It’s been a miserable couple of weeks for David Cameron. The >campaign for the referendum on staying or leaving the European Union isn’t going as he had planned, the >crisis about the future of Britain’s largely Tata-owned steel industry has made the government seem out of touch, and a (divorced) member of his Cabinet has admitted that he had a relationship over several months with a woman who he discovered was a ‘dominatrix’ sex worker.
But most painful for Britain’s Prime Minister has been the uncomfortable glare of attention on his and >his late father’s personal financial dealings.
Something fishy? It’s not that Mr. Cameron has done anything illegal, or indeed clearly improper. Nor is the amount of money involved particularly large. But, in the words of a political opponent, he has failed the political ‘smell’ test.
British voters, presented with the until now hidden details of Mr. Cameron’s finances, are minded to think “there’s something fishy going on there”. Indeed, tarnished by this episode, the Prime Minister’s personal standing in opinion polls has, for the first time, dipped below that of the hard-Left Leader of the Opposition, Labour’s Jeremy Corbyn. For Mr. Cameron’s Conservatives, it can’t get much worse than that.
The public in the U.K. isn’t minded to give its politicians the benefit of the doubt. The basic assumption — unfairly perhaps — is that the political class are in it to line their own pockets and hide the evidence. A sentiment, of course, that is not confined to Britain’s shores.
The financial crash of 2008 fuelled that narrative. Bankers commanding astronomic salaries presided over a collective madness which took the global financial system to the precipice — and has affected living standards and economic prospects around the world. And, largely, those same bankers continue to receive huge financial rewards as they seek to make good the mess for which they were responsible.
Politicians appeared to be unable or unwilling either to regulate high finance effectively or to punish those who had been culpably reckless.
In 2009, just months after the crash, a vast amount of confidential data about Members of Parliaments’ expenses claims were leaked (or more accurately, sold) to a British daily paper. They revealed petty dishonesty and financial sleight-of-hand among MPs of all parties. It was, said The Times , ‘Parliament’s darkest day’.
A handful of politicians were prosecuted and jailed; a larger number were forced out of political life; and in total 381 Parliamentarians were obliged to pay back an average of £3,000 (Rs. 3 lakh) for expenses they had claimed but were not entitled to.
Mr. Cameron, then Leader of the Opposition, publicly acknowledged that the old, discredited expenses system “was wrong and we’re very sorry about it”. But the damage had been done. Parliament had become associated with sleaze. Public confidence in MPs slumped. Demands were made for much greater financial transparency.
The Panama headache Mr. Cameron’s latest political headache has again been caused by a huge leak of confidential financial data. What’s become known as the >Panama Papers has revealed the lengths to which the super-rich around the world go to protect their wealth — sometimes legally obtained, sometimes from questionable sources — from scrutiny and from the tax officials. There’s a huge industry in providing ‘offshore’ financial services and off-the-shelf companies — based in usually very small out-of-the-way countries and jurisdictions which attract this murky business by offering confidentiality, lax regulation, and low or no local taxes.
For the rich, the key benefits of offshore finance are to obscure who owns what and to avoid tax. That’s not necessarily illegal but it hardly looks good, especially for those whose purpose is to serve the public.
One of the revelations of the Panama Papers was that Ian Cameron, the Prime Minister’s stockbroker father, had in the 1980s set up an offshore investment fund, incorporated in Panama and based in the Bahamas. The fund initially made use of ‘bearer’ shares, sometimes used to conceal beneficial ownership and no longer legal in the U.K.
The press and Mr. Cameron’s political opponents seized on this to demand whether the Prime Minister himself had benefitted from a fund which appeared to have been set up to sidestep tax.
At this stage, Mr. Cameron compounded the political error by failing to come clean. He says that he was upset about the implied criticism of a father (he died in 2010) of whom he is very proud. But in five successive days, he gave five contrasting accounts of his offshore financial dealings — starting from “it’s a private matter” and >ending with full disclosure .
The golden rule of the political spin doctor is that when a crisis erupts, close it down as quickly as possible — by yourself putting all the information promptly into the public domain. Mr. Cameron failed do that, and concedes that he was personally at error in his response.
When after days of twisting and turning, the Prime Minister disclosed the details of his investment in his father’s offshore fund, they were entirely unexceptional. He had invested in the offshore fund, sold his holdings for £31,000 (Rs. 31 lakh), and had paid all the U.K. taxes due. But his decision to divest from the fund in 2010, just as he became Prime Minister, suggested a recognition that having a stake in an offshore investment didn’t look too good.
By then, the story had a momentum of its own. Mr. Cameron felt obliged to release his past six years of tax returns. Several other top politicians followed suit, including the Finance Minister, George Osborne; Scotland’s First Minister Nicola Sturgeon, and Labour’s Jeremy Corbyn whose blemish of a £100 fine for submitting his tax details late was made public.
Sooner or later, it’s likely that all British MPs will have to make public their tax returns. The days when politicians can tell the voters ‘my money is none of your business’ are over.
Andrew Whitehead reported from India and on British politics for the BBC. He’s now honorary professor at the University of Nottingham.
