MercoPress. South Atlantic News Agency

Tax havens to face new UN corruption code.

Gibraltar, the Channel Islands, the Isle of Man and other British Overseas Territories including the Cayman Islands and the British Virgin Islands will come under more pressure to disclose details about bank accounts next year when the new United Nations Convention against Corruption becomes effective worldwide.

This was reported in Tuesday's edition of The Independent. The newspaper said that the Netherlands Antilles, Panama, Liechtenstein and other financial bolt holes will also come under mounting pressure, according to officials at the UN Office on Drugs and Crime (UNODC) in Vienna.

The convention is also likely to force changes on Britain's Financial Services Authority. Unlike its counterparts in Switzerland for instance, it does not name banks it has found housing the proceeds of corruption. An FSA spokeswoman said that it was not involved in the convention and declined to comment.

The International Monetary Fund estimates that something between 600 billion US dollars and 1,800 billion annually - approximately 3 to 5% of the world's GDP - is involved in money laundering. A large slice of this is believed to be the product of corruption.

The World Bank estimates corruption accounts for one milliard US dollars a year. Famous examples include General Mobutu Sese Seko of Zaire, who looted 5 billion US dollars between 1965 and 1997, and General Sani Abacha of Nigeria, who is estimated to have pocketed 2.2billion US dollars in the late 1990s.

Signed by almost all the world's governments in Mexico, December 9 last year, the convention comes into force when ratified by at least 30 governments. That is expected to have happened before the next United Nations Congress on Crime Prevention and Criminal Justice opens in Bangkok on April 18. The UNODC acknowledges that it cannot end corruption, but is confident of cutting back the practice.

The convention, which was strongly opposed by those Western governments favouring bilateral action, calls for hallowed legal concepts that have long shielded the corrupt to be cast aside in favour of greater transparency.

The new legal instrument is a victory for developing countries which are showing more enthusiasm for its ratification than EU countries or the US, none of which have so far ratified it. The treaty says that those suspected of corruption will no longer be able to avail themselves of bank secrecy laws. In future, such laws cannot obstruct the investigation of crimes of corruption.

A major departure in international practice is that the convention commits governments that trace the product of foreign corruption to return the cash to its country of origin, a practice which is slowly being adopted. It also requires governments to adopt measures "respecting, promoting and protecting the freedom to seek, receive, publish and disseminate information concerning corruption".

Illicit enrichment of civil servants is a target. Those who clearly live in a style "that he or she cannot reasonably explain in relation to his or her lawful income" should be subject to criminal proceedings. Under the convention, states must also consider measures against bribery and embezzlement in the private sector. Not least, the convention obliges governments to give each other "the widest measure of co-operation and assistance".

The convention is likely to add to the regulatory burden in the Channel Islands, where in Jersey alone 150 banks have £150bn on deposit and produce 60% of GDP.