The monarchy is great for the economy, the royals are above politics, or so that’s what we are regularly told. The release of the Paradise Papers, however, paints a very different picture of the Queen and Prince Charles.
The Queen and Charles have been implicated in offshore tax avoidance that has seen their money end up in Bermuda and the Cayman Islands, beyond the reach of Her Majesty’s very own Revenue and Customs.
The royals’ claim to be “above politics” has again been shown to fall short of the truth, with the revelations showing Prince Charles to be guilty of a clear conflict of interest in lobbying on issues from which he has made a large profit.
The royal abuse of public money is not a new story, but the Paradise Papers show that the royals are embroiled in an even deeper expenses scandal than previously thought.
The Queen’s tax-dodging offshore investments
The Duchy of Lancaster is said to be a private estate owned by the Queen, though it only belongs to the Queen in her public role as head of state, and actually belongs to the Crown (that's us).
The Duchy has a commercial and residential property portfolio and financial investments, the profits from which provide private income for the Queen.
The Duchy is not legally required to pay tax, but the Queen voluntarily pays an undisclosed sum of tax on any income she receives.
The Paradise Papers revealed the Duchy of Lancaster has held offshore investments of around £10m in the Cayman Islands and Bermuda.
A fund the Duchy held shares in went on invest in the rent-to-own chain BrightHouse, which has been criticised for exploiting poor families and "preying on the vulnerable".
The Duchy has said the Queen "takes a keen interest in the Duchy’s estates and tenants" but "appoints a chancellor and the Duchy Council to administer the affairs of Her Duchy. The chancellor delegates the oversight of the Duchy to the Council".
The Queen cannot rightfully deny all responsibility in this scandal. She could have instructed her advisers to invest ethically and to avoid tax dodging. As our head of state, she should aim to set the highest standards of transparency.
A knighthood for the Duchy Council chairman
Just days into the scandal, Mark Hudson, Chairman of the Duchy of Lancaster, received a knighthood from the Queen. Tellingly, the media were instructed specifically not to publish photographs of this moment in the ceremony.
As chairman of the Duchy of Lancaster, he is responsible for the Queen’s private finances. If the Queen really had no idea these offshore investments were being made, he is next in line to carry responsibility. Of course, either way, the Queen has failed to oversee the proper management of the Duchy.
Charles's conflict of interests
The Paradise Papers reveal that the Duchy of Cornwall purchased shares worth $113,500 (£85,000) in Sustainable Forestry Management, an offshore company based in Bermuda, run by one of Prince Charles’s friends, Hugh van Cutsem. Documents show the company’s board of directors agreed that the Duchy’s shareholding would remain secret.
Prince Charles then began lobbying about sustainable forestry just weeks after he was sent lobbying documents by the company at his friend's request. Beginning with a series of speeches criticising the European Union's emissions policy and international climate change agreements, later that year he launched the Prince’s Rainforests Project, and over the next six months made further speeches and released videos calling for change.
Charles reportedly discussed rainforests at a private meeting with Prime Minister Gordon Brown in 2008, and days later, met with the President of the European Commission, Jose Manuel Barroso, and the EU’s environment, energy, trade and agriculture commissioners. Charles then lobbied 150 Members of the European Parliament, delivering a speech in which he asked them to support “a market approach to assist in keeping the rainforests standing.”
Over this period, Sustainable Forestry Management's shares rose in value so quickly that the Duchy almost tripled its money — profits that personally benefitted Prince Charles.
Despite Prince Charles's high-profile campaign, his financial interest in the firm, and the Duchy's investments, have remained a secret until now. The documents also show the Duchy made investments in four funds in the Cayman Islands.
Prince Charles’s lawyers have said he has been campaigning on the same issues for nearly two decades, and that he was not involved in detailed investment decisions, or aware of share purchases made by the Duchy.
However, the Duchy of Cornwall’s own website tells another story:
"The current Duke is actively involved in running the Duchy"
The Duchy of Cornwall's own website states:
"The current Duke is actively involved in running the Duchy and his philosophy is to improve the estate and pass it on to future Dukes in a stronger and better condition. The Prince of Wales takes a long-term stewardship approach and has proved that environmental and agricultural best practice are compatible with a sound financial return. The Duchy capital account has increased from £408m to £763m since 2004, and the surplus has increased £9.9m to £19m over the same period.
The "board" of the Duchy is The Prince's Council, which meets twice a year and is chaired by His Royal Highness. With the exception of the Secretary and Keeper of the Records, The Prince's Council is a non-executive body which provides advice to His Royal Highness with regard to the management of the Duchy.”
Prince Charles has always made a virtue of his close involvement in the management of the Duchy, as the Duchy's website clearly shows.
He cannot have it both ways, boasting of his "long-term stewardship" when finances are good, and blaming officials or accountants when questionable investments are made, or tax is avoided.
What does this tell us about our current and future head of state?
The royals are often regarded as having never put a foot wrong, despite many accounts of secret lobbying and financial scandal.
The Paradise Papers reveal we have a head of state that takes little interest her responsibilities, who had every opportunity ensure her money was invested ethically, and that there was no tax dodging involved, yet is happy to pass the buck when things go wrong.
Our next head of state is no different. Equally happy to avoid tax, and unfazed by serious conflicts of interest, it's extremely difficult to imagine Charles acting differently as King.
While the cost to taxpayers is not a reason to get rid of the monarchy, the royal abuse of public money and efforts to avoid tax is a symptom of the main problem: the palace is totally unaccountable and is able to operate with a far greater degree of secrecy than any other part of the state. It also clearly has considerable lobbying clout within government, which explains why the government hasn't cracked down on royal spending.
We can’t hold the Queen or Charles to account at the ballot box, so there’s nothing to stop them abusing their privilege, misusing their influence or simply wasting our money. The answer to this is a democratically elected, accountable and forthcoming head of state.
What happens next?
Republic has written to MPs calling for them to investigate the finances of the Duchies of Lancaster and Cornwall.
The opportunity for misuse of funds, inappropriate investments, exploitation of privileged access to ministers or confidential information or conflicts of interest are considerable. Whether individual MPs support the monarchy or not, they must agree that the financial affairs of the Duchies of Lancaster and Cornwall should be of the highest standard of integrity and subject to proper scrutiny.
We're calling on the Treasury to:
- Investigate recent allegations and revelations concerning the finances of the Duchies of Lancaster and Cornwall
- Publish clear guidelines on the standards royal finances should meet
- Require the Royal Household to declare financial interests and meet the same standards on conflicts of interest as ministers and MPs
In response to the scandal, Labour Party leader Jeremy Corbyn called for the Royal Household to be included in any such inquiry into the revelations about the Paradise Papers, and Shadow Chancellor John McDonnell called for the Queen to open up her full financial records to the public.
The Queen and Charles now needs to come clean, to set the highest standards of transparency in their financial affairs.