Secrecy and confidentiality – a personal view

Friday, 01 January 2010
A personal view on issues of secrecy and confidentiality.

I recently went to the excellent STEP Symposium on the future of Offshore Financial Centres, which was so well chaired by Richard Pease and Richard Hay. A very stimulating day it was. During the day, there was a presentation by Nils Johnson about his recent survey, for which the view of a number of STEP members was sought on whether banks’ secrecy would survive. The vast majority of members asked thought that bank secrecy was no longer an option for the future given the number of treaties allowing information exchange that are required by the G20 countries. Then I was reading in the STEP Offshore Digest, a piece taken from BBC News reporting that every year Norway’s tax authorities publish details about people’s individual income and wealth and, every year, sifting through the data gets easier. I am obviously slow because others said this has been going on for years.

I accept that governments are entitled to information about their tax paying community, but given that there are proposals to name and shame tax payers who have been guilty of evasion, I am concerned that we should not go a step further down the slippery slope to the Norwegian ‘freedom of information.’ I am sure that the disreputable media will think this is a terrific idea and will claim that this is in the public interest, as the disclosures about MPs’ expenses have been. We already have the publication of the Sunday Times Rich List, which is credited with being impressive and reliable, although I have commented before that, in most cases that I have known about, it has been neither of those things. The media have a vested interest in opposing anything which might restrict access to material which they can use for a story, so we can expect no defence of individual rights from them.

I think we need to draw very firm lines and defend the right of individuals, whether as tax payers or merely as citizens, to confidentiality about their personal affairs. There seems to me to be all the difference in the world between the State being entitled to information on which an accurate assessment of tax to be gathered can be made, and a general right to make personal information freely available. The payment of tax is a civic duty incumbent on all of us and an impartial HMRC undertaking the performance of that strictly limited duty has been in place now for a very long time.

I take comfort that the proposed Tax Payers Charter and the European Convention on Human Rights protect the right of the subject to confidentiality of his or her affairs, subject to restrictions in accordance with law, and necessary in a democratic society.

As against that, much play has been made, in recent times, about that ugly word ‘transparency’, which is supposed to be so important. Why does everything have to be transparent? Only the prurient interest of those who are entertained by the media and the prurience of the media itself can make an argument for the disclosure of private affairs. It is self-indulgent, self-serving, unprincipled and wrong. I am reminded of Abraham Lincoln’s comment that ‘it has been my experience that folks who have no vices have very few virtues.’ I am very conscious of mine, thank you, and think I will keep them to myself. Further, I accord you, Dear Reader, the same respect.

But perhaps my concern is that we are going to repeat what has happened over the last few years in the movement of definitions of words. I am thinking of tax ‘evasion’ and tax ‘avoidance.’ Those terms had clear meanings and, some may not recall, avoidance presupposed using provisions of the law and ‘evasion’ presupposed dishonesty. It has to be said that it was Gordon Brown who led the ‘taint’ on the word ‘avoidance’ and imported dishonourable motives to it. That movement in language has distorted the argument and confused the issues.

Are we going to have the same issues with ‘secrecy’ and ‘confidentiality?’ According to my Oxford Concise Dictionary, the words mean the same for all intents and purposes. So we must beware any suggestion that there is no right to ‘secrecy’ but there is a right to ‘confidentiality.’ For that will intrude into the definition and erode it. The European Convention defines those limits, one of which we have discussed on tax matters. So far, but no further!

Author block
Martyn Gowar

Martyn Gowar TEP is a Partner at McDermott Will & Emery UK LLP and an Editor of the STEP Journal.

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