From the Wall Street Journal, May 24:
Jersey has tried to remake itself as an offshore haven where rule of law runs deeper than in othersST. HELIER, Jersey—For years authorities on this small island in the English Channel have tried to clean up its image as a tax haven for the super rich, marketing it as a well-governed offshore financial center enshrined in the rule of law.
The makeover helped draw billions of dollars in new assets to the territory from other well-known, but scandal-plagued havens like the British Virgin Islands and the Cayman Islands. Part of that migration of money: Russian oligarch Roman Abramovich, who has increasingly concentrated his wealth here. The island has offered him residency and became the home to some of his closest advisers.
Now, Jersey officials are in an awkward standoff with one of their best-known customers. Last month, they froze over $7 billion of assets they say are linked to Mr. Abramovich amid sweeping economic sanctions imposed on him and scores of other wealthy Russians by Western governments in response to Moscow’s invasion of Ukraine. Jersey officials have gone a step further: opening a wide-ranging preliminary probe into how he acquired oil companies in 1990s post-Soviet Russia, according to people familiar with the matter. The probe is also looking into whether one of his business partners helped the billionaire try to evade U.K. sanctions, according to these people.
The Jersey probe, first reported earlier Tuesday by The Wall Street Journal, is in its early stages and hasn’t reached the stage of being a formal investigation. Authorities haven’t accused anyone of wrongdoing.
Located just off the north coast of France, Jersey is a self-governing island with the British monarch as head of state. Technically called the Bailiwick of Jersey, it is a picturesque island closer to France than England, popular with day-tripping tourists and famous for its low taxes and namesake cows and potatoes.
The size of Mr. Abramovich’s assets in Jersey has surprised many, forcing the government to defend its previous courtship of the billionaire. “Right across Europe, with hindsight, different decisions would have been made,” said Ian Gorst, Jersey’s minister for external relations and financial services, sitting in an office in the capital St. Helier. “But at the time, Russian individuals and oligarchs were investing and being given residency across Europe, just as they were here.”
Jersey’s outsize financial role traces its roots back to a historical anomaly in the thirteenth century, when the island pledged allegiance to the British monarchy but was never formally incorporated into what became the U.K. That left it free to set its own rules while benefiting from privileged access to Britain, including passport-free travel.....MUCH MORE
The largely agrarian economy gravitated to finance from the 1970s, when Britons and others started parking assets here to avoid higher onshore taxes. Today, funds routed through Jersey’s 46 square miles total some $1.7 trillion in assets, according to a report by industry body Jersey Finance. The island’s financial industry now accounts for 40% of its economy....
