Monday, March 14, 2011

Peddling offshore finance in India and the Gulf

Jersey's Evening Post is reporting that two of the island's government ministers will be attending the opening of new offices for Jersey Finance in Mumbai, India, and Abu Dhabi, United Arab Emirates.

What the JEP does not explain, however, is what useful purpose these offices will serve. India and the Gulf states are both prone to massive illicit financial outflows. In the case of India, with an estimated $462 billion of assets held illicitly offshore, these outflows are largely attributed to tax evasion by that country's wealthy elites.

With 80 percent of its population living below the $2 a day level, and every second child suffering from malnourishment, India can ill-afford such a haemorrhaging of its domestic resources. The political failure to rein in these massive outflows and the accompanying tax evasion has contributed to the rising political tensions, which at its most extreme is manifested in a conservative estimate that up to one third of all districts in the world's largest democracy are currently affected by insurgency, most notably from Naxalite forces which have been able to operate within striking distance of New Delhi.

Secrecy jurisdictions have played a long and dishonourable role in supporting the world's kleptocrats and crooked elites. For all its protests against those, like TJN, who argue against financial secrecy, Jersey Finance has been unable to come up with one good argument for how the island's secrecy services actually benefit the globalised economy. We are not arguing against cross-border investment flows; we are arguing against the secrecy furnished by opaque offshore companies, trusts and foundations and by the sort of weak information exchange processes that Jersey will be signing up to with the Indian government.

Ironically, in the same paper the JEP also reports that an islander has been jailed for laundering the proceeds of a £22 million telecoms fraud in Nigeria. Once again the obvious question is not asked: what legitimate role can an island like Jersey play in any financial deal involving a country with which it holds no direct trade or investment link? The same question can be asked about the new offices in Abu Dhabi and Mumbai.


Anonymous Anonymous said...

I've just noticed this article on the Jersey Evening Post website, reporting that ordinary people are paying double the tax they were - while companies are paying just half.

10:09 am  
Anonymous Anonymous said...

Another little twist to this story that the Jersey Evening Post also omitted is that both members of the political delegation from Jersey are millionaires who inherited their wealth and have never earned any income from their own efforts. Philip Ozouf's father is a major landowner. Freddie Cohen - the so-called "Foreign Minister" - inherited tens of millions when he reached 21 and has never worked. Both seem to think that tax cheating is the prerogative of the mega-rich.

Keep up the good work.

1:26 am  

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