It’s a real-world Treasure Island, a tiny Caribbean paradise that, on paper, is home to nearly half a million companies.
But suddenly the British Virgin Islands, that outpost of sun, sand and offshore banking, has been swept up in the fury following the enormous leak of documents about the financial dealings of some of the world’s richest people.
A vital link in the global money chain and the legal address for countless investment funds, the British Virgin Islands were singled out in the far-reaching investigations by a group of news media outlets into shell companies and tax shelters.
The revelations about the islands have sent shock waves across the Atlantic, where some are now urging U.K. Prime Minister David Cameron to end the overseas territory’s status as a sort of financial no-man’s land.
On Tuesday, Cameron himself was drawn into the fray amid news that his late father, Ian, a stock broker and investment manager, had helped establish a company in none other than the BVI. While there was no suggestion of illegal activity, the development was a political embarrassment for Cameron, who has positioned himself as a leader in the global crack down on tax havens. At an EU referendum campaign event on Tuesday, Cameron was forced to deny that he had any offshore trusts or shares stemming from his father.
Now, amid calls for the U.K. to tighten control over the British Virgin Islands, the future of a world capital of shell companies is at stake. For decades, the BVI has quietly -- and lucratively -- greased the wheels of global finance. More than half of the companies linked to the articles by the International Consortium of Investigative Journalists, based on leaks from a secretive Panamanian law firm, were said to have been incorporated in the British Virgin Islands.
“They are still our responsibility," Vince Cable, a Liberal Democrat who served as the U.K.’s secretary of state for business from 2010 to 2015, said Tuesday of the territory. “We’ve got rogue micro states who are flaunting basic standards and someone has to take them in hand.”
The reverberations from what are being called the Panama Papers have only just begun. The scandal widened Tuesday as Cameron insisted he held no offshore funds and the leader of the opposition Labour Party, Jeremy Corbyn, called for an independent investigation of the tax affairs of Britons linked to reports, including Cameron’s family.
The uproar also reached Iceland, where the prime minister resigned following revelations that he and his wife had set up a company in the British Virgin Islands in 2007.