Since the Thatcher years, the UK has built itself into a powerhouse money-launderer, selling financial secrecy to the world's most corrupt and vicious looters; but with a Labour victory looking more likely with each passing day, the super-rich of Britain are starting to panic.
Managers of private trusts — the preferred financial secrecy vehicle for tax-free intergenerational wealth-transfers (notoriously used by the Duke of Wellington to transfer £9 billion tax-free to his son) — are moving those trusts offshore.
But that capital flight isn't easy. The British Overseas Territories in the English Channel, the Caribbean and the Spanish coast are a natural choice, because they enjoy the stability of the strong British state without collecting the taxes that are needed to keep the state powerful enough to protect the money hidden there.
But a Corbyn/Labour majority in Parliament could very well see those British Overseas Territories brought to heel and forced to disclose the beneficial owners of all the money they're hiding — not just in service to British justice, but also to reveal the hidden assets looted by corrupt foreign oligarchs and dictators to the people they stole it from.
So that leaves British oligarchy with a conundrum: other tax havens are weak, corrupt and unstable — the kinds of state you get when you starve the tax-coffers, in other words — and hiding your money there is a bet on the local dictator not converting all your assets to a hyperinflationary currency, pocketing your money, and daring you to sue him in the courts he owns.
In the meantime, there's a wisdom of crowds on display here: the Labour establishment and the British press may still be convinced that Corbyn can't win an election, but Britain's super-rich seem increasingly convinced that this is inevitable.
"Most people are much more worried about Corbyn than Brexit — by a factor of 10," said Michael Maslinski of the wealth management consultancy Maslinski & Co, who is also a partner at Stonehage Fleming, an investment firm working for several rich families.
Iain Tait, a director at London & Capital, the wealth management firm, said dozens of his clients have already taken firm steps to protect their assets from a potential Labour government.
"We have had some UK families ask us to set up offshore investment accounts," he added.
"They want to make sure their investment accounts are Channel Islands-based or Switzerland-based so their money would not be subject to capital controls. It is activity we have seen from . . . clients in direct response to the threat of a Corbyn-led government."
Ultra-rich shift assets as fear of Labour government mounts [Alice Ross and Madison Marriage/FT]
(via Naked Capitalism)
(Image: Garry Knight, CC0)