Kleptocrats looting their country and shifting the looted wealth offshore

Just as I finished reading that book, Treasure Islands by Nicholas Shaxson, about the offshore tax evasion system, this ad appeared in my gmail inbox:

Screen Shot 2018-09-28 at 09.08.17So I want to quote a few paragraphs from the conclusion to Shaxson’s book:

A kleptocrat loots his country and shifts the looted wealth offshore, the banks, accountants, and law firms that assist him are just as guilty as the kleptocrat.When a client gets caught and goes to jail, so should his or her relationship manager, accountant, trustee, lawyer, and corporate nominee. A few organizations like London-based Global Witness have sought to call these intermediaries to account— but we now need a sea change in the world’s approach. Get serious with these people at last.

kleptocracy-NYTFirst, policymakers, journalists, and many others can start to understand and accept how tax havens have become the fortified refuges of financial capital, protecting it from tax and regulation and in the process contributing to the latest crisis in many and varied ways.The veil of silence and ignorance can be lifted and the message spread.

Tax must now be brought squarely into corporate responsibility debates. Corporate managers are taught to think that they are accountable only to shareholders. From this perspective, escaping tax seems to be their duty. But we have forgotten the fundamental truth that corporations get their license to operate, and the tools and confidence to do so effectively, from society. Seen this way, tax is not a cost to shareholders, to be minimized, but a distribution to the stakeholders in the enterprise: a return on the investment societies and their governments make in infrastructure, education, law and order, and the other basic prerequisites for all corporate activity.

money-laundering-tease_pe5n9x

Wash your dirty money? If anyone can, London can!

The final and most important thing is to change the culture. When pundits, journalists, and politicians fawn over people who get rich by abusing the system— getting around tax and regulation and forcing everyone else to shoulder the associated risks and taxes—then we have lost our way.

When a private equity company shows record profits, we can be told how much of that comes from genuine productive improvement, and how much comes from gaming the offshore system.

When magazines carry alluring advertisements from seedy offshore promoters who may be inciting clients to criminal behavior, we can complain.When corporations talk about social responsibility, we can ask if they mean tax. When journalists need expert commentators to advise them about that tax story they are writing, they must understand that their interviewee from the big accountancy firm works for a business that makes a living out of helping wealthy corporations and individuals get around paying tax, and that their opinions will reflect that corrupted worldview. They must find alternative opinions to balance those views.

kleptocraqcy 2We can recapture our culture from the forces of unaccountable privilege that have taken it away from us.

It is time for the great global debate about tax havens to begin in earnest. Whoever you are, wherever you live, and whatever you do, offshore is at work nearby. It affects you. It is undermining the government you elect, hollowing out its tax base and corrupting your elected politicians. It is sustaining a vast criminal economy and creating a new, unaccountable aristocracy of corporate and financial power. If we do not act together to contain, control, and eradicate financial secrecy, then the world I found in West Africa more than a decade ago, a world of suave insiders, criminal complicity, and desperate poverty, will become the world we leave to our children. A tiny few will have their boots washed in champagne, while the rest of us struggle to make our lives in conditions of steepening inequality. We must avert this future.

You can find the book here.

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3 thoughts on “Kleptocrats looting their country and shifting the looted wealth offshore

  1. This serves to show the absurdity of “free-market classical economics” (if we want to get pendantic, all marketplaces have limitations or controls, as Ha-Joon Chang has pointed out). Its supporters accross the English-speaking world almost invariably imagine themselves to be the ones soaked in champagne, when your statistical chances of making it to the One Percent are extremely small at most. Britons and Americans are now reaping all the societal consequences of the philosophy that the world should only be run for Musk or Murdoch. Namely, a poor quality of life in addition to mafia police protecting only the oligarchs.

    • Yes. The market is controlled either by an elected government (as it should be) or by powerful private interests, as it now is. And we see the results all around us.

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