Monday, May 16, 2011

The Looting Continues

The current edition of Critical Perspectives on International Business covers the theme of corruption, and among other interesting papers includes a paper titled The Looting Continues by TJN's John Christensen.

First given as a conference paper at the annual conference of the Royal Geographical Society in September 2006, this paper outlines the activities of tax havens in the global financial markets and explores their role in providing a supply-side stimulant for corrupt practices. It argues for the corruption debate to shift to a second phase in which the role of tax havens as supply-side stimulants features more prominently.

Based on John's original research into the practices and activities of tax havens, the paper explores the operational features of tax havens, with particular focus on their role in providing opaque and complex offshore structures through which illicit financial flows can be routed to disguise their origins, method of transfer and true beneficial ownership. The paper explores how bankers, lawyers and accountants create complex and opaque offshore structures to facilitate economic crime and impede investigation.

Despite severe limitations imposed by the absence of rigorously researched statistical data on capital flows into and out of tax havens, the paper argues that the available data support the view that tax havens have become prominent features of the globalised capital markets, and their activities create a 'criminogenic' environment in which illicit financial flows are easily disguised and hidden amongst legitimate commercial transactions. The paper notes that effective remedies are available to reduce financial market opacity, but political will is lacking to take effective action.

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