The recent release of the Panama Papers and the convoluted ways the rich and powerful seek to obscure their financial affairs again throws a dark shadow over the UK property market – and London in particular – with property one of the most common asset classes used, according to the leaks.
What is striking are the alleged vast sums controlled on behalf of what are, in the main, public servants, whose salaries tend to be modest. Certainly in the UK we don’t expect our public servants, especially elected officials, to get rich in a job done theoretically out of political conviction and for the public good. The scope to get wealthy in the process brings an obvious conflict of interest.
The role of professionals in facilitating the transfer of resources, or creating the instruments by which these are transferred, further calls into question whether the accent on professionalism is more about technical skill in using the laws effectively rather than the ethical considerations these transactions pose.
“In the UK we don’t expect our public servants, especially elected officials, to get rich in a job done theoretically out of political conviction and for the public good. The scope to get wealthy in the process brings an obvious conflict of interest.”
These range from understatement of income and assets for tax purposes to out-and-out corruption and siphoning off a country’s wealth. The result is the same: fewer resources for development of the countries concerned and a culture where corruption becomes endemic, be it payments to a government official or a bottle of cognac for the hotel concierge.
Whatever the method, a lot of the money has made its way into the London property market. You don’t have to be a rocket scientist to know that large tranches of it have dubious origins, though by the time it gets to London it has been thoroughly washed through offshore vehicles. It’s easy to turn a blind eye. But hand on heart we all know that because of the route it has taken, the covering-up of the beneficial owners is indicative of something to hide.
That prompts the question: why?
A crackdown may be talked about, though that will be about all. But if one did come along and knock the bottom out of the high-end property market maybe we could get back to crafting spaces which are accessible to local people, and recreate communities of residents working in the capital. The lack of affordable housing for the next generation of young workers has been highlighted as the single biggest risk to London’s future prosperity.
The Panama Papers identified a network of over 2,000 brass-plate professionals based in London who are facilitating these transactions. Officially they are not breaking the law, but whatever it does, it does not seem right. Isn’t this what ethics is about?
