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The mess in India’s higher judiciary is, sadly, of its own making

The judiciary has become cocooned while being the supreme force for transparency elsewhere. The complainant against CJI Gogoi has laid bare this hypocrisy writes Shekhar Gupta in The Print

Most of today’s judges on the Supreme Court bench were in their thirties on 7 May 1997 when, famously, the full court sat and issued a 16-point declaration called Restatement of Values of Judicial Life. That year was the 50th anniversary of our Independence. You can find the full text here.

Twenty years on, we should check if our most hallowed institution has lived up to it.

You might begin with the question: Why is it that the Supreme Court of India has been making headlines for controversies than for good news? The current Chief Justice of India, Ranjan Gogoi, as his two immediate predecessors, Justices Dipak Misra and J.S. Khehar, have faced crippling controversies. The two before them cadged convenient sarkari sinecures. One of these, regrettably, in a Raj Bhavan.

Khehar was “mentioned” in the diaries of dead Arunachal chief minister Kalikho Pul. Dipak Misra first faced an unprecedented joint press conference by his four senior-most colleagues, protesting what they saw as his high-handedness and lack of institutional democracy, and then an impeachment threat by the opposition. The ‘sexual harassment’ crisis facing Justice Gogoi now is the gravest.

Let’s presume that each of these was spotless and targeted by interested parties. But we simply cannot defend none of them facing any scrutiny. Mostly, it happened because there was no procedure, mechanism or institution for such an inquiry. And where there is one, the Internal Complaints Committee for Sexual Harassment under the Vishakha Guidelines laid down by the highest court, the matter has been referred to a specially constituted committee of SC judges first, which the complainant has rejected.

Here are the three key reasons our judiciary has dug itself into a deep hole. First, its insistence on ducking inconvenient questions by invoking stature and reputation. This means there’s never closure on any issue. Second, that while the court lectures us on transparency, it remains India’s most opaque institution. And third, there is no mechanism, even a council of respected elders, which could step in when a crisis of credibility or internal distrust became evident.

Parliament had tried to create the National Judicial Accountability Commission exactly for such situations, but the court struck it down 4-1 as unconstitutional. Three of the judges who served on that bench (including Chelameswar, the lone dissenter) figured in the four-judge press conference in Gogoi’s company. 

Since Gogoi was the most senior among the four and the only one still in the chair, he needs to reflect on how his institution ended up here. Why is his Supreme Court looking like a big, flailing body oozing blood from a dozen, mostly self-inflicted cuts? And piranhas of various kinds are lurking.

It’s a tragedy when Supreme Court judges complain that they are victims of conspiracies. How did this most powerful institution, which is supposed to protect us and give us justice, become so vulnerable that busybody conspirators can threaten it? If it is so weak, where will we citizens go for justice?

The CJI’s office is a most exalted one. It is also possible that, as he and his brother judges in that most avoidable Saturday morning outburst indicated, there indeed is a conspiracy to undermine him. The Chief Justice of India deserves the fullest protection against interested parties throwing muck at him. But exactly the same principle should also apply to the complainant and the underdog.

Justice Gogoi and colleagues erred gravely in holding that peremptory Saturday morning sitting and pre-judging her case. Subsequent repairwork is now lost in the thickening murkiness, with an activist lawyer popping up with conspiracy theories. What these precisely are, we don’t know, because he has submitted them in a sealed cover. 

The sealed cover has now become a defining metaphor for the last of the three big mistakes the court has made: Making itself the most opaque institution while preaching transparency from the Republic’s highest pulpit. Here is an indicative list. In the Rafale case, the government’s evidence is in a sealed envelope, as indeed are all the reports of the officer in-charge of the NRC process in Assam. In former CBI chief Alok Verma’s case the CVC report remains in a sealed cover, as do NIA’s reports in the Hadiya ‘conversion’ case.
The SC order to political parties to submit details of their donors to the EC is the latest example of this quaint judicial doctrine of the sealed cover. You might understand need for secrecy in a rare case. But if even the compensation for the assorted retirees heading the court-appointed Committee of Administrators of Indian cricket remains in a sealed cover for three years, it’s fair to ask why the court should be hiding behind secrecy when its entire BCCI excursion was about transparency.

Opacity is comforting. You can so easily get used to it. The SC protects RTI for us, but claims immunity for itself. Only seven of 27 SC judges have disclosed their assets. There is no transparency or disclosure of the collegium proceedings, or even explanation when it changes its mind on an appointment. Shouldn’t you have the right to know exactly how many special and empowered committees the court has set up, mostly as a result of PILs, their members—especially retirees—and compensations? If the executive hid such information from you, you’d go to the courts. Where do you go against the Supreme Court?
Judges are wise people. It follows that top judges should be among the wisest of all. They must reflect on the consequences of their making the judiciary an insulated and cocooned institution while being the supreme force for transparency and disclosure elsewhere. It is this contradiction and hypocrisy that the complainant against the CJI has laid bare. That’s why the court is looking unsure.

Read that 16th and last point in that 1997 Restatement of Values of Judicial Life: ‘Every judge must at all times be conscious that he is under the public gaze and there should be no act or omission by him which is unbecoming of the high office he occupies and the public esteem in which that office is held.’

The Supreme Court’s refuge in opacity does not live up to this principle. An institutional reset and retreat are called for here. Of course, while both the complainant and the CJI get justice.

Why we stopped trusting elites

The credibility of establishment figures has been demolished by technological change and political upheavals. But it’s too late to turn back the clock. By William Davies in The Guardian

For hundreds of years, modern societies have depended on something that is so ubiquitous, so ordinary, that we scarcely ever stop to notice it: trust. The fact that millions of people are able to believe the same things about reality is a remarkable achievement, but one that is more fragile than is often recognised.

At times when public institutions – including the media, government departments and professions – command widespread trust, we rarely question how they achieve this. And yet at the heart of successful liberal democracies lies a remarkable collective leap of faith: that when public officials, reporters, experts and politicians share a piece of information, they are presumed to be doing so in an honest fashion. 

The notion that public figures and professionals are basically trustworthy has been integral to the health of representative democracies. After all, the very core of liberal democracy is the idea that a small group of people – politicians – can represent millions of others. If this system is to work, there must be a basic modicum of trust that the small group will act on behalf of the much larger one, at least some of the time. As the past decade has made clear, nothing turns voters against liberalism more rapidly than the appearance of corruption: the suspicion, valid or otherwise, that politicians are exploiting their power for their own private interest.

This isn’t just about politics. In fact, much of what we believe to be true about the world is actually taken on trust, via newspapers, experts, officials and broadcasters. While each of us sometimes witnesses events with our own eyes, there are plenty of apparently reasonable truths that we all accept without seeing. In order to believe that the economy has grown by 1%, or to find out about latest medical advances, we take various things on trust; we don’t automatically doubt the moral character of the researchers or reporters involved.

Much of the time, the edifice that we refer to as “truth” is really an investment of trust. Consider how we come to know the facts about climate change: scientists carefully collect and analyse data, before drafting a paper for anonymous review by other scientists, who assume that the data is authentic. If published, the findings are shared with journalists in press releases, drafted by university press offices. We expect that these findings are then reported honestly and without distortion by broadcasters and newspapers. Civil servants draft ministerial speeches that respond to these facts, including details on what the government has achieved to date.

A modern liberal society is a complex web of trust relations, held together by reports, accounts, records and testimonies. Such systems have always faced political risks and threats. The template of modern expertise can be traced back to the second half of the 17th century, when scientists and merchants first established techniques for recording and sharing facts and figures. These were soon adopted by governments, for purposes of tax collection and rudimentary public finance. But from the start, strict codes of conduct had to be established to ensure that officials and experts were not seeking personal gain or glory (for instance through exaggerating their scientific discoveries), and were bound by strict norms of honesty.

But regardless of how honest parties may be in their dealings with one another, the cultural homogeneity and social intimacy of these gentlemanly networks and clubs has always been grounds for suspicion. Right back to the mid-17th century, the bodies tasked with handling public knowledge have always privileged white male graduates, living in global cities and university towns. This does not discredit the knowledge they produce – but where things get trickier is when that homogeneity starts to appear to be a political identity, with a shared set of political goals. This is what is implied by the concept of “elites”: that purportedly separate domains of power – media, business, politics, law, academia – are acting in unison.

A further threat comes from individuals taking advantage of their authority for personal gain. Systems that rely on trust are always open to abuse by those seeking to exploit them. It is a key feature of modern administrations that they use written documents to verify things – but there will always be scope for records to be manipulated, suppressed or fabricated. There is no escaping that possibility altogether. This applies to many fields: at a certain point, the willingness to trust that a newspaper is honestly reporting what a police officer claims to have been told by a credible witness, for example, relies on a leap of faith.

A trend of declining trust has been underway across the western world for many years, even decades, as copious survey evidence attests. Trust, and its absence, became a preoccupation for policymakers and business leaders during the 1990s and early 2000s. They feared that shrinking trust led to higher rates of crime and less cohesive communities, producing costs that would be picked up by the state.

What nobody foresaw was that, when trust sinks beneath a certain point, many people may come to view the entire spectacle of politics and public life as a sham. This happens not because trust in general declines, but because key public figures – notably politicians and journalists – are perceived as untrustworthy. It is those figures specifically tasked with representing society, either as elected representatives or as professional reporters, who have lost credibility.

To understand the crisis liberal democracy faces today – whether we identify this primarily in terms of “populism” or “post-truth” – it’s not enough to simply bemoan the rising cynicism of the public. We need also to consider some of the reasons why trust has been withdrawn. The infrastructure of fact has been undermined in part by a combination of technology and market forces – but we must seriously reckon with the underlying truth of the populists’ charge against the establishment today. Too often, the rise of insurgent political parties and demagogues is viewed as the source of liberalism’s problems, rather than as a symptom. But by focusing on trust, and the failure of liberal institutions to sustain it, we get a clearer sense of why this is happening now.

The problem today is that, across a number of crucial areas of public life, the basic intuitions of populists have been repeatedly verified. One of the main contributors to this has been the spread of digital technology, creating vast data trails with the latent potential to contradict public statements, and even undermine entire public institutions. Whereas it is impossible to conclusively prove that a politician is morally innocent or that a news report is undistorted, it is far easier to demonstrate the opposite. Scandals, leaks, whistleblowing and revelations of fraud all serve to confirm our worst suspicions. While trust relies on a leap of faith, distrust is supported by ever-mounting piles of evidence. And in Britain, this pile has been expanding much faster than many of us have been prepared to admit.

Confronted by the rise of populist parties and leaders, some commentators have described the crisis facing liberalism in largely economic terms – as a revolt among those “left behind” by inequality and globalisation. Another camp sees it primarily as the expression of cultural anxieties surrounding identity and immigration. There is some truth in both, of course – but neither gets to the heart of the trust crisis that populists exploit so ruthlessly. A crucial reason liberalism is in danger right now is that the basic honesty of mainstream politicians, journalists and senior officials is no longer taken for granted.

There are copious explanations for Trump, Brexit and so on, but insufficient attention to what populists are actually saying, which focuses relentlessly on the idea of self-serving “elites” maintaining a status quo that primarily benefits them. On the right, Nigel Farage has accused individual civil servants of seeking to sabotage Brexit for their own private ends. On the left, Jeremy Corbyn repeatedly refers to Britain’s “rigged” economic system. The promise to crack down on corruption and private lobbying is integral to the pitch made by figures such as Donald Trump, Jair Bolsonaro or Viktor Orbán.

One of the great political riddles of recent years is that declining trust in “elites” is often encouraged and exploited by figures of far more dubious moral character – not to mention far greater wealth – than the technocrats and politicians being ousted. On the face of it, it would seem odd that a sense of “elite” corruption would play into the hands of hucksters and blaggards such as Donald Trump or Arron Banks. But the authority of these figures owes nothing to their moral character, and everything to their perceived willingness to blow the whistle on corrupt “insiders” dominating the state and media.

Liberals – including those who occupy “elite” positions – may comfort themselves with the belief that these charges are ill-founded or exaggerated, or else that the populists offer no solutions to the failures they identify. After all, Trump has not “drained the swamp” of Washington lobbying. But this is to miss the point of how such rhetoric works, which is to chip away at the core faith on which liberalism depends, namely that power is being used in ways that represent the public interest, and that the facts published by the mainstream media are valid representations of reality.

Populists target various centres of power, including dominant political parties, mainstream media, big business and the institutions of the state, including the judiciary. The chilling phrase “enemies of the people” has recently been employed by Donald Trump to describe those broadcasters and newspapers he dislikes (such as CNN and the New York Times), and by the Daily Mail to describe high court judges, following their 2016 ruling that Brexit would require parliamentary consent. But on a deeper level, whether it is the judiciary, the media or the independent civil service that is being attacked is secondary to a more important allegation: that public life in general has become fraudulent.

Nigel Farage campaigning with Donald Trump in 2016. Photograph: Jonathan Bachman/Getty Images

How does this allegation work? One aspect of it is to dispute the very possibility that a judge, reporter or expert might act in a disinterested, objective fashion. For those whose authority depends on separating their public duties from their personal feelings, having their private views or identities publicised serves as an attack on their credibility. But another aspect is to gradually blur the distinctions between different varieties of expertise and authority, with the implication that politicians, journalists, judges, regulators and officials are effectively all working together.

It is easy for rival professions to argue that they have little in common with each other, and are often antagonistic to each other. Ostensibly, these disparate centres of expertise and power hold each other in check in various ways, producing a pluralist system of checks and balances. Twentieth-century defenders of liberalism, such as the American political scientist Robert Dahl, often argued that it didn’t matter how much power was concentrated in the hands of individual authorities, as long as no single political entity was able to monopolise power. The famous liberal ideal of a “separation of powers” (distinguishing executive, legislative and judicial branches of government), so influential in the framing of the US constitution, could persist so long as different domains of society hold one another up to critical scrutiny.

But one thing that these diverse professions and authorities do have in common is that they trade primarily in words and symbols. By lumping together journalists, judges, experts and politicians as a single homogeneous “liberal elite”, it is possible to treat them all as indulging in a babble of jargon, political correctness and, ultimately, lies. Their status as public servants is demolished once their claim to speak honestly is thrown into doubt. One way in which this is done is by bringing their private opinions and tastes before the public, something that social media and email render far easier. Tensions and contradictions between the public face of, say, a BBC reporter, and their private opinions and feelings, are much easier to discover in the age of Twitter.

Whether in the media, politics or academia, liberal professions suffer a vulnerability that a figure such as Trump doesn’t, in that their authority hangs on their claim to speak the truth. A recent sociological paper called The Authentic Appeal of the Lying Demagogue, by US academics Oliver Hahl, Minjae Kim and Ezra Zuckerman Sivan, draws a distinction between two types of lies. The first, “special access lies”, may be better termed “insider lies”. This is dishonesty from those trusted to truthfully report facts, who abuse that trust by failing to state what they privately know to be true. (The authors give the example of Bill Clinton’s infamous claim that he “did not have sexual relations with that woman”.)

The second, which they refer to as “common knowledge lies”, are the kinds of lies told by Donald Trump about the size of his election victory or the crowds at his inauguration, or the Vote Leave campaign’s false claims about sending “£350m a week to the EU”. These lies do not pretend to be bound by the norm of honesty in the first place, and the listener can make up their own mind what to make of them.

What the paper shows is that, where politics comes to be viewed as the domain of “insider” liars, there is a seductive authenticity, even a strange kind of honesty, about the “common knowledge” liar. The rise of highly polished, professional politicians such as Tony Blair and Bill Clinton exacerbated the sense that politics is all about strategic concealment of the truth, something that the Iraq war seemed to confirm as much as anything. Trump or Farage may have a reputation for fabricating things, but they don’t (rightly or wrongly) have a reputation for concealing things, which grants them a form of credibility not available to technocrats or professional politicians.

At the same time, and even more corrosively, when elected representatives come to be viewed as “insider liars”, it turns out that other professions whose job it is to report the truth – journalists, experts, officials – also suffer a slump in trust. Indeed, the distinctions between all these fact-peddlers start to look irrelevant in the eyes of those who’ve given up on the establishment altogether. It is this type of all-encompassing disbelief that creates the opportunity for rightwing populism in particular. Trump voters are more than twice as likely to distrust the media as those who voted for Clinton in 2016, according to the annual Edelman Trust Barometer, which adds that the four countries currently suffering the most “extreme trust losses” are Italy, Brazil, South Africa and the US.

It’s one thing to measure public attitudes, but quite another to understand what shapes them. Alienation and disillusionment develop slowly, and without any single provocation. No doubt economic stagnation and soaring inequality have played a role – but we should not discount the growing significance of scandals that appear to discredit the honesty and objectivity of “liberal elites”. The misbehaviour of elites did not “cause” Brexit, but it is striking, in hindsight, how little attention was paid to the accumulation of scandal and its consequences for trust in the establishment.

The 2010 edition of the annual British Social Attitudes survey included an ominous finding. Trust in politicians, already low, had suffered a fresh slump, with a majority of people saying politicians never tell the truth. But at the same time, interest in politics had mysteriously risen.

To whom would this newly engaged section of the electorate turn if they had lost trust in “politicians”? One answer was clearly Ukip, who experienced their greatest electoral gains in the years that followed, to the point of winning the most seats in the 2014 elections for the European parliament. Ukip’s surge, which initially appeared to threaten the Conservative party, was integral to David Cameron’s decision to hold a referendum on EU membership. One of the decisive (and unexpected) factors in the referendum result was the number of voters who went to the polls for the first time, specifically to vote leave.

What might have prompted the combination of angry disillusionment and intensifying interest that was visible in the 2010 survey? It clearly predated the toughest years of austerity. But there was clearly one event that did more than any other to weaken trust in politicians: the MPs’ expenses scandal, which blew up in May 2009 thanks to a drip-feed of revelations published by the Daily Telegraph.

Following as it did so soon after a disaster of world-historic proportions – the financial crisis – the full significance of the expenses scandal may have been forgotten. But its ramifications were vast. For one thing, it engulfed many of the highest reaches of power in Westminster: the Speaker of the House of Commons, the home secretary, the secretary of state for communities and local government and the chief secretary to the treasury all resigned. Not only that, but the rot appeared to have infected all parties equally, validating the feeling that politicians had more in common with each other (regardless of party loyalties) than they did with decent, ordinary people.

Many of the issues that “elites” deal with are complex, concerning law, regulation and economic analysis. We can all see the fallout of the financial crisis, for instance, but the precise causes are disputed and hard to fathom. By contrast, everybody understands expense claims, and everybody knows lying and exaggerating are among the most basic moral failings; even a child understands they are wrong. This may be unfair to the hundreds of honest MPs and to the dozens whose misdemeanours fell into a murky area around the “spirit” of the rules. But the sense of a mass stitch-up was deeply – and understandably – entrenched.

The other significant thing about the expenses scandal was the way it set a template for a decade of elite scandals – most of which also involved lies, leaks and dishonest denials. One year later, there was another leak from a vast archive of government data: in 2010, WikiLeaks released hundreds of thousands of US military field reports from Iraq and Afghanistan. With the assistance of newspaper including the New York Times, Der Spiegel, the Guardian and Le Monde, these “war logs” disclosed horrifying details about the conduct of US forces and revealed the Pentagon had falsely denied knowledge of various abuses. While some politicians expressed moral revulsion with what had been exposed, the US and British governments blamed WikiLeaks for endangering their troops, and the leaker, Chelsea Manning, was jailed for espionage.

 

Rupert Murdoch on his way to give evidence to the Leveson inquiry in 2012. Photograph: Ben Stansall/AFP/Getty Images

In 2011, the phone-hacking scandal put the press itself under the spotlight. It was revealed that senior figures in News International and the Metropolitan police had long been aware of the extent of phone-hacking practices – and they had lied about how much they knew. Among those implicated was the prime minister’s communications director, former News of the World editor Andy Coulson, who was forced to resign his post and later jailed. By the end of 2011, the News of the World had been closed down, the Leveson inquiry was underway, and the entire Murdoch empire was shaking.

The biggest scandal of 2012 was a different beast altogether, involving unknown men manipulating a number that very few people had even heard of. The number in question, the London interbank offered rate, or Libor, is meant to represent the rate at which banks are willing to loan to each other. What was surreal, in an age of complex derivatives and high-frequency trading algorithms, was that this number was calculated on the basis of estimates declared by each bank on a daily basis, and accepted purely on trust. The revelation that a handful of brokers had conspired to alter Libor for private gain (with possible costs to around 250,000 UK mortgage-holders, among others) may have been difficult to fully comprehend, but it gave the not unreasonable impression of an industry enriching itself in a criminal fashion at the public’s expense. Bob Diamond, the CEO of Barclays, the bank at the centre of the conspiracy, resigned in July 2012.

Towards the end of that year, the media was caught in another prolonged crisis, this time at the BBC. Horror greeted the broadcast of the ITV documentary The Other Side of Jimmy Savile in October 2012. How many people had known about his predatory sexual behaviour, and for how long? Why had the police abandoned earlier investigations? And why had BBC Newsnight dropped its own film about Savile, due to be broadcast shortly after his death in 2011? The police swiftly established Operation Yewtree to investigate historic sexual abuse allegations, while the BBC established independent commissions into what had gone wrong. But a sense lingered that neither the BBC nor the police had really wanted to know the truth of these matters for the previous 40 years.

It wasn’t long before it was the turn of the corporate world. In September 2014, a whistleblower revealed that Tesco had exaggerated its half-yearly profits by £250m, increasing the figure by around a third. An accounting fiddle on this scale clearly had roots at a senior managerial level. Sure enough, four senior executives were suspended the same month and three were charged with fraud two years later. A year later, it emerged that Volkswagen had systematically and deliberately tinkered with emissions controls in their vehicles, so as to dupe regulators in tests, but then pollute liberally the rest of the time. The CEO, Martin Winterkorn, resigned.

“We didn’t really learn anything from WikiLeaks we didn’t already presume to be true,” the philosopher Slavoj Žižek observed in 2014. “But it is one thing to know it in general and another to get concrete data.” The nature of all these scandals suggests the emergence of a new form of “facts”, in the shape of a leaked archive – one that, crucially, does not depend on trusting the secondhand report of a journalist or official. These revelations are powerful and consequential precisely because they appear to directly confirm our fears and suspicions. Resentment towards “liberal elites” would no doubt brew even in the absence of supporting evidence. But when that evidence arises, things become far angrier, even when the data – such as Hillary Clinton’s emails – isn’t actually very shocking.

This is by no means an exhaustive list of the scandals of the past decade, nor are they all of equal significance. But viewing them together provides a better sense of how the suspicions of populists cut through. Whether or not we continue to trust in politicians, journalists or officials, we have grown increasingly used to this pattern in which a curtain is dramatically pulled back, to reveal those who have been lying to or defrauding the public.

Another pattern also begins to emerge. It’s not just that isolated individuals are unmasked as corrupt or self-interested (something that is as old as politics), but that the establishment itself starts to appear deceitful and dubious. The distinctive scandals of the 21st century are a combination of some very basic and timeless moral failings (greed and dishonesty) with technologies of exposure that expose malpractice on an unprecedented scale, and with far more dramatic results.

Perhaps the most important feature of all these revelations was that they were definitely scandals, and not merely failures: they involved deliberate efforts to defraud or mislead. Several involved sustained cover-ups, delaying the moment of truth for as long as possible.

Several of the scandals ended with high profile figures behind bars. Jail terms satisfy some of the public demand that the “elites” pay for their dishonesty, but they don’t repair the trust that has been damaged. On the contrary, there’s a risk that they affirm the cry for retribution, after which the quest for punishment is only ramped up further. Chants of “lock her up” continue to reverberate around Trump rallies.

In addition to their conscious and deliberate nature, a second striking feature of these scandals was the ambiguous role played by the media. On the one hand, the reputation of the media has taken a pummelling over the past decade, egged on by populists and conspiracy theorists who accuse the “mainstream media” of being allied to professional political leaders, and who now have the benefit of social media through which to spread this message.

The moral authority of newspapers may never have been high, but the grisly revelations that journalists hacked the phone of murdered schoolgirl Milly Dowler represented a new low in the public standing of the press. The Leveson inquiry, followed soon after by the Savile revelations and Operation Yewtree, generated a sense of a media class who were adept at exposing others, but equally expert at concealing the truth of their own behaviours.

On the other hand, it was newspapers and broadcasters that enabled all of this to come to light at all. The extent of phone hacking was eventually exposed by the Guardian, the MPs’ expenses by the Telegraph, Jimmy Savile by ITV, and the “war logs” reported with the aid of several newspapers around the world simultaneously.

But the media was playing a different kind of role from the one traditionally played by journalists and newspapers, with very different implications for the status of truth in society. A backlog of data and allegations had built up in secret, until eventually a whistle was blown. An archive existed that the authorities refused to acknowledge, until they couldn’t resist the pressure to do so any longer. Journalists and whistleblowers were instrumental in removing the pressure valve, but from that point on, truth poured out unpredictably. While such torrents are underway, there is no way of knowing how far they may spread or how long they may last.

 

Tony Blair and Bill Clinton in Belfast in April. Photograph: Charles McQuillan/Getty Images

The era of “big data” is also the era of “leaks”. Where traditional “sleaze” could topple a minister, several of the defining scandals of the past decade have been on a scale so vast that they exceed any individual’s responsibility. The Edward Snowden revelations of 2013, the Panama Papers leak of 2015 and the HSBC files (revealing organised tax evasion) all involved the release of tens of thousands or even millions of documents. Paper-based bureaucracies never faced threats to their legitimacy on this scale.

The power of commissions and inquiries to make sense of so much data is not to be understated, nor is the integrity of those newspapers and whistleblowers that helped bring misdemeanours to light. In cases such as MPs’ expenses, some newspapers even invited their readers to help search these vast archives for treasure troves, like human algorithms sorting through data. But it is hard to imagine that the net effect of so many revelations was to build trust in any publicly visible institutions. On the contrary, the discovery that “elites” have been blocking access to a mine of incriminating data is perfect fodder for conspiracy theories. In his 2010 memoir, A Journey, Tony Blair confessed that legislating for freedom of information was one of his biggest regrets, which gave a glimpse of how transparency is viewed from the centre of power.

Following the release of the war logs by WikiLeaks, nobody in any position of power claimed that the data wasn’t accurate (it was, after all, the data, and not a journalistic report). Nor did they offer any moral justification for what was revealed. Defence departments were left making the flimsiest of arguments – that it was better for everyone if they didn’t know how war was conducted. It may well be that the House of Commons was not fairly represented by the MPs’ expenses scandal, that most City brokers are honest, or that the VW emissions scam was a one-off within the car industry. But scandals don’t work through producing fair or representative pictures of the world; they do so by blowing the lid on hidden truths and lies. Where whistleblowing and leaking become the dominant form of truth-telling, the authority of professional truth-tellers – reporters, experts, professionals, broadcasters – is thrown into question.

The term “illiberal democracy” is now frequently invoked to describe states such as Hungary under Viktor Orbán or Turkey under Recep Tayyip Erdoğan. In contrast to liberal democracy, this model of authoritarian populism targets the independence of the judiciary and the media, ostensibly on behalf of “the people”.

Brexit has been caused partly by distrust in “liberal elites”, but the anxiety is that it is also accelerating a drift towards “illiberalism”. There is a feeling at large, albeit amongst outspoken remainers, that the BBC has treated the leave campaign and Brexit itself with kid gloves, for fear of provoking animosity. More worrying was the discovery by openDemocracy in October that the Metropolitan police were delaying their investigation into alleged breaches of electoral law by the leave campaign due to what a Met spokesperson called “political sensitivities”. The risk at the present juncture is that key civic institutions will seek to avoid exercising scrutiny and due process, for fear of upsetting their opponents.

Britain is not an “illiberal democracy”, but the credibility of our elites is still in trouble, and efforts to placate their populist opponents may only make matters worse. At the more extreme end of the spectrum, the far-right activist Stephen Yaxley-Lennon, also known as Tommy Robinson, has used his celebrity and social media reach to cast doubt on the judiciary and the BBC at once.

Yaxley-Lennon has positioned himself as a freedom fighter, revealing “the truth” about Muslim men accused of grooming underage girls by violating legal rules that restrict reporting details of ongoing trials. Yaxley-Lennon was found guilty of contempt of court and jailed (he was later released after the court of appeal ordered a retrial, and the case has been referred to the attorney general), but this only deepened his appeal for those who believed the establishment was complicit in a cover-up, and ordinary people were being deliberately duped.

The political concern right now is that suspicions of this nature – that the truth is being deliberately hidden by an alliance of “elites” – are no longer the preserve of conspiracy theorists, but becoming increasingly common. Our current crisis has too many causes to enumerate here, and it is impossible to apportion blame for a collective collapse of trust – which is as much a symptom of changes in media technologies as it is of any moral failings on the part of elites.

But what is emerging now is what the social theorist Michel Foucault would have called a new “regime of truth” – a different way of organising knowledge and trust in society. The advent of experts and government administrators in the 17th century created the platform for a distinctive liberal solution to this problem, which rested on the assumption that knowledge would reside in public records, newspapers, government files and journals. But once the integrity of these people and these instruments is cast into doubt, an opportunity arises for a new class of political figures and technologies to demand trust instead.

The project that was launched over three centuries ago, of trusting elite individuals to know, report and judge things on our behalf, may not be viable in the long term, at least not in its existing form. It is tempting to indulge the fantasy that we can reverse the forces that have undermined it, or else batter them into retreat with an even bigger arsenal of facts. But this is to ignore the more fundamental ways in which the nature of trust is changing.

The main feature of the emerging regime is that truth is now assumed to reside in hidden archives of data, rather than in publicly available facts. This is what is affirmed by scandals such as MPs’ expenses and the leak of the Iraq war logs – and more recently in the #MeToo movement, which also occurred through a sudden and voluminous series of revelations, generating a crisis of trust. The truth was out there, just not in the public domain. In the age of email, social media and cameraphones, it is now common sense to assume that virtually all social activity is generating raw data, which exists out there somewhere. Truth becomes like the lava below the earth’s crust, which periodically bursts through as a volcano.

What role does this leave for the traditional, analogue purveyors of facts and figures? What does it mean to “report” the news in an age of reflexive disbelief? Newspapers have been grappling with this question for some time now; some have decided to refashion themselves as portals to the raw data, or curators of other people’s content. But it is no longer intuitively obvious to the public why they should be prepared to take a journalist’s word for something, when they can witness the thing itself in digital form. There may be good answers to these questions, but they are not obvious ones.

Instead, a new type of heroic truth-teller has emerged in tandem with these trends. This is the individual who appears brave enough to call bullshit on the rest of the establishment – whether that be government agencies, newspapers, business, political parties or anything else. Some are whistleblowers, others are political leaders, and others are more like conspiracy theorists or trolls. The problem is that everyone has a different heroic truth-teller, because we’re all preoccupied by different bullshit. There is no political alignment between figures such as Chelsea Manning and Nigel Farage; what they share is only a willingness to defy the establishment and break consensus.
If a world where everyone has their own truth-tellers sounds dangerously like relativism, that’s because it is. But the roots of this new and often unsettling “regime of truth” don’t only lie with the rise of populism or the age of big data. Elites have largely failed to understand that this crisis is about trust rather than facts – which may be why they did not detect the rapid erosion of their own credibility.

Unless liberal institutions and their defenders are willing to reckon with their own inability to sustain trust, the events of the past decade will remain opaque to them. And unless those institutions can rediscover aspects of the original liberal impulse – to keep different domains of power separate, and put the disinterested pursuit of knowledge before the pursuit of profit – then the present trends will only intensify, and no quantity of facts will be sufficient to resist. Power and authority will accrue to a combination of decreasingly liberal states and digital platforms – interrupted only by the occasional outcry as whistles are blown and outrages exposed.

Dark money lurks at the heart of our political crisis

George Monbiot in The Guardian


Democracy is threatened by organisations such the Institute of Economic Affairs that refuse to reveal who funds them

 

Illustration: Sébastien Thibault


A mere two millennia after Roman politicians paid mobs to riot on their behalf, we are beginning to understand the role of dark money in politics, and its perennial threat to democracy. Dark money is cash whose source is not made public, and which is spent to change political outcomes. The Facebook/Cambridge Analytica scandal,unearthed by Carole Cadwalladr, and the mysterious funds channelled through Northern Ireland’s Democratic Unionist party to the leave campaign in England and Scotland have helped to bring the concept to public attention. But these examples hint at a much wider problem. Dark money can be seen as the underlying corruption from which our immediate crises emerge: the collapse of public trust in politics, the rise of a demagogic anti-politics, and assaults on the living world, public health and civic society. Democracy is meaningless without transparency.

The techniques now being used to throw elections and referendums were developed by the tobacco industry, and refined by biotechnology, fossil fueland junk food companies. Some of us have spent years exposing the fake grassroots campaigns they established, the false identities and bogus scientific controversies they created, and the way in which media outlets have been played by them. Our warnings went unheeded, while the ultra-rich learned how to buy the political system. 

The problem is exemplified, in my view, by the Institute of Economic Affairs (IEA). In the latest reshuffle, two ministers with close links to the institute, Dominic Raab and Matthew Hancock, have been promoted to the frontbench, responsible for issues that obsess the IEA: Brexit and the NHS. Raab credits the IEA with supporting him “in waging the war of ideas”. Hancock, in his former role as cabinet office minister, notoriously ruled that charities receiving public funds should not be allowed to lobby the government. His department credited the IEA with the research that prompted the policy. This rule, in effect, granted a monopoly on lobbying to groups such as the IEA, which receive their money only from private sources. Hancock has received a total of £32,000 in political donations from the IEA’s chairman, Neil Record.

The IEA has lobbied consistently for a hard Brexit. A report it published on Monday as an alternative to Theresa May’s white paper calls for Brexit to be used to tear down the rules protecting agency workers, to deregulate finance, annul the rules on hazardous chemicals and weaken food labelling laws. Darren Grimes, who was fined by the Electoral Commission on Tuesday for spending offences during the leave campaign, now works as the IEA’s digital manager.

So what is this organisation, and on whose behalf does it speak? If only we knew. It is rated by the accountability group Transparify as “highly opaque”. All that distinguishes organisations such as the IEA from public relations companies such as Burson-Marsteller is that we don’t know who it is working for. The only hard information we have is that, for many years, it has been funded by British American Tobacco (BAT), Japan Tobacco International, Imperial Tobacco and Philip Morris International. When this funding was exposed, the IEA claimed that its campaigns against tobacco regulation were unrelated to the money it had received. Recently, it has been repeatedly dissing the NHS, which it wants to privatise; campaigning against controls on junk food; attacking trade unions; and defending zero-hour contracts, unpaid internships and tax havens. Its staff appear on the BBC promoting these positions, often several times a week. But never do interviewers ask the basic democratic questions: who funds you, and do they have a financial interest in these topics?

The BBC’s editorial guidelines seem clear: “We should make checks to establish the credentials of our contributors and to avoid being ‘hoaxed’.” In my view, the entire IEA is a hoax. As the documentary filmmaker Adam Curtis has revealed (ironically, on the BBC’s website), when the institute was created, in 1955, one of its founders, Maj Oliver Smedley, wrote to the other, Antony Fisher, urging that it was “imperative that we should give no indication in our literature that we are working to educate the public along certain lines which might be interpreted as having a political bias. … That is why the first draft [of the institute’s aims] is written in rather cagey terms”.

 

The two men were clear about its purpose: to become a public relations agency that would change society along the lines advocated by the founder of neoliberalism, Friedrich Hayek. It should not, Hayek urged them, do any actual thinking, but become a “second-hand dealer in ideas”. The IEA became the template for other neoliberal institutes. It was financed initially from the fortune Fisher made by importing broiler chicken farming into the UK. Curtis credits him with founding 150 such lobby groups around the world.

While dark money has been used to influence elections, the role of groups such as the IEA is to reach much deeper into political life. As its current director, Mark Littlewood, explains, “We want to totally reframe the debate about the proper role of the state and civil society in our country … Our true mission is to change the climate of opinion.”

Astonishingly, the IEA is registered as an educational charity, with the official purpose of helping “the general public/mankind”. As a result it is exempted from the kind of taxes about which it complains so bitterly. Charity Commission rules state that “an organisation will not be charitable if its purposes are political”. How much more political can you get? In what sense is ripping down public protections and attacking the rights of workers charitable? Surely no organisation should be registered as a charity unless any funds it receives above a certain threshold (say £1,000) are declared.

The Charity Commission announced last week that it has decided to examine the role of the IEA, to see whether it has broken its rules. I don’t hold out much hope. In response to a complaint by Andrew Purkis, a former member of the Charity Commission’s board, its head of regulatory compliance, Anthony Blake, claimed that the IEA provides a “relatively uncontroversial perspective accepted by informed opinion”. If he sees hard Brexit, privatising the NHS and defending tax havens as uncontroversial, it makes you wonder what circles he moves in.

I see such organisations as insidious and corrupting. I see them as the means by which money comes to dominate public life without having to declare its hand. I see them as representing everything that has gone wrong with our politics.

Nevis: how the world’s most secretive offshore haven refuses to clean up

Oliver Bullough in The Guardian


Tax havens hate attention. Places such as Jersey, Switzerland and the British Virgin Islands made a handsome living from helping their clients break other countries’ laws for decades, without anyone really noticing. And they liked it that way. Then came the 2007-8 financial crisis, and the good times ended. Rich nations, angry over the loss to their budgets caused by tax dodging, put diplomatic pressure on the havens. Activists, furious over the theft of hundreds of billions of pounds from poor countries, exposed them in the press. The release of vast troves of confidential information – SwissLeaks, the HSBC files, the Panama Papers, the Paradise Papers – cemented a public perception that offshore financial centres exist to help the powerful dodge their obligations to the rest of us, and governments have queued up to punish them. In May, when Britain’s parliament voted to force transparency on its Caribbean islands, it was just the latest blow to the offshore havens.

This concerted campaign has threatened the tax haven business model. Since Swiss banks were forced to open up by the US Department of Justice in 2010, their share of the world’s offshore wealth has dropped from almost half to less than a third. In the British Virgin Islands (BVI), where UK investigators now have access to corporate ownership information, the number of new companies created annually has fallen by more than 50% since 2012. Jersey’s banking sector is barely half the size that it was in 2007.

Although cooperating with outsiders in this way has proven expensive, the havens clearly concluded there was little choice. If denied access to the global financial system, or sanctioned by Brussels or Washington, an offshore centre could be put out of business altogether.

This is good. Tax havens have helped the world’s wealthiest and most powerful keep a disproportionate share of the benefits of globalisation, by preventing the rest of us from seeing how much they own. This, in turn, has eroded trust in democracy and capitalism all over the world. Restricting the operations of tax havens, and enforcing true transparency on the ownership of property, is crucial if citizens are truly to take back control of their countries’ destinies. 

Yet, at the heart of this increasingly encouraging picture, there remain a few holdouts – places that have stuck to the old habit of keeping the secrets of the powerful. Foremost among them is Nevis, a solitary volcano in the Caribbean with a population of just 11,000, which has been implicated in some of the most sordid financial scams of modern times, from Britain’s biggest-ever tax fraud to the fleecing of 620,000 vulnerable Americans in a $220m payday loan scam. The story of Nevis reveals the difficulties the world faces in trying to put an end to tax evasion, fraud and kleptocracy.

While Nevis’s rivals have lost business by opening up, Nevis has doubled down on secrecy. Not long ago, I spoke to a lawyer with extensive experience of the island, who asked not to be identified because he still needs to work with Nevisian officials. “The only good thing that Donald Trump could do, if he was ever so inclined,” he said, “is take a battleship and roll it up to Nevis, and literally train the guns and say: ‘Get rid of these bullshit laws or I’ll blow you to kingdom come.’”

In short, he said, “A bright light needs to be shone on this cockroach.”

Tax havens are often lumped together as if they all do the same job. In reality, they are distinctive and highly specialised predators in the financial shark tank. At the top of the food chain – as far as the western world goes, anyway – are places such as London, Switzerland and New York. These apex predators are surrounded by clouds of pilot fish that snap up the scraps: places such as Monaco, Jersey and the Cayman Islands.

These smaller centres all play different aspects of the offshore game: Jersey specialises in trusts, the BVI in incorporation, Liechtenstein in foundations. They also differ in their tolerance for criminality. Among the British territories: Gibraltar is dodgier than Guernsey, but cleaner than Anguilla. And they serve different geographical regions: Mauritius for Africa and India; Cyprus for the former Soviet Union; the Bahamas for the US.

In the world of offshore, Nevis is a bottom-feeder. It specialises in letting its clients create corporations with greater anonymity than almost anywhere else on earth. Last year, information on 70,000 Nevisian companies was leaked as part of the Paradise Papers investigation, but that didn’t help us find out who owns them: ownership information is so secret there that even the island’s own corporate registry doesn’t know. In other words, there was nothing substantial to leak.

“We feel very strongly that people are entitled to some semblance of financial privacy,” the Nevis premier, Mark Brantley, himself an offshore lawyer, told me when we met in his office in January. “Why shouldn’t you be entitled to a secret?”

The secrets don’t belong to residents of Nevis, of course: it would be hard to keep anything quiet for long on an island this size. The secrets belong to foreigners and are being kept from other foreigners, with Nevis getting paid to protect them.

A satellite image of St Kitts and Nevis (the smaller island to the bottom right). Photograph: Planet Observer/UIG/Getty/Universal images

We can see that these secrets exist thanks to the UK’s Land Registry, which releases spreadsheets listing all offshore-owned property in the country, along with the registered address of the company that owns it. Some of the secrets are mundane and could be entirely innocent. For instance, who is behind Shi Li Gao Trustees Ltd, the Nevis-incorporated company that owns 13 Brunswick Gardens, a handsome terrace a short walk from Kensington Palace? Some of them are intriguing: for what reason would a Catholic primary school in Liverpool be held via this little Caribbean volcano? And some are decidedly weird: who on earth decided to structure their ownership of a room in a hotel on Llandudno’s North Parade through Caribbean Establishment LLC?

But all of these questions are impossible to answer since the secrets are sealed away in Nevis. If these properties were owned via a British company, the true owner of that company would have to be declared to Companies House, and would be visible to anyone with access to the internet. If they were owned via a BVI company, that information would be available to the British police. But a Nevisian company is a closed book, and some people really like it that way.
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While the BVI has seen the number of companies created there each year collapse, the number created in Nevis has stayed stable. Since 2012, the island’s financial services sector has grown by more than a quarter, as people with secrets have moved to a place that still keeps them. That is a pretty good argument for Brantley’s government not to follow the BVI in opening up its corporate registries to foreigners. Secrecy pays.

“The numbers are relatively small, compared to other financial services industries around, but bear in mind the size of Nevis,” Brantley said. “We get direct revenues of $5m-$5.5m, simply from renewal fees.” Renewal fees are what you pay to maintain your company’s registration; the more companies there are, the more fees you get. “When that is extrapolated outwards – in terms of rental of office space, employment – we recognise that it does have a multiplier effect on the economy.”

It is this provision of secrecy that makes Nevis such an obstacle to law-enforcement investigators. If police can’t prove who owns something, they can’t prove it was criminally acquired, say, or that tax was avoided on the profits from it. This is what crooks are looking for when they send their business offshore. Around 300 British properties are owned in Nevis, and Brantley was unrepentant in defending the secrecy his island provides to those properties’ owners.

“Why should a bureaucrat in London, or wherever, curious about his neighbour’s financial situation, pick up the phone and say, ‘You know what, I need to know if Mr John Smith, who’s my neighbour down the road, has an account or a company in Nevis.’ Why’s that his business?” Brantley asked. “Why are Mr John Smith’s financial affairs any business of a bureaucrat in London, unless there’s an allegation against Mr John Smith that he’s somehow contravening some law somewhere?”

It is an interesting philosophical question, but it is also a major problem. Countries recognise and respect each other’s laws and sovereignty, so Nevis corporations have as much international validity as anyone’s. So, as long as Nevis persists in denying foreigners access to the ownership information of its companies – no matter how hard other places work to open up – scoundrels can keep routing their business via Nevis, breaking the chain of traceable ownership, and hiding themselves and their crimes from discovery. That means crooked politicians, tax dodgers and fraudsters in Ukraine, Nigeria, Malaysia, the US or anywhere else get to mismanage their country’s finances for their own benefit.

And, thanks to Nevis’s curious constitutional situation – it is neither an independent country nor can it be controlled by any other country – there doesn’t appear to be anything we can do about it.

From the sea, Nevis (pronounced “knee-vis”) resembles a green nipple. It is elegantly symmetrical, a tropical volcano ringed with golden beaches. By surface area, it is roughly the same size as Bristol, yet its peak is taller than any mountain in England, so the whole island slopes upwards, starting gently where the beach bars shelter among the palm trees, then steadily steepening, while the tree cover gets denser. If you hike up the peak, you are in true rainforest, and will find yourself scrutinised by monkeys in the overhanging greenery.

It is a gorgeous place, much frequented by famous people. Earlier this week, John Cleese told Newsnight he was so fed up with how Britain is run that he is moving to Nevis for good. “It’s one of the nicest islands I’ve ever been to,” he said. “The children and adults are extraordinarily well-educated, the weather’s good the whole time, I’m very lucky.”

The island was once a major centre for Britain’s sugar growers and slave traders, but it slipped into obscurity in the 18th century, when it was out-competed by larger and more fertile rivals. In the 19th century, Britain added it to neighbouring St Kitts for administrative purposes, and it was as the junior half of the Federation of St Kitts and Nevis that it became independent in 1983.

The 80s were a bonanza period for Caribbean islands, as the global economy opened up and law enforcement was caught flat-footed. Tax evaders and drug dealers from North and South America flew planeloads of dollar bills into places such as Cayman and Anguilla, stashed them in bank accounts owned by untraceable shell companies, then invested them in property in Florida, the south of France or New York.

In 1984, Bill Barnard, an American lawyer who had taken to vacationing on Nevis, asked the island’s premier if he would be interested in getting into the offshore game. Thanks to the almost complete autonomy Nevis enjoys under the federal constitution of St Kitts and Nevis, its first premier, Simeon Daniel, was free to do what he liked. He approved Barnard’s suggestion, passed the incorporation and secrecy laws the American lawyer drafted and awarded Barnard’s company, Morning Star Holdings, the right to act as exclusive agent for creating the companies. It was a win for both of them. (Neither Morning Star Holdings nor Barnard wished to comment for this piece.)

At first, Nevis struggled to compete with already-established rivals, partly because it had no particular advantage of its own. Barnard and his team of American lawyers had borrowed their legislation from Delaware, which acts as a sort of tax haven within the US by offering laxer regulations and lower taxes than the other states, so there wasn’t much reason to look to a remote island for products you could already buy elsewhere. “It was certainly successful,” says David Neufeld, a New Jersey lawyer and an expert on company structuring and international tax. “But it was never at the level of BVI or Cayman.”

 

Long Haul Bay, Nevis. Photograph: Michael Runkel/Robert Harding/Getty
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When Barnard’s monopoly expired in 1994, Nevis took the opportunity to reboot. Neufeld already worked with Barnard, and was asked to help Nevis diversify its offering. Tax havens are always borrowing ideas from each other, seeking to improve on laws that are proving popular – and this process has led to progressively greater secrecy, fewer taxes and lighter regulations. Neufeld looked to the USnited States for inspiration, and specifically to Wyoming, which had invented the limited liability company (LLC), a useful hybrid structure that allowed people to avoid identification and taxes at the same time, as well as offering other benefits.

LLCs make it hard for your creditors to find your assets, which also helps rich people avoid paying damages if they lose a lawsuit. Your creditors may have a court judgment against you, but if they can’t find your stuff, they will settle for perhaps 50 cents on the dollar to get the legal wrangling over with. Lawyers call this asset protection.

But in the US, it is hard to hide property, since courts can order disclosure of information. Handily, those courts have no jurisdiction in Nevis, which made the idea of a Caribbean version of the LLC very attractive. “In my mind, I was trying to create an LLC for the 51st state,” Neufeld told me. “If you see yourself as someone who could be exposed to some kind of predatory lawsuit where people feel you have assets that are exposed, this gives you an opportunity to protect that.”

In simple terms, Nevis’s laws allow rich people to put ramparts around their property, to protect it from someone who might want to use the courts to take it away, whether that be a business partner, a spouse, an estranged child, or indeed anyone. All tax havens do this, but Nevis turned the ratchet many clicks further than its rivals, in its efforts to tempt business away from its rivals.

To bring legal proceedings on Nevis, you have to file a bond of $100,000 with the court as proof that your case isn’t frivolous. If you win, that is only the beginning of your quest for the assets. Nevis’s regulator holds no information on either the ownership of the company or its assets. Nevis’s LLCs – Neufeld’s innovation – can’t be wound up, meaning you won’t be able to confiscate any assets they own, and you would have to seek redress elsewhere. If you seek to challenge the legality of a property being put in a Nevis-registered trust – for example, if you thought the property actually belonged to you – you have to prove beyond reasonable doubt that the trust’s creation was fraudulent, and you would have to begin that legal challenge within a year of its creation. This is tricky, since Nevis law requires all information on the trust to be confidential, so you would be unlikely to know it even existed.

These ludicrously formidable defences are not really intended to be used, but instead – like the bright colouring of a poisonous tree frog – they exist to warn you off attacking in the first place. If they can persuade a plaintiff to settle out of court for less than is owed, then, for a rich person with vulnerable assets, they are well worth paying for.

“I don’t like the word ‘hidden’,” says Laurie Lawrence, who retired a couple of years ago after two decades as permanent secretary to the Nevis government. “It’s protected, not hidden. There’s nothing to hide. Look at it from the other way: a lot of females are gold-diggers. You are married to a man; you don’t really love him, but he has money. People find ways and means to protect their assets.”

This is perhaps why a wealthy person might want to own a Kensington house (or, indeed, a Llandudno hotel room) via a Nevisian company or other structure: it prevents a divorced spouse, or any other creditor, from accessing that property, without a tortuous legal process. “Nevis structures started coming up about 12 years ago, and they’re coming around with increasing prevalence,” Jeffrey Fisher, one of America’s leading divorce lawyers, told me by telephone from West Palm Beach in Florida.

“I’m a former prosecutor, and I know about the ways people hide money, and what they’ll do,” said Fisher. “My approach to getting assets that are in asset protection entities like a Nevis LLC, is that you don’t go to Nevis and try to get the money out – that is a foolhardy enterprise. They passed laws and they set up structures to stop us and to make it expensive and to make it take years and years and years. What we do here is we use some more creative approaches to, for lack of a better term, make them cough up the dough.”

Fisher’s approach is to target property and bank accounts in the US, to make his opponents’ lives so onerous that they eventually beg to settle – and he’s extremely good at it. The trouble is that anyone who cannot afford to employ highly expensive specialists such as Fisher has no prospect of even finding where their spouse has put their property, let alone wrestling a fair share away from them. They have to accept what they’re given – there’s no court that can help them.

“You’ve got to realise that the asset protection industry is trillions of dollars, not billions of dollars, it’s trillions of dollars,” said Fisher. “Essentially, it’s: we’re going to find a way to screw legitimate creditors out of collecting a legitimate debt. That’s the business these people are in.”

Brantley, the Nevis premier, is fluent and passionate in his defence of the ramparts that Nevis builds for rich people looking to protect their assets from creditors. “All it does is say that you’re creating a locked box, so to speak, if you want to protect assets,” Brantley said, when we met in his office up the hill from Charlestown, Nevis’s capital village. “And people protect assets for a variety of reasons. It’s not always to get away from a pending divorce.”

The trouble is that when you cast your eye beyond the divorce cases, Nevis’s business model begins to looks even worse. The Nevis financial system is rudimentary compared to the large tax havens – places such as Jersey, or the Cayman Islands, which have major accountancy firms, fund managers, large banks and other global behemoths. In Nevis, there’s precious little money for anyone to avoid tax on. But then, it isn’t really a haven from taxes at all, so much as a haven from scrutiny of any kind. The same laws that appeal to the kind of nervous and wealthy men who want to hide their assets from their wives, have been regularly exploited by crooks from all over the world.

Britain’s biggest-ever tax fraud – for which five men were jailed in November, after attempting to scam the Treasury out of £107m in tax – involved Nevis-registered companies, which were helping to hide the identity of the fraudsters. The family of a former president of Taiwan used a Nevis trust to help to hide its ownership of corruptly acquired US property. Ukraine’s deposed president, Viktor Yanukovych, used Nevis structures to hide his stolen assets, as did corrupt Russian officials who stole $230m from the budget in 2007. (When the accountant Sergei Magnitsky uncovered the scam, they arrested him and left him to die in jail.) British trader Navinder Sarao, who pleaded guilty to fraud for helping cause 2010’s flash crash, diverted some of his profits to a Nevis structure called the NAV Sarao Milking Markets Fund.

According to the independent advocacy group Tax Justice Network, Nevis out-obscures all the traditional offshore centres: BVI, Switzerland, Guernsey, the Isle of Man, Luxembourg, and even fellow bottom-feeders such as Belize and the Cook Islands. And its enthusiasm for secrets impedes other countries’ efforts to enforce transparency.

To see how, just look at the UK. In theory, it has always been possible to find out who a British company’s shareholders are, but until recently there was a loophole. If a company was owned offshore, shareholders could preserve their anonymity. To combat this, in 2016, the government brought in a law that requires UK companies to declare the identity of their true owner or owners: any person with significant control (PSC). (Defined thus: “A person of significant control is someone that holds more than 25% of shares or voting rights in a company, has the right to appoint or remove the majority of the board of directors or otherwise exercises significant influence or control.”) This new system is imperfect, not least because Companies House doesn’t check the information provided to it, but it’s a step towards full transparency, and part of the UK’s commitment to stop its companies being used to enable tax dodging and kleptocracy.

But a search of the Companies House website reveals how Nevis is able to defang Britain’s attack on secrecy. For instance, I recently came across three LLPs, all of which are owned by the same two Nevis companies: Tallberg and Uniwell. According to data gathered by the Organised Crime and Corruption Reporting Project, one of these LLPs controlled a Latvian bank account used in a money-laundering scheme; the other two have not been implicated in any wrongdoing (and neither have Tallberg and Uniwell).

According to Companies House, the three LLPs have the same ownership structure, which means that their person or persons with significant control should be the same. Mysteriously, however, each of the LLPs is listed as having a different PSC. This is technically possible, but highly unlikely. But we have no way of finding out the truth, since Nevis does not cooperate with the UK in allowing law enforcement officers to see who really owns Nevisian companies such as Tallberg and Uniwell. These three LLPs are not isolated examples – Tallberg and Uniwell alone have owned dozens of British companies, and there are many more Nevisian corporations like them.

The new UK law requiring disclosure of true owners is useless if that ownership can just be hidden in Nevis. And this is why Nevis-controlled but British-registered companies, whose ownership is unclear, have been involved in many of the massive eastern European money-laundering scams collectively known as the “laundromats”, which have moved tens of billions of dollars out of the former Soviet Union. Nevis ownership can transform a supposedly transparent British company into a secrecy vehicle as iniquitous as anything on earth.

In the words of Jack Blum, a veteran investigator of corruption who has worked for the UN and the US senate: “If somebody finds out that there’s a Nevis corporation involved [in a scam], and they go to Nevis, they could waterboard the entire board of directors and nobody would know anything.”

Charlestown is a handsome place, consisting of a long street of two-storey buildings parallel to the shore, many with first-floor balconies for catching the sea breeze. Its most striking feature, however, is the truly remarkable number of signs advertising lawyers, accountants and administrators. The Devon town of Ilfracombe, with its 11,000 inhabitants, has two lawyers’ offices, an insurance company and two sets of accountants, as well as a branch of Lloyds and a Nationwide. The 11,000 Nevisians, by contrast, host six domestic banks, one international bank, 18 insurance managers, seven international insurance entities, four money service businesses and 58 registered agents, many of them law firms. Nevis may be the most over-lawyered place on earth.

When you get off the ferry, almost the first house you see is the Henville building, nominal home to the Azerbaijan first family’s business empire. If you then turn right at the T-junction, you see the Edith Solomon building (although it has lost two of the letters from its name), which hosted an Idaho payday loan company that was shut down by the state government in 2012, for operating without a license. Barely 100 metres in the opposite direction on Main Street, meanwhile, is the office of Morning Star Holdings, pioneers of the Nevis offshore industry.

I was keen to find the registered address of Tallberg and Uniwell, the two Nevisian companies that had so successfully outmanoeuvred UK company law, in the – admittedly, rather forlorn – hope that I could find someone who would give me information about them. Their registered address was the same as that of the Nevis International Trust Company (NITC), which, according to its website, will supply you not only with a shell company, but also with nominee directors and shareholders, which will further obscure your involvement in it, as well as a bank account, a credit card and a stock trading account. “Nevis is an excellent location for: privacy, estate planning, asset protection, tax reduction planning, holding investments, royalty and licensing ownership,” the website states.

I had an address for the NITC’s office, but no one on the island was able to tell me where it was. I spent a frustrating, hot and thirsty morning searching for it and, when I finally got through on the phone, was brushed off. “I’m not a robber,” I told the woman who answered the phone, after she had refused to help me. “I don’t know that, do I?” she replied.

In fairness, she had a good reason not to talk. According to a 1985 law, anyone on Nevis disclosing financial information without a court order is liable to a prison term of up to a year, as well as a fine of $10,000. (This is another area where Nevis is resisting the trend towards openness. Cayman previously had a similar law against breaching confidentiality, but decriminalised the offence in 2016.)

When I tried phoning the registered office of Tallberg and Uniwell, the receptionist refused to even tell me where the office was, so I couldn’t visit. When I emailed the NITC, there was no reply. Eventually I had to accept that it was not going to be possible to make contact with them, which meant the true ownership information for the three LLPs was undiscoverable.

 

Nevis, looking up at the volcano. Photograph: Marka/Getty

And it is not just journalists who are unable to check the reliability of Nevis’ financial information for themselves; foreign police can’t either. That means we are all reliant on the Nevis financial services regulatory commission to do it for us. The commission is based in an office in the centre of Charlestown, and is run by Heidi-Lynn Sutton, its chief regulator, who works in an office on the first floor.

Sutton started off unfriendly, and became less friendly as our 45-minute chat progressed, her manner becoming increasingly exasperated. She flatly dismissed the US state department’s description of Nevis as “a desirable location for criminals to conceal proceeds”. It was simply untrue, she said, that Nevis had anonymous bank accounts, bank secrecy and an opaque corporate register.

This was odd, since her regulator’s own website states that bank account holders on the island have no obligation to provide any “statement, return or information (to) … the regulator or the minister”. However, Sutton defended Nevis against all allegations, no matter how serious. The heavy cost of bringing proceedings in Nevis court, for example, was simply to protect the justice system from being “bombarded with frivolous lawsuits”, rather than to protect the wealthy. “That is our weeding-out mechanism,” she said. “Some countries are very litigious. If you get a little burn on your hand because you spill a McDonald’s coffee, somebody will sue you.”

When I explained the difficulty I had faced in even finding NITC, Sutton laughed, asking why I was looking for it. I explained that I had hoped to discover who actually owned the limited partnerships on the British registry. When I asked about whether the regulator she runs might have failed to notice a number of serious money-laundering schemes, she simply said: “I can’t speak to that, I really cannot speak to that.”

What about the fact that the former ruling families of Taiwan and Ukraine, as well as lower-profile crooks from all over the world, had used Nevis vehicles to obscure the ownership of their stolen assets? Sutton laughed again. “I can’t accept that there has been multiple usage of our structures to facilitate whatever. I can’t accept hearing it from you. I won’t be able to speak to that.”

If the island is so clean, why did online trolls looking to smear Emmanuel Macron before the 2017 French presidential election create fake documents supposedly showing he had a shell company in Nevis? Isn’t that a sign that the industry Sutton oversees has an image problem? “People make things up all the time,” she replied. “Once you are an international financial centre, and provide certain services, you will always be a target, it doesn’t mean that it’s true.”

I have spent most of the last four years researching financial crimes, and have spoken to dozens of regulators and investigators in multiple jurisdictions, but never before had I met one who responded in such a way to allegations of grand corruption, money laundering and fraud that I was making against their jurisdiction.

Like any financial centre, Nevis must choose between turning away dirty money, or attracting as much business as it can. I did not find my visit to Nevis reassuring.

Since Nevisian officials appear happy with the current situation, it is up to outsiders to force change on the island, and sadly – thanks to the constitutional peculiarities of the federation – this is all but impossible. We know this because it has been tried.

In 1995, in federation-wide elections, the St Kitts and Nevis Labour party swept to power with seven of the 11 federal seats, and its leader, Denzil Douglas, became prime minister. He had no seats on Nevis, but did not need any to pass laws for the whole federation. Among his priorities was restricting Nevis’ sordid financial sector. “We were aware that the international community had begun to frown upon Nevis, and on the international financial services that were poorly regulated, not supervised, etc,” said Douglas when we met in his office in Basseterre, the federal capital, which is on St Kitts. “And we sought to bring in new legislation. So they had their referendum.”

The federal constitution allows Nevis to hold a referendum on secession whenever it wants to, and so, in 1998, annoyed by Douglas’s attempt to rein in its lawyers, it did. And 62% of Nevisians voted to break free of their neighbours, which was not quite enough to reach the two-thirds super-majority that the constitution demanded, but enough to make Douglas and his government back down. “The government has no choice,” Douglas said, “because we’ve tried.”

In 2000, the Financial Action Task Force – a Paris-based group created by the G7 to develop policies against money-laundering – blacklisted the whole of St Kitts and Nevis, as one of 15 countries deemed to be non-cooperative. That forced Nevis to agree to federal legislation, but did not change the basic dynamic that it has significantly more autonomy than Scotland has within the UK, and in some ways more than individual US states. One financial professional in Basseterre described the relationship between Nevis and St Kitts as like that of a teenager with access to his big brother’s credit card.

Even if Premier Brantley were not ideologically committed to selling privacy to wealthy foreigners, his government’s statistics provide plenty of reasons for him to favour maintaining the country’s opaque company-registration system on purely pragmatic grounds. Fees from incorporating companies and renewing their registration made up more than 16% of Nevis’s government revenue in 2015, up from less than 12% in 2014.

None of the tools that large countries have used against tax havens such as Switzerland or Jersey – diplomatic pressure, legal proceedings against banks, and so on – are applicable to Nevis. It is part of a fully independent country (unlike the BVI or Gibraltar) and the companies providing its services (unlike the Swiss banks targeted by the US Department of Justice) are not large enough to fear losing their offices in the US.

Major western countries will have to make their criticism of Nevis via diplomatic channels, if they want it to change its ways. Brantley got his retaliation in first, however, accusing the British government of hypocrisy.

“It is no secret that the UK, and London in particular, has a disproportionate number of wealthy Russians, for example, and wealthy oligarchs from all around the world, and the question is: why? It can’t be for the weather. So, why are people flocking to London? So, if the United Kingdom can do that, then what is the issue with other countries, not as endowed as the UK, trying to stand on their own two feet?”

The issue is that if every jurisdiction thinks only of how to stand on its own two feet – whether that’s post-Brexit Britain, Nevis or Wyoming – we will all be pushed over separately by the world’s crooks and thieves. Brantley is right that we all need to do more to fight kleptocrats and fraudsters, but by keeping their secrets and making money from it, Nevis is stopping the rest of us from moving forward.