As our Embraer EMB-120 twin-turboprop commuter plane gradually levelled off in the balmy Caribbean evening, the vibrations from the propellers rattled different cabin objects in turn: the window blinds; the cockpit door; the cups. The plane-proud steward appeared to be auditioning for a role on a far larger aircraft. ‘The captain has extinguished the seat-belt sign. You may now move around the cabin,’ he said. There were only twenty-six of us, and no one took him up on the offer. But then, it was so noisy I was probably the only person who could hear.

We were flying north-west, and islands came and went below us, each rimmed with a white surf border. These are the Leeward Islands. Seen from above, they are a singular geographical phenomenon, illustrated so clearly it could be a picture in a school textbook: what happens when two tectonic plates grind against each other and volcanoes burst out along the seam.

Humans are more complex than volcanoes, however, and have divided the singular geographical phenomenon into perhaps the most plural jurisdictional web in the world: independent Antigua; France’s St Barts; St Martin, which the French share with the Dutch, who call it Sint Maarten, and which welcomed our overflying Embraer with a text message saying I could use my phone with no extra charge; Britain’s Anguilla, where another text message, a minute or two later, said calls would cost £1.20 a minute; the US Virgin Islands, sold to Washington by the Danes a century ago; and finally, as our plane dipped back under the clouds, and its juddering engines played a new scale on a fresh range of resonant objects, a fresh spray of islets. Seven different jurisdictions, five different countries, all overflown in a forty-five-minute hop.

‘Please stow your tray tables for landing,’ the steward said, although the plane was not large enough to have any. We skimmed so low over the water we could see through the windows of a luxury housing development on a clifftop. We had arrived in one of Britain’s most contested, confusing and consequential outposts: the British Virgin Islands.

The British flag once flew over imperial possessions the length and width of the triangular Caribbean Sea, from Guyana in the south to the Bahamas in the north, then west to tiny Belize on Mexico’s southern border. The first Brits in the Caribbean were privateers for Queen Elizabeth, legalised pirates preying on treasure ships sailing from South America to Spain. British colonists then turned to slavery: buying, selling and owning people, establishing control over anywhere that would grow sugar. Even after the slaves were freed in 1834, emancipation was at best partial: thousands upon thousands of black people spent another century in the heat of the tropics, cutting cane for the profit of a handful of white masters.

The sun finally began to set on the empire of sugar in the 1950s. Most of the colonies broke free from Britain, but a handful of them were too small, remote and underpopulated to be turned into independent countries: Montserrat, Anguilla, the Cayman Islands, the Turks and Caicos Islands and – my destination on that rackety plane – the BVI.

None of these places were exactly prosperous, but the BVI were long particularly destitute, and what trade they had was almost entirely with the US-owned islands next door. That economic dependence resulted in the British islands looking markedly more American than any of the other colonies in the Caribbean. ‘In fact, the only elements obviously British . . . are the Union Jack that flies over the government buildings and the charming British colonel who is the commissioner,’ wrote an American academic who visited in the mid-1950s.

The situation is little changed now. The street signs are of the American type, with boxy white letters on green rectangles. The cars are large and mostly American-made, with automatic transmissions and steering wheels on the left. The currency is the US dollar. In the ex-British islands further south in the Caribbean, such as St Lucia and Dominica, the banknotes retain the Queen’s head, but here – on supposedly British territory – you find only greenbacks, with their portraits of US presidents. During a week’s stay in the islands, I asked many local people I met if they felt themselves to be British, and most were baffled by the question. They are BVIslanders, they said, as reflected in their official status as ‘British Overseas Territories Citizens’ – they have a British passport, but have no automatic right to live and work in the UK.

The only unambiguous sign of Britishness I found – if you exclude the flag outside the governor’s house – was the crown on a traditional cast-iron pillar box abandoned in the undergrowth. It was a long time since anyone had used it to send a message, however, unless you count those left by dogs.

This local indifference towards London has long been reciprocated. British officials appreciated Antigua for the sheltered port which allowed the Royal Navy to dominate the seas; British businessmen loved Jamaica, Barbados and Trinidad for the profit their sugar brought; but London only kept the Virgin Islands to stop someone else from having them. They had no military significance and, as soon as the slaves were freed in the 1830s, there was no profit for planters here either. When the islands stopped being profitable, Britain lost interest in its colony.

The colonists went elsewhere, and their no-longer-required labourers were left to themselves, which marked the end of the first phase of empire for these islands, and the beginning of the second. The left-behind people lived off littoral fishing, cattle farming and subsistence agriculture, and they did so for a century or more, deep into the second half of the twentieth century.

But the islands never stopped being nominally British, and that was attraction enough for Michael Riegels, who is a straight-backed, white-haired, aquiline-nosed man of a type that is now all but extinct: someone who is unmistakably English, but who barely knows England. He was born eighty-one years ago in what was then Tanganyika, one of the many colonies where a Brit could make a good living without having to tolerate the rain, pollution and squalor of life in the ‘mother country’. But such places became rare: Britain’s footprint grew smaller and, in 1961, his birth country became the independent Tanzania.

Michael’s wife Norma served us curry East Africa-style – with fresh chutneys of banana and onion – before they settled down to describe how they ended up in the Caribbean. They had stuck it out in Dar es Salaam for more than a decade after independence, but life became increasingly difficult as the post-colonial government built a China-aligned, one-party state. ‘If you did something the government didn’t like, they put you in permanent detention, you just disappeared,’ Norma explained. ‘It got to the stage, our son was almost a year old, when Michael would say: “If I’m not home by seven o’clock, get out on the next plane.” One day came and we said: “We can’t live like this any more.” So we went back to the UK. We hated it, had another baby.’

That was in 1973, perhaps the most dispiriting year in a dispiriting decade for Britain: a year of strikes, IRA bombings, the oil crisis and the three-day week. It was a miserable time for pretty much everyone, but particularly so for a young couple accustomed to the warmth and exuberance of East Africa who were trying to start life again, having been forced by exchange controls to leave a lifetime’s savings behind them and who had two young children to feed.

Michael was a barrister and heard from a friend about a law firm looking for a new partner in the British Virgin Islands. He’d never heard of the place, but anywhere had to be better than where they were. He came out to have a look, saw the sun on the water, felt the warmth on his skin and fell in love immediately. So he and Norma packed their belongings, gathered up the kids and shipped out for a new life on a third continent in as many years. ‘When we came here from Tanzania, we thought we’d died and gone to heaven,’ Michael remembered. ‘It was so nice. And it was a change not having everyone saying you’re a filthy imperialist swine, which does get wearing after a while.’

Britain had lost an empire and Michael Riegels had found a role, one that would make him a fortune and propel this lost little colony to the centre of the modern world. Riegels and the BVI were going into the incorporation business.

The United States and Britain had a treaty under which they agreed not to tax each other’s companies’ profits. Such double-taxation treaties are foundational to the globalised economy because they ensure that a company that operates in more than one country isn’t taxed twice on the same money. Riegels’s new business was based on the fact that this treaty extended to Britain’s overseas colonies, which exposed a flaw at the heart of this system: if one country undercuts the other on tax rates, companies that base themselves there can dramatically reduce the amount of tax they pay in the other.

Most big countries won’t play this game, because it would destroy their tax bases. The BVI, being small and having a weak economy, had no such considerations because it didn’t have much tax revenue to lose: the new business the islands attracted from relocating companies gained them more in fees than they lost in taxes. Such countries are now understood and referred to as tax havens, but back in the 1970s they were a new phenomenon and businesses were exploring them with relish.

In the 1970s, corporations in the BVI paid 15 per cent tax on their profits, while in the United States they paid 50 per cent. If an American incorporated her business in the Caribbean she could export her dividends and cut her effective tax rate by more than half. All she needed was a local lawyer. And, dating from 1976, when US clients first found him, that lawyer was Michael Riegels.

This was not just lucrative for the businesswoman in question, who was cutting her tax rate by 35 percentage points, and not just good business for Riegels, whose law firm expanded fast. It was also fantastic for the government of the British Virgin Islands. At the time, most islanders were still subsistence farmers. The islands’ government was so poor that it was powerless to develop the economy and was constantly obliged to beg London for funds, and so welcomed any fresh revenue.

Each company that Riegels created brought a fee into the BVI’s administrative budget. The more companies that were created, the more fees there were; the more fees that were paid, the more funds the government had to spend. It didn’t care if it was thereby enabling tax dodging in other countries, depriving their governments of revenue; it cared about finally having an income and being able to build some roads and hire some teachers. The BVI business model didn’t bear much moral scrutiny, but needs must: it was all that was available and it proved a successful way of putting food on the table. By 1978, the islands no longer needed ‘grant-in-aid’, the subsidies to their budget sent from London. They had become financially self-sufficient.

‘It started off quite slowly, then it picked up,’ Riegels said with wry understatement. ‘By the time the US pulled the plug on us, it was quite a few: a hundred companies a month.’

Not every lawyer manages to enrage the US government, but Riegels succeeded with the diligent and reliable way he created companies for Americans. In 1982, the United States, infuriated by the BVI’s flagrant enabling of massive tax avoidance, cancelled the islands’ access to the double-taxation treaty and thus removed the key advantage of their business model. The islands’ administration, which had become rather attached to picking the Americans’ pockets, was stunned. Riegels remembers local premier Hamilton Lavity Stoutt asking him to find a way around what the Americans had done. The BVI might still be a colony, which meant that the UK government could overrule the local administration on any matter it wanted, but the islands also had their own assembly, which meant they could pass their own laws. It was an uneasy compromise between colonialism and democracy, and here it worked to the lawyers’ advantage.

The US lawyers who had been sending Riegels most of his work had an idea: they said, ‘What you guys really need is a very good companies act, very user-friendly, flexible, commercially attractive, so you can wind companies up quickly, can form companies quickly, so you can have one shareholder.’ Deregulate, deregulate, deregulate. It was very much in keeping with the political tone of the times. Britain and America were deregulating, business was being unleashed, greed was good, the empire of money was replacing the empires of politics, a tsunami of footloose capital was crashing onto the world and the BVI was going to surf that wave.

Lawyers drew up the bill and presented it to the BVI parliament. ‘It passed in a day, unanimous. No one had a clue what it meant probably,’ Riegels remembered. The new law was technical and complicated, but created something genuinely new: the international business company, a hyper-deregulated shell corporation. The companies were not taxed at all, which made them highly attractive to business people, and there was no registry of who actually owned them, which was a matter for individual lawyers. With one of these IBCs, you could own property anywhere, pay no tax and operate with complete anonymity.

It was an idea whose time had come, thanks to two coincidental favours from history. The first boon was Britain’s announcement in 1984 that it would hand control of Hong Kong back to China in 1997. A lot of wealthy people were very concerned that their property would be expropriated and sought a way to move ownership of that property overseas, thus hiding it from Beijing. ‘All the Chinamen got a terrible fright and said: “We’ve got to move our assets out.” And somehow the BVI sprang into someone’s head. Now in Hong Kong they talk about having a BVI, everyone has a BVI,’ Riegels told me.

The second boon was Washington’s decision to invade Panama and expel Manuel Noriega. Panama had been the base for some of the muckiest business in the Americas, and the lawyers who had been arranging that business suddenly found themselves needing a new home. They found that home – for both themselves and their clients’ business – in Road Town. This meant the British Virgin Islands had become the haven of choice for both Asian businessmen looking to hide their activities from Beijing and criminals looking to hide their activities from the FBI. The BVI might have lost the US tax-dodging business, but it more than replaced it with these new revenue streams, particularly since they both turned out to be two of the biggest growth areas of the decades ahead. From 1989, when Noriega was ousted, new incorporations increased every year by 50 per cent. By 1999, the BVI had more than two-fifths of the world’s entire market for offshore companies. These islands had gone from being barely a backwater to a key hub in the globalised economy in a single generation.

Every company created, whoever bought it, generated fees for the government. So it was in the government’s interests not to ask too many questions about where the money came from, or what the companies were being used for. Those fees make up two-thirds of the BVI budget, paying for roads, schools, the hospital and police officers’ wages. BVIslanders stopped farming cassava and goats, and started importing frozen chicken and potatoes. Everyone got a share, and it was all thanks to Riegels.

‘We do a good job, we’ve always tried to be efficient, which is a bit of a struggle in the Caribbean. The idea of doing something instantly is not very Caribbean. But to give the BVI its due, it offered a very good service at a very reasonable price. I don’t say we’re cheap, we’re just good value for money,’ he said.

Riegels is long retired now and lives in a villa situated high above the sea and facing a little east of south. After he had finished telling me about how he invented the world’s most prolific offshore tax haven, we sat on his terrace and looked down onto the Sir Francis Drake Channel, and beyond that to the chain of smaller islands that separate Tortola from the Atlantic Ocean. The sun danced on the water, lighting up the sails of the white yachts running into Road Town with the trade wind. It was deliciously warm and delightfully diverting. There was always something to see, every minute was different, while the breeze ruffled the surface of our cups of tea and blew the hair off my forehead. Just the day before Norma had seen a three-masted yacht which, according to her neighbour, who read about it on Facebook, had cost its Russian owner more than $300 million.

It felt a long way from Dar es Salaam, with its grim East German-style government assistance programme, and just as far from suburban London, with its gossip and curtains and culs-de-sac. ‘It was fortuitous. I could still be sitting in Ham or somewhere in England, bitching about the weather and Brexit and everything else,’ Michael said, laughing hugely. ‘But here I couldn’t care less.’

Although Riegels’s invention was significant in the way it supported the islands’ budget and gave them fiscal independence from Britain, the actual process of what he did every day was not in and of itself very interesting. Company incorporations are the krill at the bottom of the financial food chain: they are enormously numerous and cumulatively valuable, but also quite dull. Requests come in, forms are completed, fees are paid, companies go out – low margin, high volume. The clients might be interesting, the money may or may not be crooked, but the job is not. However, as with krill, when companies emerge in vast quantities, the effects are extraordinary.

The BVI works hard to explain that those effects are beneficial, that its companies are a win-win-win for everyone in the world, that they build prosperity at home, spread capital around, and create jobs everywhere. According to a recent report, written for the islands by a business consultancy firm, $1.5 trillion of investment has been ‘mediated’ by BVI companies, creating some 2.2 million jobs, most of them in the Far East, 12,000 of them in the United States. ‘Uninformed individuals and organisations have questioned our integrity and approach,’ the report said. ‘However, we stand firm in the belief that international finance centres like ours service very specific business needs, bringing together a network of skilled professionals with deep technical knowledge and a specialist financial services infrastructure.’

BVI companies provide anonymity, convenience, respectability – all for a very reasonable price. They are quantum objects, which project the laws of one country into the space of another, to the benefit of those wealthy enough to afford their services. You can own your assets wherever you want to, wrap them in an offshore company, and the laws of your home country cannot follow you inside. If you are struggling to understand how this works, that’s because it doesn’t make sense. The illogicality of shell companies is a result of the fact that they emerged from an illogical system in which globalisation is incomplete: money can go anywhere, but laws cannot. And the consequences of that mismatch are profound. They have helped major corporations reduce their tax burdens, depriving treasuries everywhere of revenue. They have smoothed the path of capitalism, stripping away the tiresome regulations insisted on by governments elsewhere. And, on the way, they have helped hide the identities of the people behind a new form of colonialism. It was once Europeans who looted Africa, Asia and the Americas of their wealth and brought it home to spend on luxuries. Now those continents’ own rulers do the looting as well, and the money ends up in the same cities as it always did. We struggle to find out about it, because it’s hidden behind the convenient anonymity provided by shell companies.

Here’s an example: in 1999, the ceasefire in Angola’s civil war was precarious. On one side, UNITA was funded by the trade in illegally mined diamonds; on the other side, the MPLA earned its living from oil. Angola was once a front in the Cold War – the West’s UNITA against the USSR’s MPLA – but by the 1990s, ideological differences were long forgotten and the war was all about controlling resources, and making as much profit as possible for the individuals leading the two sides. Ordinary Angolans, meanwhile, were some of the poorest people anywhere: rates of disease, maternal mortality, premature death and malnutrition were extremely high.

The 1999 ceasefire gave some hope that the war would end and ordinary Angolans would begin to gain some respite. Leading figures from the MPLA, however, had other plans. They created a company in the BVI called CADA, which ‘won’ a five-year $720 million contract to supply its armed forces with food and uniforms. Then the ceasefire broke down and the two sides went back to war, to the personal profit of the MPLA leaders who owned CADA and who stood to make personal fortunes selling food and uniforms to their own party’s soldiers. Angolans were dying, their country was being devastated and the country’s rulers were able to store the tax-free, anonymous profits they made from the destruction they themselves perpetrated behind the protective screen of a BVI company. The leaders of the MPLA poured this money into luxury goods and property in London and Lisbon, free from scrutiny or interference.

It could have been a scandal for the ages, but it barely scratched the public consciousness, anywhere. It was just one example of egregious corruption among many others; just one shell company among millions.

We know about this case thanks to a report written by Global Witness, a campaigning organisation founded in London in 1993 to publicise the links between corruption, human rights abuses and natural resources, particularly in developing countries. All over the world, and at an accelerating rate, the rulers of the poorest countries were acting just like the MPLA in Angola, using their political power to amass vast wealth, which they then hid behind shell companies, spending capital with impunity in London, New York, Paris and other Western centres. Global Witness activists hoped that by exposing what was happening, they could force governments to clean up. They were not entirely unsuccessful, particularly with their focus in 1998 on ‘blood diamonds’, a term they invented, which helped bring in a certification system for precious stones. But corruption was spreading all across Asia, Africa, South America, the former Soviet Union and the Middle East, bringing misery with it.

‘We used the metaphor of the leaky bucket in campaigning on corruption – that pouring aid into countries is like pouring water into a leaky bucket if flight capital is coming the other way,’ said Anthea Lawson, an experienced campaigner who saw the damage the blood diamond trade did in Sierra Leone when working against the arms trade with a local NGO. ‘I had a strong sense that the world was run for, by and on behalf of a very small proportion of its population.’

In 2006, she joined Global Witness to focus on this problem, which was a new departure for the NGO. For the first time it had hired someone specifically to look at the way that the revenue from corrupt assets was hidden and where it was spent. Once Lawson had understood what was happening, Global Witness wanted to use her findings to force governments to shut those networks down. It had become too easy for crooked people to obscure their activities, to hide and spend their cash, and too many lawyers were willing to help them do so.

‘They told me to turn it all around into a report on what banks are doing, to get it out in three months,’ is how she remembers the exchange. The work ended up being far more complicated than anyone had anticipated. ‘It took two years, five months and seven days. Not three months.’

When she dug through a hard drive salvaged from Liberia, she found secret financial records from Congo-Brazzaville: there were bank accounts in Hong Kong, shell companies in the Caribbean and much more. Global Witness called the report ‘Undue Diligence: How banks do business with corrupt regimes’ and it was revolutionary.

It singled out some of the world’s biggest financial institutions – Barclays, Citibank, Deutsche Bank – for criticism; it slated the failure of Western countries to prevent their financial systems being used to legitimise stolen money and proposed new rules to drive dirty money out of the world economy. The explosive charge, however, was buried on page six, in the first bullet point below point four: ‘Each country should publish an online registry of the beneficial ownership of all companies and trusts.’ Again, that doesn’t sound like much, but it demanded that anyone, anywhere, should be able to discover the true owner of a company. Only then could we be sure that crooks were not hiding their theft behind shell corporations and only then could we be confident that theft would be exposed. There wasn’t a single country in the world that met that test – Lawson was demanding a radical overhaul in the way globalisation works. She was also posing a clear and present danger to the BVI’s business model: if the ownership of the islands’ companies was visible to anyone, why would people incorporate there?

A friend at Global Witness had asked me, while I was visiting the islands, to check out five BVI companies which featured on a couple of contracts for mining operations in Afghanistan and to see if I could find out anything about them. On the third day after my arrival, I set out to make some enquiries.

There is a standard playbook for journalists looking to investigate companies in the BVI. You start with an official document containing the name of one or more BVI companies, such as the contract provided by my Global Witness friend. Each company should have an address, which will be that of its ‘registered agent’, the law firm that created it, looks after it and answers post on its behalf. That registered agent will have a file that contains the name of the company’s real owner. The journalist’s ambition is to get hold of that file.