'True or not, tax dodging allegations harm the islands'

BANKING scandals in the national media are damaging the island, according to GuernseyFinance.

A BBC Panorama programme last night introduced Guernsey and Jersey as Britain's tax havens.

It revealed that British tax officials were investigating Lloyds Banking Group in the Channel Islands over allegations that rich clients were being encouraged to avoid UK taxes by channelling money through Hong Kong.

The programme showed an employee at the Jersey Lloyds branch telling an undercover journalist it was of no interest to the bank whether the client told the taxman about income.

While the programme focused more on Jersey, the investigator also stated that a banker from Northern Rock in Guernsey told him EU tax laws could be avoided by opening an account in the name of a non-trading company.

The member of staff said the client should inform HM Revenue and Customs, but the bank itself keeps the details from the taxman.

The reporter said that it was strange that a bank owned by the British taxpayer was encouraging him to avoid tax.

The programme also highlighted that Northern Rock (Guernsey) had been doing well since nationalisation, with deposits doubling over the last year.

GuernseyFinance chief executive Peter Niven said the bad press would tarnish the island.

'It is extremely frustrating when this happens,' he said. 'About 99.9% of people on the islands do good business and very professionally and this is an unwelcome distraction and not the norm.'