There’s a large number of properties in old and new Kings Cross owned by offshore companies. In one building alone, the Arthouse 33 flats owned by companies in exotic locations many with high opacity about their true ownership. At the anti corruption summit today the government says:
The PM will announce today that foreign companies that own property in the UK will be forced to make public who really owns them.
Any foreign company that wants to buy UK property or bid for central government contracts here will have to join a new public register of beneficial ownership information before they can do so. This will be the first register of its kind anywhere in the world.
Crucially, it will include companies who already own property in the UK, not just those wishing to buy. Foreign companies own around 100,000 properties in England and Wales. Over 44,000 of these are in London.
The new register for foreign companies will mean corrupt individuals and countries will no longer be able to move, launder and hide illicit funds through London’s property market, and will not benefit from our public funds.
This is very welcome (subject to my caveats below) and it will be fascinating to see what impact this has on behaviours. Will there be a sudden flight of capital as people dump London investment properties over the next year or so before the law comes in. Or will the opposite happen and with a friendly face to a property we can invite them around for tea, to meetings, to get involved in the local community. I once lived next to a hostel building in Kings Cross that was very noisy and its true ‘beneficial’ owners elusive – the company was registered in the British Virgin Islands – and neither I nor the council had a way of engaging with the people who ran it to help the building be a better neighbour.
I’d like to offer up the Arthouse building in Kings Cross as a canary in the coal mine – if the law works we shall know who is the beneficial owner of each of the companies on this 2014 list (from HM Land Registry/Private Eye) if they still own property there when the law comes into force. My presumption is that the people involved with these companies have done nothing wrong and I welcome knowing who our neighbours are. However, if For Sale boards suddenly go up the journalists at the Guardian who have done so much work on transparency will be able to see them from their office window and investigate the impact of the new rules.
The Prime Minister has also said:
‘we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.’
But and it’s a big but the UK courts and law makers have always had huge trouble working out who is responsible for a company’s behaviour. And where crimes may have been committed, pinning charges on the executives. This website led a long campaign to hold a company (Transport for London) to account for the death of a cyclist on a junction on which their own engineers had warned them in writing that casualties were ‘inevitable’. In long discussion with experts, the police etc we realised the ineffectiveness of corporate manslaughter laws in large organisations. The concepts used in law just don’t work in large bureaucracies where blame is diffuse or can be made to appear so – the Corporate Manslaughter Act is widely recognised to be almost useless, except with very small companies. Similarly fraud convictions in the UK are few and far between.
So the challenge for the government’s noble endeavor is to learn from past experience and produce a workable law that can pin charges on companies in a way that counts. And to fight off the huge hordes of lobbyists from the financial services and legal industries who will try to subvert it.