PARTIES entering deals involving Jersey-based companies should “undertake their own due diligence”, the government has said in response to claims that the Island’s disclosure rules obstructed scrutiny of a property portfolio valued at nearly £350 million.
The government highlighted Jersey’s beneficial ownership framework after offshore accounting expert Professor Adam Leaver called for private company accounts to be made publicly accessible.
However, its response did not directly address his argument that identifying a company’s owners does not reveal its profits, financing costs or distributions.
Professor Leaver told the JEP last week that Jersey’s disclosure rules had hampered attempts to establish who benefited from Manchester Life, a property partnership between Manchester City Council and Abu Dhabi investors.
He co-authored the 2022 public interest report Manchester Offshored, which estimated the portfolio’s value at nearly £350 million.
Although the council held stakes in the joint-venture development companies, the report found that the property assets were held separately through Jersey-based companies ultimately owned by the Abu Dhabi United Group.
It concluded that the Island’s “minimal reporting requirements” made it “impossible” to “understand the full economics” of the developments and assess whether the best use of land and money had been achieved.
Professor Leaver suggested that Jersey could “co-operate” with UK Prime Minister Andy Burnham on “public access to accounts” to improve transparency around the finances of overseas entities holding UK property.
External Relations Minister Ian Gorst did not directly answer the JEP’s question about whether he would be prepared to cooperate with the UK on making company accounts publicly accessible.
A government spokesperson said that “matters relating to disclosure and reporting requirements” for UK public authorities were “for the UK government to determine”.
“Parties entering into contractual arrangements,” the statement added, “should undertake their own due diligence in respect of transactions, including as to the financial circumstances of the participating entities.”
The spokesperson also highlighted the “accuracy and transparency” of Jersey’s internationally recognised beneficial ownership framework.
“Since 1989 we have maintained a central register of beneficial ownership containing verified information which is available to law enforcement, tax authorities and competent authorities within one hour in some circumstances.
“Jersey works closely with UK authorities on corporate transparency and beneficial ownership matters, and we remain committed to constructive engagement with the UK and other jurisdictions on these matters.”
Professor Leaver acknowledged that progress had been made on ownership transparency.
“There has been progress,” he said. “The Register of Overseas Entities requires overseas entities within its scope to identify their registrable beneficial owners or managing officers.”
However, he said that “knowing who owns a property company” did not reveal its profits, financing costs or distributions.
He argued: “Jersey could introduce a requirement for private companies to file publicly accessible annual accounts, with meaningful disclosure of revenues, costs, assets, liabilities, related-party transactions, distributions, cashflows etc.
“For projects such as Manchester Life, accounts for individual companies could also be accompanied by an explanation of the ownership structure and a reconciliation of transactions between the entities – which were difficult to trace in that specific case.”
