LONDON: The tax haven infrastructure that has enabled global financial crime and malpractice to flourish has barely been reformed, despite a pledge by the G20 leaders in 2009 to close it down, according to a financial secrecy index published by campaign group the Tax Justice Network on Tuesday.

Switzerland, the Cayman Islands, Luxembourg, Hong Kong and the US are placed among the top of the league as the most aggressive in providing secrecy in the latest index.

The UK, with the City of London and a network of overseas tax haven territories and dependencies including Jersey, Bermuda, the British Virgin Islands and the Caymans, also features prominently in the index’s dirty dozen of top offenders.

The UK Treasury said it did not recognise the picture presented in the index, adding that the government had demonstrated a clear commitment to tackling all forms of tax avoidance and evasion.

Two years on from Gordon Brown’s G20 summit pledge to tackle tax havens and the role they played in the global economic crisis, TJN says there has been little real progress. It claims the role in the Greek debt crisis of endemic tax evasion through offshore centres is being downplayed because the big powers in the G20 — the US, the UK, and Germany — are also key beneficiaries of tax havens, as the index shows. TJN director John Christensen said secrecy jurisdictions “have become a central feature of global financial markets, creating the environment for fraud, avoidance of financial regulations, market manipulation, and money laundering”.

The financial secrecy index is compiled from data collected by the OECD and IMF on flows of finance though individual offshore centres and on the extent to which jurisdictions co-operate with tax authorities in other countries. TJN also surveyed finance ministries directly about their tax agreements and disclosure rules to draw up secrecy scores. These were weighted for the share each territory has of global offshore financial services to produce a ranking of most problematic havens. Switzerland is ranked first since it has fought hard against EU efforts to expand automatic exchange of information and to tighten up on tax collection, preferring instead to sign up to weaker individual deals with the UK and Germany,according to TJN. The Swiss government’s department of finance declined to comment.

The Cayman Islands, a British overseas territory, is placed second. “It facilitates a huge number of opaque offshore companies and trusts which can be used to hide all manner of illegitimate activities,” according to the index. A spokeswoman for the Cayman Islands’ financial secretariat said the territory had taken an increasingly significant role in global transparency efforts in the last 10 years. Luxembourg wins its high ranking partly thanks to the sheer size and range of financial and secrecy services it provides, accounting for 13 per cent of global offshore financial services, compared with Switzerland, with 6 per cent, and the Caymans, 4 per cent. The UK mainland has 20 per cent and the US 21 per cent of offshore services.

The Luxembourg Bankers’ Association dismissed the index as “yet another pseudo-scientific compilation of random data for the most part wrong or deliberately misused to reach a predetermined conclusion”.

The UK is given a relatively low secrecy score and comes in at number 13. But if the City were combined with UK overseasterritories such as the Caymans and dependencies such as Jersey which have greater secrecy, the UK would come out as top of the league overall in the secrecy index.

A Treasury spokesman defended the UK record, saying: “At the budget this year we published Tackling Tax Avoidance, on tackling avoidance at the root. The world has changed over the past three years and continues to do so, and the government is committed to keep up momentum.”—Dawn/Guardian News Service