In the FT: modern version of anti-slavery campaign needed
"Complicity by powerful nations in some controversial aspects of offshore finance has invited scepticism about politicians’ determination to stamp out evasion. John Christensen of Tax Justice Network, a campaign group, says that “nothing short of a political movement comparable to the 19th-century anti-slave trade campaign will put an end to Britain’s dependence on dirty business”.
The article, which broadly takes far too indulgent a view of offshore abuses for our tastes but does at least contain some balanced commentary in places, also makes this similarly historical point: an imperial flavour to Britain's tax havenry that we noted at the launch of our Financial Secrecy Index
"The financial centres that operate in the last remnants of the British empire face a bleak future, according to Rodney Gallagher, a veteran Foreign Office adviser."
The future for these places is bleaker than it was, to be sure - this May 2009 letter from the Cayman Islands highlights the panic -- but a bleaker future for the relatively small populations of the classic secrecy jurisdictions almost automatically means a better future for the far larger populations of ordinary people in developing and developed world alike. There will undoubtedly be a re-ordering of financial flows, with jurisdictions backed by major states doing better than many others, as Marty Sullivan of TaxAnalysts notes:
"'It has always been dangerous to invest in tax havens. Who are these people? Will they be there tomorrow? Will they freeze assets when the banks fail? Who is going to bail them out?” As some tax havens fade away, others will benefit, he says. “Somebody’s crisis is someone else’s bonanza.”
The article cites
"Guernsey’s Mr Niven, recently returned from China, reports a positive reception in an Asia where offshore services are deemed to “oil the wheels” of financial centres rather than simply be the “pariahs” they are often seen as in the west."
Hmm. We wonder if it is ordinary Asians, or super-wealthy ones Mr. Niven has been talking to. The answer is provided:
"Europe’s offshore centres are in turn marketing their wealth management services to the fast expanding number of rich Asian families."
So the strategy is simple, really: implicitly subsidise Asia's rich, and let Asia's poor bear the burden. Would rich Asians want their accomplices in crime and abuse to become pariahs? Of course not.
And in a separate article immediately beneath the first one, the FT notes:
"The rich nations’ decade-old campaign for tax haven reform has grown from an attack on paradise islands into a broader assault on the corporate structures and regulatory practices worldwide that allow financial crime to flourish, writes Michael Peel.
. . .
The altered global landscape was highlighted in a survey published last month by the UK’s Tax Justice Network campaign group, which suggested powerful countries were as culpable over illicit fund flows as the offshore centres they have attacked since the financial crisis began."