Financial Secrecy Index - what the papers said

The Financial Secrecy Index was launched a few days ago. TJN national chapters handled press launches in France, Germany, Netherlands, Switzerland, United Kingdom and the USA. Here is a selection of cuttings from various newspapers, starting with the Financial Times, which flagged the story first in its Weekend edition:

Leading economic centres including the US, UK and Singapore are among the countries most to blame for promoting international financial secrecy, according to a new index comparing the harm allegedly done by tax havens and rich nations.

The league table to be published on Monday by the Tax Justice Network, a respected campaign group, is led by the US state of Delaware and includes Luxebourg, Switzerland and Hong Kong in its top 10.

Reuters included an interview with TJN-USA's Sarah Lewis:

The United States . . . took in $2.6 trillion in deposits from non-resident corporations and individuals in 2007, according to a survey of financial institutions analyzed by Tax Justice Network.

"While the U.S. has been jumping up and down and saying 'Aha, bad, wicked Swiss banks,' the U.S. is doing exactly the same thing as far as non-resident bank account holders," said Sarah Lewis, executive director of the group, based in the UK.

The index attracted huge coverage in all the major and minor Swiss newspapers as well as national radio, which broadcast interviews with our partners at AllianceSud and Berne Declaration. French language Le Temps summarised the problem of secrecy jurisdictions as follows:

"Market transparency, free access to information, optimal allocation of resources. These terms slip easily from the lips of the ideologues of capitalism. But in reality these notions are just myths. The globalised economy of business . . . functions on secrecy, smokescreens, exploitation of legal loopholes.

The proof of this situation can be seen in the Financial Secrecy Index, which the Tax Justice Network (co-founded by AllianceSud and Berne Declaration) launches today in London . . .

This pioneering work makes it possible for the first time to rank financial centres according to their degree of opacity whilst also taking account of their relative scale of activity in the global financial markets"

Leading Sunday newspaper Neue Zuercher Zeitung ran a feature article on 1st November, and like most Swiss papers its main message was that Switzerland needs to engage pro-actively in a multilateral initiative to wipe out all secrey jurisdictions, including Delaware and London, but will only be capable of doing so if it cleans up its own mess in the first place. Now that's what we want to hear. Fantastic.

The German press also gave the index launch a brilliant coverage, thanks to careful pre-planning by our team in Berlin. Interviewing TJN's Markus Meinzer, Taz correctly noted that there is much, much more to market transparency than the weak agenda of tackling banking secrecy:

The term tax haven is inadequate when it comes to capturing the nature of the problem, explained Markus Meinzer, author of the index: "Opacity, the hiding of the origin of the money and non-disclosure of ownership structures, is what makes these financial centres attractive to their users." TJN therefore speaks about 'secrecy jurisdictions'. These are places where there are no disclosure requirements for companies, the regulation is weak, and banking secrecy impenetrable. Furthermore, the information exchange with the tax authorities of other states is inadequate.

This theme was also picked up by Berliner Zeitung :

The FSI assesses financial centres using twelve key indicators which, according to TJN, take account of the fact that the provision of financial secrecy and opacity is not limited to banking secrecy.

Manager-Magazin placed the index in its wider context, noting that secrecy jurisdictions, "encourage tax flight through impenetrable banking secrecy, or opaque ownership structures of foundations and trusts, as reported by TJN in Berlin on Monday"

The UK's Observer, which devoted an entire page of its business section to the index launch, spoke with officials from the USA, Luxembourg, and Cayman. Predicatibly they were largely dismissive. Anthony Travers, who chairs Cayman Finance, is quoted saying: "Anybody who claims to have evidence that Cayman is opaque hasn't read the IMF and Financial Action Task Force reports . . " and then goes on to dismiss the index as having a selective bias and "totally discredited, and will be seen as such by everybody in the financial world." Hard words coming from an insider from a global industry that is itself totally discredited and now lives on government life support.

Referring to the USA's ranking at the head of the index, TJN's Jack Blum is quoted saying: "Secrecy in Delaware has been a massive problem for sometime. They have a lot of rules that make it so advantageous to be there that it is breathtaking," adding that requests for legal assistance from other countries "pile up in district courts. It's beyond embarassing. It's a disgrace."

The same article also explored the broader political economy of secrecy, quoting a broad overview by TJN's John Christensen:

The secrecy jurisdictions are found in North America, the former British Empire and Europe. These are the regions which have driven the neo-liberalisation project that has skewered financial markets and turned them into criminogenic environments. They can attract capital with no questions asked. What this reveals is the massive hypocrisy of the OECD countries.

Coincidentally, the French papers also pick up on the theme of skewering. Le Monde, for example, ran an excellent article under the title Tax Havens: NGOs skewer the United Kingdom and United States. Rival paper Le Figaro ran almost the same headline but with a different geographical focus - Tax Havens: NGOs skewer Luxembourg and Switzerland.

Meantime Les Echos, which ran a similar headline (Tax Havens: rich countries, including UK and USA, skewered by NGOs) noted that many of the OECD's white listed countries had been ranked as opaque, quoting our colleagues at the Plateforme Paradis Fiscaux et Judiciaires saying that despite being white-listed by the OECD many places continue to cause concern to independent actors involved in researching financail opacity. Les Echos also interviewed the OECD's Pascal Saint-Amans, who commented that there's nothing so effective as having tax administrations from secrecy jurisdictions surveying and mutually denouncing one another. Well maybe.

Coverage in the United States kicked-off with a Sunday morning article on the Huffington Post, which spoke with Nicole Tichon of US based Public Interest Research Group who said:

"If the US wants to be taken seriously by the international community and try to get their cooperation, then we've got to crack down on what's going on here at home. We can't have it both ways.

Banking secrecy breeds the same problems, the same criminal behavior, and puts up the same roadblocks to law enforcement regardless of where it occurs."

Never one to miss an opportunity to promote an anti-state, pro-tax haven, Dan Mitchell of the Cato Institute struck back splendidly with a blog titled The World's Best Tax Haven: In America, but Unavailable to Americans. Nice one, Dan. A compelling argument in favour of market transparency. And tomorrow, children, we'll be covering why markets fail to work without transparency.

Unsurprisingly, the launch of the Financial Secrecy Index generated headlines in most of the 60 secrecy jurisdictions ranked by the index. Examples include Luxembourg, Singapore, and Ireland.

And the story has been picked up in developing countries too. This from Burundi, for example.

The final word goes to Christopher Bergin from US-Based Tax.Com who, having noted how USA officials have been beating up Swiss bankers while ignoring their home-grown problems, asks:

"Does this mean I owe the Swiss an apology?

It's actually worse than that; I suddenly realise, I'm Swiss. We're all Swiss. Actually, we're worse that being the same as the Swiss. Our chocolate tastes like crap."