Jersey breaks promise to outlaw bribes

Britain's offshore tax haven of Jersey has failed to plug a loophole under which bribery payments made in Africa remain legal.

Despite a promise to a mission from the Organisation for Economic Cooperation and Development (OECD) last year that the loophole would end early this year, it remains open. Jersey-registered companies will be able to pay overseas bribes with impunity.

Lord Falconer's Department for Constitutional Affairs refuses to take action, although it has the power to enforce change on the nominally self-governing island.

The UK mainland outlawed overseas bribery three years ago, although no one has been prosecuted and the OECD has criticised Britain's failure to provide sufficient resources.

Legal sources on Jersey say the promise has been broken because of administrative delays and the decision to redraft the law to conform with a UN convention against bribery.

There will be further delays while the island holds elections this autumn, and the loophole will not be plugged until next year at the earliest.

Although the Channel Islands have become a notorious - and wealthy - haven for "black money", Jersey has had an improving record in recent years.

President Olusegun Obasanjo of Nigeria visited the island last year to thank its attorney general, William Bailhache, for a ground-breaking investigation which recovered nearly $200m (£110m) looted by relatives of Nigeria's late dictator, General Sani Abacha.

A conduit through which more than £100m had flowed in undercover payments from Britain and France to the regime in Qatar was also stopped up, exposing along the way a £6m payment from the arms firm BAe to the Middle Eastern country's foreign minister in connection with a deal for Hawk warplanes.

These investigations used anti-money laundering powers, which island investigators say are a valuable weapon.

But the ease with which Jersey transactions can be concealed was demonstrated when about £100m of Angola's oil money was discovered to have been moved to Lloyds bank accounts in Jersey in 2000. That included oil contract "signature bonuses" from the US Marathon oil company, and loans from Swiss banks.