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Monaco tries to ward off extinction

Porsche outside the Hotel de Paris in Monaco
Monaco says it will implement international standards of financial transparency

By Stephen Chittenden
BBC Five Live, Monaco

Huge steel barriers are going up along the roads of Monaco, as preparations get under way for next month's Formula 1 grand prix.

In the harbour, the palatial yachts bob at their moorings. It seems like just another spring in the principality, but things are changing.

The tourist board has embarked on a five-year plan to develop Monaco as a destination.

Among its ideas is what was originally called Concept URI, which targets "ultra-rich individuals". This has since been rebranded to include "high net-worth individuals" in the light of the global economic crisis.

But whatever the name, the strategy remains the same.

'Monaco Private Label'

Monaco's network of 100 honorary consuls dotted around the world have been set the task of identifying some extremely wealthy people, particularly in developing economies such as India, Brazil and Russia.

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The guests will then be invited to enjoy "Monaco Private Label", a bespoke holiday of private shopping tours around luxury boutiques with helicopters at the ready to whisk guests off to the Alps or a yacht in the Mediterranean.

They also get access to three-Michelin-star restaurants and the world's biggest private wine cellar of 600,000 bottles.

I was granted a sneak preview of the kind of shopping beyond most people's means and dreams, with a private view of Cartier jewellery at the company's Monaco boutique, next to the famous Casino de Monte-Carlo.

Corinne Fobiglio showed me a large ring in the shape of a panther, made of tiny diamonds with emeralds for eyes. I asked her the price.

"Seventy thousand euros [£63,500]," she replied matter-of-factly.

We then moved on to the watches. "Forty thousand euros [£36,250] for this one," she told me.

Perhaps this is no surprise in a place where a bowl of pasta and a coffee can cost 20 euros (£18).

Tax haven

On the face of it, Concept URI is simply about promoting Monaco to the wealthy of the outside world.

Boats in Monaco
It's a tax haven because lots of outsiders place their money in Monaco, pay no tax, and have banking secrecy which allows for investments there not to be discovered by foreign tax authorities
Matti Kohonen
Tax Justice Network

But with the principality facing criticism over its tax-haven status, it needs friends in high places.

And the director of its tourism office, Michel Bouquier, admits his strategy may help.

"As long as everyone is positive about Monaco, this is good," he says.

"About culture, about the political, about anything, we can talk about Monaco positively. Definitely it's part of my job to build a network of influential people."

When world leaders put four tax-haven nations in the naughty corner at last week's G20 summit in London, Monaco's government breathed a sigh of relief.

"We are happy not to be on the blacklist," Foreign Minister Franck Biancheri told me.

Monaco was instead put on a list of countries that have committed to, but not yet implemented international standards of financial transparency.

This is the principality's first major move towards bringing an end to its status as a tax haven.

Transparency

Campaigners claim the move will make little difference, because foreign governments will have to provide evidence of an individual's tax evasion before Monaco agrees to hand over their bank details.

Hotel de Paris cellar in Monaco (Photo: Monaco Tourist Office)
The Hotel de Paris has the largest private wine cellar in the world

Matti Kohonen of the Tax Justice Network says only an end to banking secrecy will do.

"It's a tax haven because lots of outsiders place their money in Monaco, pay no tax, and have banking secrecy which allows for investments there not to be discovered by foreign tax authorities," he says.

Monaco has a total of 35,000 residents, but 350,000 bank accounts containing total deposits of more than £80bn.

When I asked Mr Biancheri if Monaco would end its banking secrecy, he answered: "I think we should call it banking confidentiality.

"The facts are more important than the words. Will a country act according to the rules? Are we moving to transparency? This, I think is the most important thing," he added.

But Mr Kohonen believes Monaco's days as a haven for the rich are numbered.

"Monaco seems to be like the refuge of the last-standing dinosaurs," he says.

The government's latest attempt to attract new wealth and reform the banking system can be seen as a bid to ward off extinction.



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