up-skills teachers, is liked by parents and teachers alike and could lead to international respect for our education system. It combines academic and vocational training and compliments our new curriculum.  It is not too expensive and is designed to fit in with other jurisdictions’ education systems.  It is a change but not a big change and it could end the polarising debate going on at the moment.
I mention this only to show what our education system could look like as, naturally, this is not going to be a matter for a vote.  Whilst ending selection may seem like a huge leap of faith for some, I do not think the alternative has to be based on the UK comprehensive system.  By removing selection, I don’t think it will, in any way, be the end of the line for great education here on Guernsey.