Thursday, December 22, 2011

The Great Corporate Tax Dodge - new website

Bloomberg has a new and excellent-looking website, called The Great Corporate Tax Dodge, featuring Jesse Drucker. Enjoy.

We will post it as a permanent link on our Transfer Pricing webpage.

And, so as not to show favouritism between competing news agencies, we highlight two other important stories from Reuters in its excellent and important Shell Games series.
And a follow-up to an earlier Shell Games report: Exclusive: On the run, U.S. financier finds Spanish refuge.

We will located these Shell Games stories in our webpage The Mechanics of Secrecy.

TJN blogging will be pretty thin for the next little while, due to the Christmas Holidays

A merry Christmas to all from today's blogger, Nicholas Shaxson.


Guardian letter: reclaim the culture of upright taxpaying

The Guardian is carrying a letter today co-signed by John Christensen, director and founder of TJN; Richard Murphy, Senior Adviser to TJN, and Nicholas Shaxson, TJN writer and author of the bestselling Treasure Islands. Here is the letter, entitled Tax avoidance must become taboo:

The public accounts committee's report into HMRC's tax settlements made for compelling reading (Revenue hid 'sweetheart' tax deals for big business, MPs say, 20 December). But more fascinating was the feeble response by HMRC and the striking lack of response from either Vodafone or Goldman Sachs.

Gone are the days when HMRC and Vodafone would come together as an unstoppable dream team proffering denials of tax avoidance as an "urban myth". Now, we see HMRC weakly saying the committee is misinformed and is basing its conclusions on partial information. We know that the committee did everything in its power to get to the truth, but HMRC obstructed the inquiry by using the veil of secrecy that is taxpayer confidentiality.

It is imperative that the UK's political and business culture changes so that rich individuals and corporations treat tax avoidance as taboo. It is also crucial that the culture at HMRC changes so that it clamps down on tax avoidance. If this were the norm, the UK could raise sufficient income to protect the services currently under threat from cuts, set an international standard for tax justice, and make progress towards achieving equality in the UK and around the world.

So while we support the efforts of the public accounts committee, we also support the action by UK Uncut Legal Action to challenge HMRC in the high court so that the decision to let Goldman Sachs off its unpaid tax is declared unlawful and the £20m is given back to the taxpayer. It is undeniably in the public interest that this case should go through the courts in order to ensure transparency, accountability and fairness.

Katy Clark MP, Virendra Sharma MP, Jeremy Corbyn MP, John McDonnell MP, Caroline Lucas MP Jonathan Edwards MP, Diane Abbott MP, Paul Kenny GMB, Mark Serwotka PCS, Christine Blower National Union of Teachers, Len McCluskey Unite, Nicholas Shaxson author of Treasure Islands: Tax Havens and the Men Who Stole the World, Richard Murphy, Tax Research, Clifford Singer False Economy, Neal Lawson Compass, Greg Muttitt War on Want, John Christensen Tax Justice Network


Wednesday, December 21, 2011

Guest blog: time for tax transparency

Guest blog: Oliver Huitson, writing about the UK's widely reported Public Accounts Committee report on Her Majesty's Revenue & Customs (HMRC, the UK's tax authorities.) Cross-posted from the New Statesman, with permission (also see the Tackle Tax Havens blog.)

Another Public Accounts Committee report, another sad indictment of the probity of our governance… This time it was HMRC, who, by the sounds of it, appear to be publicly funded tax accountants working devilishly hard to minimise the contributions of our corporate giants. At this rate, the “Big 4” accountancy cartel will be suing the government for loss of earnings.

Perhaps, in a fit of Big Society zeal, George Osborne will simply outsource HMRC’s work to PwC and cut out the middle man. But there are other ways of approaching the “tax gap” problem than simply calling it a day over a glass of wine on the Goldman’s expenses card.

Both Prem Sikka and Richard Murphy argue for a simple yet effective measure to help stem the flow of lost tax: corporate tax returns should be made publicly available. Avoiding the privacy issues of individuals, there is little reason why this cannot be done as it already is in Scandinavia. As Murphy says, “such disclosure [should be] a corollary of the right to limited liability – which demands transparency in exchange for the privileges granted”. In unprecedented economic times it is no longer tenable that corporations can be protected from the full liabilities of their actions whilst simultaneously hiding their contributions; it’s all take and no give.

In his Code of Conduct for tax, republished today, Murphy makes a number of important suggestions as to what a sound, democratic tax structure should look like – a structure that would, for that very reason, be strongly resisted by both the City and the CBI. One of the key proposals is a lighter touch approach to auditing for those firms signing up to the code:

Any taxpayer or agent wishing to comply with the Code may do so. A State should presume that a person professing compliance with the Code has done so when dealing with any tax return they submit. In consequence the administrative burdens imposed upon that person should be reduced. In the event of evidence of non-compliance being found any consequential penalty imposed should be doubled… Those not signing up should expect the consequences.And we’d need to know who is who [my bolds]

Public information is the critical issue. Murphy cites the FT’s concerns over public disclosure of corporate returns, namely that due to the complexity of the issue public access may be ineffective. Firstly, the FT understate the growing resources of the public in holding firms to account, whether through UkUncut, Murphy’s own Tax Research UK site, the impact and popularity of Nick Shaxson’s Treasure Islands, and the recently formed Tackle Tax Havens project. The public is mobilizing, not just in the UK, but across the Western world. Online tax returns would not escape scrutiny.

But there is a limit to how far the general consumer will acquaint themselves with the returns published and the problem of “we need to know” would, to a lesser degree, still remain. What seems to be needed, in conjunction with public returns, is a simple, visible indicator of tax probity at the transaction level. The “green, amber, red” nutritional information provided on food packaging could potentially be adapted for tax purposes for all firms over a certain size and/or all publicly listed companies. If firms lack a physical good for packaging, they can be required to display their tax rating prominently on all literature and websites. We already have substantial amounts of compulsory information we require UK firms to provide. Costs of implementation, both to the state and the firm, would be relatively miniscule in comparison to the scale of tax lost – currently estimated at around £25bn a year, or around 15% of the deficit (the figure is just for avoidance, not evasion). There is no reason why only food producers should have to show consumers the information they would rather hide.

In the land of market efficiency knowledge is king, and those who purport to uphold free-market principles should recognise the importance of tax knowledge; consumers have a right to know who they are dealing with if they are to arrive at rational outcomes for their purchases. For we don’t simply rely on the goods and services we purchase, we rely also, to a great extent, on citizens and firms contributing to the collective costs of running a civilized society. More than ever, we need transparency and knowledge to empower the public to make the right choices on which firms to do business with.


Corporate tax: EU bears down on Switzerland

Following our article about a month ago looking at European moves to challenge Swiss corporate tax policies, we are encouraged to see the normally well informed Europolitics, in an article headlined Corporate taxation: Union bares teeth, reporting that the European Union is moving forwards smartly with its plans.

We have already showed that the EU is likely to all but destroy Switzerland's immoral and useless, loophole-riddled Rubik deals with Germany and the UK in the area of personal taxation. Now this, in the field of corporate taxation:
In a report adopted on 19 December, the 27 member states make veiled threats of retaliation measures against Berne if the «dialogue» they wish to engage in on application of a code of conduct should fail to produce «satisfactory» results by next summer. . . . a clash looks inevitable, unless Switzerland makes concessions and acts quickly.
Note that the European Union has a lot of leverage over countries like Switzerland who aren't member states: it can deny access to its markets, and so on. The report that Europolitics describes is one that looks at the Code of Conduct on taxation that has been applied since 1998, and which it says has already obliged the 27 member states to dismantle around 100 tax schemes that encouraged company relocations. It's not clear if this number includes schemes such as this in Jersey (which is outside the European Union but has a special relationship with it.)

For more background on the Swiss-EU corporate tax dispute, see Thomas Cottier's article on p8 of our October 2010 edition of Tax Justice Focus, which also notes that not everyone in Switzerland is happy about what is happening at home, pointing out that "the Swiss public at large generally dislike tax privileges for the rich and wealthy."

Despite the turmoil in Europe, it is likely that the 27 member states will continue to fight to protect their sovereignty from these attacks mounted from the Alpine foothills of Geneva and Zurich.


Tuesday, December 20, 2011

Tweet of the day - UK Uncut

Kind of speaks for itself.
To think it all began with 40 people sitting in a Vodafone store on a rainy Wednesday morning in October 2010. People said we were mad...
If you don't know what this is all about, read this.

Note that UK Uncut Legal Action have launched legal proceedings against HMRC over the Goldman Sachs tax deal. Read it here.


Monday, December 19, 2011

The U.S. and the U.K. - poles apart on tackling tax abuse

From Douglas H. Shulman, U.S. Commissioner of Internal Revenue, looking at how the I.R.S. has been going after offshore tax abuse:
"Our approach to offshore tax evasion follows a natural course. . .cleaning up the abuses of the past and then mining and leveraging the data we receive to mount a greater attack on the abuse.

Indeed, we have been scouring the vast quantity of data we received from all of our different offshore programs and other sources. This data mining has already proved invaluable in supplementing and corroborating prior leads, as well as developing new leads, involving numerous banks, advisors and promoters from around the world. I can tell you that we now have additional cases and banks in our sights."
The first paragraph kind of says it all. You find some crooks, put pressure on them and, crucially, on their bankers and other intermediaries - then you squeeze out information on others. The net widens. For all the faults of the I.R.S., this general approach marks a stunning contrast to the approach taken by the tax authorities in the U.K. which have instead of pursuing known criminals, have signed cosy sweetheart deals with Switzerland and other tax authorities.

In the U.S. you also have the Foreign Account Tax Compliance Act (FATCA) which is a ferocious and excellent device for rooting out offshore tax evasion, coming in soon. There have been a lot of screams about FATCA, mostly for illegitimate reasons, but some with arguably more reasonable objections that the reporting requirements are extremely complicated, especially for those less able to afford tax advisers to fill in their forms with them. Shulman notes that these concerns are being taken very seriously, and are being addressed.

Then there is corporation tax. The U.S. isn't particularly good at taxing corporations, it has to be admitted. But a damning new report out today from the British parliamentary Public Accounts Committee reveals just how bad the U.K. has been. The first words summarise it:
"This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations. We uncovered both specific and systemic failures which must be addressed."
The release goes on. Just look at this, for instance:
"It is extremely disappointing that senior HMRC officials were not prepared to cooperate with our inquiry in a spirit of openness. We accept that there is a need for confidentiality to protect individual taxpayers, but this must not be used as a cloak to protect the Department from scrutiny.
. . .
It is absurd that we had to rely on the media and the actions of a whistleblower to find out about the details of individual settlements. Parliament and the public have legitimate concerns that large companies are being treated more favourably than ordinary taxpayers, whether they be small businesses or hard-working families."
And this:
"The Department's working practices must be seen by the taxpaying public to be absolutely impartial. The impression being given at the moment is quite the opposite, of far too cosy a relationship between HMRC and large companies."
Indeed - as TJN has been saying for some time, and as outlined in Treasure Islands. And then there is this disgrace, outlined by Richard Brooks in the UK parliament.

This is not to put the U.S. I.R.S. on a pedestal - far from it. But in the U.K., something has gone very, very badly wrong. It's good to see some proper light being shone on this subject at last. Credit to UK Uncut, Richard Brooks and others (including TJN) for bringing this tricky, worthwhile argument to national prominence.


Russia: companies urged to return from "offshore shadows

From Reuters:
Prime Minister Vladimir Putin on Monday decried the illicit use of offshore structures by Russian state businesses to spirit cash out of the country and ordered them to return from the "offshore shadows".

The comments by Putin, who has launched a bid to return to the Kremlin next March, mark his clearest indication to date of concern that accelerating capital flight is being partly driven by corrupt schemes run.
Good to see the words. Now let's see the deeds. Nothing would do as much to mark seriousness in the fight against corruption than a crackdown on the use of offshore.

Now here are a couple of interesting statistics:
"Some 55 percent of accumulated foreign direct investment into Russia comes from companies registered in Cyprus or the Netherlands - some $70 billion in total. Most of that is believed to be money of Russian origin."
That latter sentence refers to so-called "round tripping." Now Reuters goes on:
The companies counter that they prefer to base themselves offshore because they cannot get adequate redress in the Russian courts and consider the protection of property rights at home to be inadequate.
Nonsense. It is one thing to put your money overseas. There are a range of reasons why one might do that, some more legitimate than others. But putting your money overseas doesn't mean you have to put it offshore through a mucky tax haven like Cyprus. Using Cyprus is usually not about investor protection, but about tax abuse or outright crime.

"Returning the Russian economy's strategic sectors from the offshore shadows to the national economy is our priority task for the next period," Putin said
Indeed. Mr. Putin's advisers might like to start, perhaps, by reading this, then this, then this, then this.

Hat tip: David McNair


UK banks ‘cheat’ Europe in €600m tax scheme

From the Bureau of Investigative Journalism:
Some of the city of London’s biggest banks are behind a huge tax avoidance trade ‘cheating’ European countries of hundreds of millions of euros a year in a development that sheds fresh light on David Cameron’s decision to wield Britain’s EU veto to protect the Square Mile.

A two-month study by the Bureau has uncovered a discreet $102bn market in European shares whose ‘central’ purpose is tax avoidance. The Bureau’s analysis suggests the European tax loss – mainly to France, Germany and Italy – is up to €595m a year. The scale of tax avoidance will fuel further anger within the EU towards the Square Mile, where the vast majority of the trade known as dividend arbitrage is conducted.
And TJN's opinions are involved:
"Markus Meinzer, applied researcher and analyst at the Tax Justice Network, said: ’This issue highlights a structural flaw in our current international financial system. Governments refuse to institute robust transparency and cooperation mechanisms in view of aggressive financial sector lobbying and because of the bizarre, yet largely unchallenged view of alleged benefits flowing from competition between states.’ "
Well said. Now read on. And see Nick Mathiason's story in The Observer.

Oh, and then there's this, which was also in the UK news. Revealed: how City fees are eating into our pensions. Makes you love 'em even more . . .


Friday, December 16, 2011

UK government inquiry into tax and development

The UK government's International Development Committee has just announced a new inquiry into tax and development. The scope of the inquiry, which we copy below, covers many issues close to TJN's key areas of concerns. The Committee is inviting written submissions by no later than 6th February 2012. Get writing!

The link between taxation and development is fundamental. The failure to collect tax in developing countries is therefore a major concern. Poor revenue collection of property, wealth, income and sales taxes leaves developing countries with highly constrained budgets for the provision of basic services and poverty reduction. It also represents a missed opportunity to redistribute wealth and improve governance.

Developing countries lose an estimated $160 billion each year through tax avoidance by multinational companies (including those based in the UK). Of particular concern are the extractive industries where payments to governments are often not disclosed and may not contribute to development or poverty reduction.

The International Development Committee is to begin an inquiry into tax in developing countries. The Committee will use Zambia as a case study due to its aid dependence (18% of the Government’s budget), high poverty levels (64% of the Zambian population live below the poverty line) and the large mining sector. The UK’s Department for International Development (DFID) is spending £59 million in the country each year until 2015.

Key issues for the inquiry include:
  • how DFID can better support developing countries to improve revenue collection
  • how DFID can support developing countries to use the revenue base responsibly in order to improve service delivery and development outcomes
  • tax evasion and avoidance in developing countries by private individuals and companies
  • how effective international efforts to promote tax disclosure and transparency are likely to be
  • capital flight and its implications for developing countries

The deadline for submitting written evidence is Monday 6 February 2012.

Written evidence submitted should:

  • Be no longer that 3000 words in length
  • Be provided electronically in MS Word (no PDFs e-mail to Submissions can also be sent by post to International Development Committee, House of Commons, 7 Millbank, London, SW1P 3JA.
A guide for written submissions to Select Committees may be found on the parliamentary website at:


UK Uncut to shut down high street stores Saturday 17th December

From UK Uncut:

For immediate release
Tel 07415063231
Email ukuncut (at)

UK Uncut, the anti-austerity direct action group [1], will shut down scores of high street stores of tax dodging companies across the country this Saturday 17th December, with Vodafone at the top of its list of targets.

Thousands of supporters voted in a Facebook poll [2] to decide which 'tax-avoiding Scrooge or big-banking Grinch' should be 'crowned UK Uncut’s Christmas Turkey', the headline target for the day [3]. After a tense run-off, Vodafone pipped Sir Philip Green's Arcadia empire to the 'prize' of bearing the brunt of activists' ire.

People from Glasgow to Poole [4] will hit high street stores to demand the government collects the tax avoided by corporations and rich individuals instead of slashing public services. In London, protesters will stage a 'flash freeze-in' in the huge Topshop on Oxford Circus before donning UK Uncut-branded Santa suits and heading to Vodafone's flagship store on Oxford Street [5].

The nationwide day of action comes ahead of a report next week by parliament's Public Accounts Committee which is expected to be highly critical of the way HMRC struck deals with multinational corporations allowing them to avoid billions of pound in tax [6]. The report will pave the way for a National Audit Office investigation into ten large corporate tax deals, including Vodafone's let off of between £6-8billion [7].

UK Uncut supporter Daisy Cooper, 26, said: "Over the past 14 months, direct action by UK Uncut has put the issue of tax avoidance on to the political agenda with the head of HMRC forced to retire due to the dodgy deals he's struck. In the words of a Labour MP uttered just days ago: "Cosy tax deals between the government, the banks and other global corporations cannot go unchallenged.". The government's claim that 'there is no alternative' to the cuts has been exposed as a lie."

Rachel Stevens, 22, who will be taking part in the 'Freeze-In' in London, said: "Thanks to a combination of savage welfare cuts, reductions in the winter fuel allowance and outrageous profiteering from the big energy companies gone unchecked by the government, one county estimates its seasonal death rate could jump 20% as temperatures plummet. The government tell us they have no alternative to letting people freeze. It's a lie. Here's one alternative: collect the tax avoided by corporations and rich individuals, starting with Vodafone's £6bn."

Notes to editors:

[1] The day of action will see UK Uncut return to the high streets for the first time since May. Since that time, the group has closed Westminster Bridge in protest the government's NHS reforms, helped give birth to the Occupy movement, staged a creative intervention of a speech by HMRC boss Dave Hartnett with over 12,000 views on Youtube (Hartnett recently took unexpected 'retirement') and supported the public sector strikes of 30 June and 30 November. See
[5] The 'freeze-in' will start at 1pm on the ground floor of Topshop's Oxford Circus store. See for full details
[7] UK Uncut first accused Vodafone of avoiding a £6bn tax bill relating to the purchase of German engineering firm Mannesmann in October last year. At the time, the claim was dismissed by the company and HMRC as an 'urban myth'. In the last month, however, a parliamentary committee has said the deal 'may have been illegal' and could have been worth up to £8bn. The deal will now be investigated as part of the judge-led review of corporate tax deals struck by HMRC. See
And note this useful commentary on the protests, from Richard Murphy. As he says:
"HMRC has been corrupted from the top down."
And much more.


Center for Freedom and Prosperity should read this

The Center for Freedom and Prosperity, a pro-tax haven, pro-secrecy, pro-tax 'competition', libertarian anti-government organisation based in Washington, would do well to take a long, hard look at the evidence presented in this blog, entitled:

Nine Reasons that Progressive Policies Deliver Prosperity and Freedom

We kind of wish they'd entitled it Nine Reasons that Progressive Policies Deliver Freedom and Prosperity, but hey.


Thursday, December 15, 2011

Links Dec 15

New Data Show Corporate Offshore Funds Not “Trapped” Abroad: Nearly Half of So-Called “Offshore” Funds Already in the United States U.S. Senate Permanent Subcommittee on Investigations
Dec 14 - Press Release: New data released today by Sen. Carl Levin, D-Mich., chairman of the U.S. Senate Permanent Subcommittee on Investigations, show that large multinational U.S. corporations with substantial offshore funds have already placed nearly half of those funds in U.S. bank accounts and U.S. investments without paying any U.S. tax on those foreign earnings. Hat tip: Nicole Tichon. See our earlier blog today on Sen. Levin.

Insight: In Greece, playing cat and mouse with tax evaders Reuters

Dec 15 - "Earlier there was no political will by governments to get to the bottom of this ... Now that we've reached the edge of the cliff, they've decided to implement measures against tax evasion." Interesting commentary on the culture of tax evasion.

Greek tax collectors accused over bribes Financial Times
Dec 14 - "Greek tax collectors routinely pocket 40 per cent of fines imposed in disputed tax cases in return for lowering the penalties paid by miscreants, a former senior Greek finance ministry official has revealed." Hat tip: Offshore Watch.

Panama's tax battle with the French parliament La Tribune (In French)
Dec 14 - On the debate within the French parliament as to whether to include Panama within its list of tax havens - non-cooperative jurisdictions - renewed each January 1. The Finance Committee in the French senate has rejected the bill for ratification of the Tax Information Agreement signed earlier this year with Panama. Interesting implications for Panama, as signing of the agreement with France had them removed from the OECD's "grey" to "white" list.

Banker Contempt Tax Research UK
Dec 15 - Richard Murphy comments on "FT Alphaville has reported this morning that: A senior UBS private banker allegedly sanctioned the creation of an illegal offshore investment vehicle for one of India’s most powerful businessmen, saying that Anil Ambani’s status as a “mega-client” could justify waiving the rules, a London tribunal has been told."

India: CBDT, DRI & ED told to probe exports to tax havens Bahamas & Cyprus Economic Times
Dec 11 - "The finance ministry has asked three of its investigating arms to probe all exports to tax havens Bahamas and Cyprus, an official in the ministry told ET on the condition of anonymity. The ministry is concerned about the sudden surge in exports to the tax havens and has asked the agencies to ascertain whether the exports are genuine."

Billions lost in trade-related in tax evasion, says think tank Malaya Business Insight
Dec 15 - "Illicit activities in the Philippines are estimated to have cost the government $142 billion in taxes evaded between 2000 and 2009. This was enough to put the Philippine among the top 15 countries with the highest amount of illicit money to have been laundered out of the country for the period, according to Washington-based Global Financial Integrity. " See press release on the study blogged here.

Cayman seeking to escape tax haven shadow Caribbean360

Dec 15 - "Long characterised as a secrecy jurisdiction, the Cayman Islands are trying to shake off their tax haven label in favour of being recognised as a global hedge fund player."

Kamikaze Cameron? Huffington Post UK

Dec 12 - "Meanwhile, the fat cats at the top of the financial pile remain relatively unscathed and untouched. They continue to bask in a semi-monopolistic bonus culture where tax evasion, tax avoidance and tax havens, masterminded by the major accountancy firms and banks, bleed off billions of potential tax revenues every week - billions which are sorely needed to reduce the deficits of the national economies concerned. It is no surprise that the global street protest movement has gained such momentum with their increasing focus on corporate greed."


Madoff scandal: tax haven Luxembourg behind it all

From the Treasure Islands blog:

This searing letter on to Luxembourg Finance Minister Luc Frieden, on behalf of 2,500 ripped-off Madoff investors kind of speaks for itself. Three years on, and:

"none of these institutions has been held accountable to date."

Note that the defrauded investors have fought battles in courtrooms around the world - but keep getting directed to Luxembourg. And in Luxembourg, the financial sector has closed ranks and continued to hide behind the classic offshore attitude, elegantly summed up by Jerome Turquey, a Luxembourg critic:

"Up yours! Let's make money!


Offshore Accounts: Insider’s Summary of FATCA and its Potential Future

For FATCA wonks (that is U.S. legislation designed to protect U.S. taxpayers against offshore tax erosion), this paper looks interesting.

hat tip: A. Nonymouse.


Despite Global Financial Crisis, Illicit Financial Outflows from Developing World Remain High, Finds New Report

Another release from Global Financial Integrity:
Over US$900 Billion Illicitly Drained from Developing Countries in 2009, Says Annual GFI Study

Report Finds Developing World Lost US$8.44 Trillion over the Decade 2000-2009

WASHINGTON, DC – Developing countries lost US$903 billion in illicit financial outflows in 2009 despite the massive slowdown in economic activity which rocked world markets in late 2008, finds a new study by Global Financial Integrity (GFI), a Washington-based research and advocacy organization.

Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” which estimates the developing world lost US$8.44 trillion over the decade ending in 2009, is GFI’s annual update on the amount of money flowing out of developing economies via crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for the year 2009.

“This is a breathtakingly large sum at a time when developing and developed countries alike are struggling to make ends meet,” said GFI Director Raymond Baker. “This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”

While US$903 billion marks a drop from the US$1.55 trillion1 that illicitly flowed out of the developing world in 2008, the study finds the decrease is almost entirely attributable to the global financial crisis rather than any governance improvements or economic reforms.

The study, which was co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, tracks the amount of illegal capital flowing out of 157 different developing countries over the 10-year period from 2000 through 2009, and it ranks the countries by magnitude of illicit outflows. According to the report, the 20 biggest victims of illicit financial flows over the decade are:

China ............................................. $2.74 trillion
Mexico ............................................ $504 billion
Russia ............................................ $501 billion
Saudi Arabia ................................. $380 billion
Malaysia ........................................ $350 billion
United Arab Emirates................... $296 billion
Kuwait ............................................ $271 billion
Nigeria ........................................... $182 billion
Venezuela ..................................... $179 billion
Qatar .............................................. $175 billion
Poland ............................................ $162 billion
Indonesia ....................................... $145 billion
Philippines .................................... $142 billion
Kazakhstan ................................... $131 billion
India ................................................ $128 billion
Chile .............................................. $97.5 billion
Ukraine ......................................... $95.8 billion
Argentina ...................................... $95.8 billion
South Africa .................................. $85.5 billion
Turkey............................................ $79.1 billion
For a complete ranking of average annual illicit financial outflows over the decade by country, please refer to Table 5 of the report’s appendix.

The report also reveals the top victims of illegal capital flight in 2009. The top 20 countries suffering the highest illicit outflows in 2009 were:

China ............................................. $291 billion
Saudi Arabia ................................. $82.3 billion
Poland ........................................... $66.3 billion
Malaysia ....................................... $46.8 billion
Mexico .......................................... $34.6 billion
Nigeria ......................................... $33.4 billion
Russia ........................................... $23.4 billion
Indonesia ...................................... $20.5 billion
United Arab Emirates .................. $19.5 billion
Venezuela ..................................... $18.8 billion
Iran .............................................. $18.1 billion
Azerbaijan .................................... $14.3 billion
Chile ............................................. $13.1 billion
South Africa ................................. $12.9 billion
Vietnam ....................................... $12.5 billion
Philippines .................................... $12.1 billion
Argentina ..................................... $11.7 billion
Thailand ....................................... $10.8 billion
Romania ...................................... $10.0 billion
Ukraine ........................................ $9.8 billion
To schedule an interview with GFI spokespersons on this report, contact Clark Gascoigne at +1 202 293 0740, ext. 222 or On-camera spokespersons are available in Washington, DC.

For more information on the report, visit here.



GFI’s previous annual study of illicit financial flows out of developing countries, “Illicit Financial Flows from Developing Countries: 2000-2009,” published in January 2011, found that US$1.44 trillion had flown out of developing economies in 2008. Due to revised/improved World Bank and IMF data, GFI’s new report estimates that US$1.55 trillion is a more accurate measurement of illicit financial outflows in 2008.
Notes to Editors:

The full embargoed report can be downloaded here [PDF 2.90 MB].
A tip-sheet for journalists can be downloaded here [PDF 155 KB].

Clark Gascoigne
cgascoigne (at)
+1 202 293 0740, ext. 222

Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.


Global Financial Integrity Honours US Senator Carl Levin with 2011 Annual leadership Award

From Global Financial Integrity, an award which TJN applauds:
Global Financial Integrity Honors Senator Carl Levin (D-MI) with 2011 Annual Award for Exemplary Leadership
Senator to Accept Award Tonight at Gala Dinner in Washington, DC

WASHINGTON, DC – Global Financial Integrity (GFI) will tonight present Senator Carl Levin (D-MI) with the organization’s 2011 annual Award for Exemplary Leadership in acknowledgement of his untiring efforts on behalf of financial integrity in the U.S. and abroad. Sen. Levin will accept the award this evening at a gala dinner hosted by GFI in his honor at The Army and Navy Club in Washington, DC.

“We are thrilled to honor Sen. Levin’s many distinguished contributions in pursuit of transparency and accountability in our financial system,” said GFI Director Raymond Baker. “For many years, Senator Levin has been at the forefront of both foreign and domestic anticorruption and tax justice efforts.”

“As chairman and ranking member of the U.S. Senate Permanent Subcommittee on Investigations, Sen. Levin has played a pivotal role in exposing many of the biggest financial fraud schemes of the past decade. He led efforts to investigate offshore abuse in the collapse of Enron, exposed rampant money-laundering facilitation on behalf of foreign dictators at Riggs National Bank, and more recently, held hearings revealing how both UBS and LGT Bank helped thousands of wealthy Americans evade paying taxes to the IRS,” added Mr. Baker.

In the current Congress, GFI notes that Senator Levin has sponsored three pieces of legislation which would promote financial integrity. They are:
  • The Stop Tax Haven Abuse Act (S. 1346);
  • The Incorporation Transparency and Law Enforcement Assistance Act (S. 1483); and
  • The Equal Access to Tax Planning Act (S. 139).
Senator Levin is the third person to receive this honor from GFI. The award was first given in December 2009 to then-retiring New York District Attorney Robert M. Morgenthau. Eva Joly, chairperson of the European Parliament’s Development Committee, received the 2010 award.


Clark Gascoigne
cgascoigne (at)
+1 202 293 0740 ext.222

Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.


Quote of the day from Sarkozy: City of London is offshore

From Nicolas Sarkozy, widely reported yesterday, on UK Premier David Cameron's European snub, on behalf of the City of London:
"Cameron behaved like an obstinate kid, with a single obsession: protecting the City, which wants to carry on behaving like an off-shore centre. No country supported him."
We have our disagreements with Sarkozy but this reference to the City as an offshore centre is spot on. May the realisation continue to spread. More on this here.


Wednesday, December 14, 2011

Links Dec 14

Human rights abuses? Blame the parents Guardian
Dec 9 - Action is needed to stop companies avoiding legal liability for alleged human rights violations by hiding behind subsidiaries. As Nick Mathiason observes. "For those campaigning for economic transparency, like the Task Force on Financial Integrity and Economic Development, it seems the same intractable problems of corporate secrecy and difficulties establishing beneficial ownership also play out in the human rights arena."

Gordhan thanks tax compliant SA BusinessLive
Nov 30 - "Minister of Finance Pravin Gordhan has thanked South Africans for being tax compliant ... 'Look what has happened in Greece and other countries where there is an absence of compliance culture ...This shows that refusal by some to meet their obligations can have disastrous effects when fiscal difficulties arise.' "

Activists Want Illicit Cash Flows From Africa Stopped Voice of America
Dec 7 - "Lawyer Attiya Waris, vice-chair of the British-based Tax Justice Network, explains that tax evasion by multinational companies accounts for two-thirds of sub-Saharan Africa’s estimated $480 billion per year capital flight. She says trade mispricing, false invoicing and manipulation of tax policies are the most common methods."

India: Black money debate: Who said what
Dec 14 - "The Opposition and the Government were involved in a heated debate over black money in Parliament on Wednesday." - transcript provided here.

Eight Former Senior Executives and Agents of Siemens Charged in Alleged $100 Million Foreign Bribe Scheme U.S. Department of Justice
Dec 13 - "Bock made cash withdrawals from Siemens AG general-purpose accounts in Germany totaling approximately $10 million, transported the cash across the border into Switzerland and deposited the funds into Swiss bank accounts for transfer to officials. . . . the conspirators allegedly relied on at least 17 off-shore shell companies . . . to disguise and launder the funds, often documenting the payments through fake consulting contracts." Hat tip: Lucy Komisar.

Where’s the fraud, Mr. President? Reuters
Dec 13 - David Cay Johnston observes: "Tax evasion equals 18 percent of global tax collections, a new report by British accountant Richard Murphy shows. His report for the Tax Justice Network cleverly lined up a World Bank Report on the size of shadow economies with a Heritage Foundation report on average tax burdens by country to reach that figure."

See also:
Will the U.S. wake up to the financial black hole in London? Treasure Islands

Dec 14 - "David Cay Johnston is on form again, this time on the Dylan Ratigan show alongside Bill Black, a thoughtful former banking regulator."

Senate approves US double taxation measures swissinfo
Dec 13 - "United States authorities may be granted assistance on alleged tax evasion without providing personal details of suspects under measures agreed by the Senate."

Should Britain become the new Switzerland? Guardian
Dec 13 - A debate whether Britain should base its relationship with Europe on the Swiss model. Richard Murphy asserts: "The Swiss business model may itself already be bust."

Britain is ruled by the banks, for the banks Guardian
Dec 12 - "In a poorer country, the cosiness of relations between bankers and politicians would be scrutinised by an official from the World Bank and disdainfully pronounced as pure cronyism. In Britain, we need to come up with a new word for this type of dysfunctional capitalism – where banks neither lend nor pay their way in taxes, yet retain a stranglehold on policy-making. We could try bankocracy: ruled by the banks, for the banks."


Tuesday, December 13, 2011

India: OECD seems to warm to multilateral, automatic information exchange

TJN has, so far, reserved comment on the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This is largely because, despite the OECD trumpeting of tax transparency, the practical effect of this Convention is pretty opaque.

Recent news from India, however, we feel is worth noting now. Jeffrey Owens, Director, Centre for Tax Policy and Administration, OECD, together with other senior OECD officials, met on Dec 7 with India's Finance Minister, Mr Pranab Mukherjee and his top officials.The Hindu BusinessLine reported, in Tax convention: OECD wants India to speed up ratification:

The OECD, a grouping of wealthy nations, hopes that India would go in for quick ratification of the Multilateral Convention on mutual administrative assistance in tax matters—a multilateral agreement that is now being seen as the ‘gold standard’ for co-operation in tax administration.

G20 countries are moving from bilateral to multilateral agreements. At the recent G20 leaders summit at Cannes, India had along with 12 other G20 countries associated with this convention. India has already signed a letter of intent and now quick ratification is required, Mr Owens told Businessline here today.

We disagree that the Multilateral Convention is a "gold standard". We can view the Multilateral Convention as a step forward in that the OECD is now publicly acknowledging that a patchwork of bilateral agreements is ineffective, and that an approach that is multilateral in nature is essential for an effective fight against tax dodging by the wealthy in secrecy jurisdictions. (After all, as we pointed out in our analysis of the UK-Swiss tax deal: some of the major flaws in the deal are quite simply impossible to fix without a multilateral approach.) As The Hindu BusinessLine cites:

In a global economy, where high networth individuals and multinational enterprises operate in many jurisdictions, it is now being recognised that bilateral agreements may be inadequate to address multilateral issues, Mr Owens pointed out.

So, Jeffrey Owens of the OECD has said that bilateral agreements may be inadequate, a point that TJN has been asserting (in more forceful terms) all along. Click here for a suggested response to Mr. Owen's statement (no religious bias intended).

Although it includes an apparent obligation for automatic exchange of information which we welcome, this depends on further administrative agreements between the states involved. There appears to be no publicly available information on which states have actually concluded such agreements and are therefore in a position to exchange information automatically. Still, the Multilateral Convention does seem to create some useful momentum towards automatic exchange of information, and this certainly helps invalidate further the notion of the hopelessly inadequate "upon request" exchange of information mechanism being, as the OECD puts it, the 'internationally agreed standard.'


USA: FACT and Partners Send Strong Message Opposing Repatriation Holiday

Press Release from the FACT Coalition:
December 13, 2011

America Cannot Afford Another Tax Holiday for

Corporations Offshoring Profits and Jobs

Groups Representing Over 17 Million Taxpayers from Across the Country

Send a Message

Washington – As Congress wrestles with a number of tax-related issues to close out the year, faith-based, small business, union and public interest organizations from California to Maine sent a letter to Senate and House leaders railing against a tax break that previously failed to produce jobs and largely benefited a small percentage of corporations. Not to be confused with the payroll tax holiday for workers, the corporate tax holiday would allow businesses to pay an extremely low rate of tax for money (5.25%) kept offshore – rewarding those who keep jobs and profits outside of the U.S. The groups who sent the letter, representing over 17 million taxpayers, stand in square opposition to the large corporations and their lobbyists who seek this sizable tax break.

Think tanks and organizations from across the political spectrum have continued to debunk the myths that any corporate tax holiday will benefit the government, taxpayers, job creators or workers. In fact, they argue it would make matters worse.

An excerpt from the letter, which is also signed by government transparency, tax, human rights, anti-corruption, environmental and economic justice groups, reads:

“If Congress repeats the 2004 holiday, multinational corporations will quite rightfully expect that another holiday will be enacted in a few years. They will have enormous incentive to engage in ever more aggressive tax schemes that move their profits to foreign jurisdictions. In fact, the 20 companies who repatriated the most earnings under the 2004 holiday are already anticipating the next holiday – they now have three times as much in foreign profits parked offshore as they did at the end of 2005.

We urge you to reject the proposals for a repatriation holiday. The multinationals who are lobbying hard for this tax break offer numerous reasons why you should give them this generous reprieve. But their plea for a repatriation holiday is nothing more than a blatant attempt to escape their tax obligations and shift the burden onto the taxpaying American public.”

The FACT coalition includes a broad range of organizations with an interest in seeing the loopholes closed due to their impact on jobs, critical programs, small businesses, human rights, corruption and national security. For a full list of member organizations and campaign information visit


CONTACT: Nicole Tichon

Executive Director

Tax Justice Network USA


CONTACT: Rebecca Wilkins

Senior Counsel, Federal Tax Policy

Citizens for Tax Justice

202-299-1066 x 32


UK-US 'special relationship' is alive and well - it runs from City of London to Wall St.

Cross-posted from the Treasure Islands blog:

Some of the more thoughtful articles about the UK's recent Euro snub have lamented the fact that the UK has not only lost influence in Europe, but it no longer has the relationship with Washington to fall back on in reserve. An FT op-ed on Sunday by Jonathan Powell, Tony Blair's influential former chief of staff, notes:

"Britain will now be excluded from all decision-making on the key economic policies of Europe. . . . this catastrophic decision is all the more serious because we do not even have a “special relationship” on which to fall back."

The previous transatlantic ties, the article notes - Churchill's close links with F.D.Roosevelt; Margaret Thatcher's love-in with Ronald Reagan; and the close friendship between Tony Blair and Bill Clinton – are just not there. There is no Cameron-Obama warmth, and Cameron's latest ploy in defence of the City of London will have cooled things further. The United States has always valued Britain as a voice in Europe, and now that voice is diminished. So, as the FT continues

"We have kicked away both props of our traditional foreign policy – Europe and the transatlantic relationship. I have no idea how the government thinks we are going to make our way in the world without either, and neither does it."

Members of the coalition government said:

David Cameron went into last week's talks with "no intelligence, no friends and no flexibility" . . . [another] described Cameron's negotiating strategy as "unbelievably cackhanded",.

I agree with these articles, most of the way. But there is one thing that everyone overlooks here. In a sense, the special relationship is not dead at all.There is a special relationship that is in rude, exuberant health.

It is the Special Financial Relationship between Wall Street and the City of London.

In essence, London offers itself as an offshore escape route for Wall Street, a source of loopholes to get around U.S. financial regulation (see my last blog, for yet another shocking, appalling example of that.) The relationship began in the mid 1950s just as the British Empire crumbled (read Treasure Islands to know more about this) when the City of London discovered that it could rebuild itself by hosting offshore "Eurodollar" trading. What happened was that banks wishing to trade in this market were 'deemed' to be offshore by the Bank of England, and therefore outside the purview of regulation.

This market was, in effect, regulated nowhere. It grew explosively, and created the platform for Wall Street to grow far faster than the rest of the economy, eventually rebounding back into the United States to capture the political process there and bring the economy to its knees in an orgy of libertarian excess. The market spread widely, and had similar effects in other countries too. For over 50 years now, the Special Financial Relationship between the City and Wall Street has been going from strength to strength.

This relationship is pure poison, for both countries.

It is a purely financial relationship whose cross-border nature means it is extremely hard to tax or to regulate. It is thus directly at odds with democracy, and fosters giant inequality, in each country. Bring Britain's spider's web of Overseas Territories and Crown Dependencies into the equation - which include some of the world's biggest tax havens and are umbilically connected to the City of London - then the size of the threat begins to become apparent. A giant zone of transatlantic impunity for some of the world's wealthiest citizens and corporations.

If citizens of the U.S. want to know why Wall Street has become so powerful and difficult to reform, the London escape route is, alongside libertarian ideology, probably the biggest single explanation. "Don't tax or regulate us too much or we'll go offshore!" is probably the most powerful financial lobbying tool there is.

If citizens of the UK want to know why their economy is so unbalanced and has caused so much damage to the rest of the country (much more on this soon), then in my view the biggest single reason is Britain's willingness to prostitute itself to all comers with its pernicious 'light touch' regulation.

The New York Times is also running an excellent op-ed on the whole British-European mess, entitled "The British Euro Farce." It's another searing article, with judgements on the Eurosceptics such as:

Their nostalgia for British greatness is often no more than the trumpeting of a bunch of insular snobs who seem to have a hard time restraining their inner-fascist (those last two words are explained earlier in the article)

And the author, NY Times columnist Roger Cohen, notes the same as the FT op-ed:

The mid-Atlantic, as America pivots to Asia, could prove a lonely place for Britain, whose economy is heavily dependent on the euro zone.

Indeed. To his credit, his description of Britain as a "giant offshore hedge fund" gets closer to acknowledging the nature of the relationship between Britain and the U.S.. As The Independent put it, Britain is closer to becoming "Like the Cayman Islands, minus the weather."


EU Commission melts Swiss Rubik plans

By a non-TJN guest blogger familiar with European tax issues, who wishes to remain anonymous. (TJN has added the links.)
To all intents and purposes, Switzerland’s ill advised attempt to use its Rubik tax agreements to alleviate EU pressure for automatic exchange of information seem to have failed before it could get off the ground.

The EU Savings Tax Directive which commenced operations in 2005 had so many loopholes that tax returns in every country electing the withholding option was less than 10% than what was expected. Potential taxpayers in some countries were so efficient at avoiding the directive that less than 1% of interest was subject to withholding tax.

Consequently, some Member States such as Germany, France and Italy began demanding automatic exchange of information from the usual suspects. The Swiss bankers' association, rightly sensing the demise of their industry (see here, for an example of their terror) if they were obliged to spill the beans, devised a scheme to “fix” the loophole-riddled EU saving tax directive. They said that the low withholding tax results were due to the narrow definition of which income should be taxed. So they proposed that the withholding tax should be expanded to include capital gains, dividends and other investment related income. As a sweetener, they also proposed a withholding tax on amounts held in the past.

Beware of Swiss bearing 'gifts.'

The whole purpose of offering to “fix” the savings tax was to stave off pressure for automatic exchange of information. Therefore, the crucial condition for EU member states accepting this "gift" was that the withholding tax should be a full and final settlement of any taxes owed. In effect, the Swiss would get to keep their sacred banking secrecy.

The EU Commission, no doubt peeved about Switzerland’s divide-and-conquer strategy against future improvements to the savings tax directive, and against demands for automatic exchange of information, has now warned any EU Member State contemplating a Rubik deal, that the EU already has legislation regarding withholding taxes on interest. As EU legislation has primacy over bilateral agreements, no EU member State can enter into agreements that impinge on the EU savings tax.

The withholding taxes levied under the EUSD are merely advance payments against what would ultimately be owed by the taxpayer. Therefore Rubik cannot be regarded as a full and final settlement. The tax evader client can still be liable to penalties, etc. This defeats the one and only purpose of Rubik. Rubik is crippled.

Rubik's Loopholes.

The amendments to the Savings Tax Directive, still to be introduced, are a far more ferocious set of provisions which, while still containing some loopholes, will nevertheless capture large revenues. Even though the proposed saving tax amendments were published in 2008, however the Swiss ignored these improvements and inexplicably introduced a loophole-riddled agreement, such as explicitly exempting discretionary trusts, foundations, establishments and all other entities and arrangements without an immediate identifiable beneficiary.

Furthermore, all offshore entities and arrangements that can show they have commercial purpose is inexplicably and spectacularly exempt (remember those shoes you shipped to your Uncle in Malta or that “consulting” invoice you gave your cousin in Spain for helping him set up a facebook page”? Well, you have a commercial operation, then, and you are henceforth exempt. And it's not as if Swiss bankers, who are supposed to police these agreements, will be falling over themselves to check up on you!).

And the much touted "inclusion" of insurance wrappers only relates to Swiss insurers. Therefore all you have to do is to use an Irish, Liechtenstein or a Luxembourg insurer, for example, which can offer Swiss banks bancassurance wrappers till the cows come home, without being in scope.

All those trustees in Geneva managing Bahamas trusts with Bahamas accounts can breathe a sigh of relief as Rubik didn’t even contemplate their inclusion.

The intervention by the EU Commission that EU Member States must not touch withholding tax legislation on interest plus the fact that the EU savings tax amendments would close Rubik’s loopholes means Rubik is melting before our very eyes.
TJN: See our recent article making similar points, here, an independent analysis on the political aspects of the disagreement between the EU and the Rubik participants here, a good FT editorial on the subject here, For more details on the loopholes in Rubik, see our report here, and note that our subsequent efforts to find anyone, anywhere, to find a single fault in our report have so far proved fruitless.


Friday, December 09, 2011

Links Dec 9

30 Major U.S. Corporations Paid More to Lobby Congress Than Income Taxes, 2008-2010 International Business Times
Dec 9 - "By employing a plethora of tax-dodging techniques, 30 multi-million dollar American corporations expended more money lobbying Congress than they paid in federal income taxes between 2008 and 2010, ultimately spending approximately $400,000 every day -- including weekends -- during that three-year period to lobby lawmakers and influence political elections, according to a new report from the non-partisan Public Campaign." Hat tip: Holly Sklar.

On the run, U.S. financier finds Spanish refuge Reuters
Dec 8 - "Spargo's case shows how tough it is for regulators and law enforcement agencies to track and punish alleged financial crimes across borders. Networks of 'shell companies' -- paper-only firms with few real operations -- make it hard enough to identify suspects. Even if regulators can identify them, they are often hard to bring to justice."

The Money Carousel KyivPost
Dec 9 - "Ukraine is a nation in which billions of dollars a year escape abroad in offshore tax havens, both through legal and illegal schemes ... With so few authorities across so many borders willing to investigate such alleged financial funny business, it’s no wonder that the success rate figures of combating money laundering worldwide give no reason to be optimistic. An obvious question: Are top authorities in many of the countries themselves complicit?"

India for greater global cooperation to deal with black money livemint
Dec 7 - “The opacity of tax systems in some of the jurisdictions is adding to the challenges. There has been some movement on these issues in response to the initiative by the G-20. We need to pursue this to its logical end,” finance minister Pranab Mukherjee said addressing a global conference on tax and equality."

Black money: BJP to step up pressure on Govt IBNLive
Dec 9 - "It is being marked as International Anti-Corruption Day around the world on Friday, and the Bharatiya Janata Party (BJP) is taking advantage of the occasion to step up pressure on the government to act on black money. In fact, BJP MPs will be submitting declarations ... The declarations state that they do not have any unaccounted money stashed away in secret accounts and tax havens overseas. "

Goldman Sachs whistleblower threatened with the sack Guardian

Dec 8 - "Osita Mba, who disclosed that [UK's Revenue and Customs] managers had let off Goldman Sachs with tax penalties, is facing disciplinary procedures" He is supported within the UK Parliament: "Mr Mba's evidence has been crucial in uncovering not just specific but systemic problems in HMRC's secretive relationship with big corporations. This is harassment and is completely unacceptable."' See recent TJN blogs here and here and here.

UK: A three-step programme to re-civilise capitalism Guardian
Dec - "Restrict tax loopholes for the rich and the financial sector, including via tax havens. Tax evasion and insufficient tax on the rich, as well as on large corporations, prevent equalisation, impoverish welfare states, and contribute to unsustainable debt. Tax havens not only facilitate tax evasion but, more important, regulatory avoidance. Britain controls havens with over half this money and can lead on this.

Alex Telegraph
Dec 5 - In its witty and wise style, the Alex cartoon comments on City of London culture and tax dodging.


Africa Tax Spotlight - Taxation and Human Rights

The latest edition of Africa Tax Spotlight explores tax and human rights issues, and explains that inappropriate taxation of poor people in a context of economic cronyism and widespread human rights violations is a causal factor of growing dissent.

You can download the edition here, and we list the contents below:
  1. Editorial - "The message is clear: connecting the dots between development and human rights is fundamentally rooted in tax (as the main source of non-aid development revenue) ... Major lessons to learn? Africa – comprised of countries large and small, free, un-free and somewhere in between – has the foundation of justice embedded in the characters of our peoples, our histories, and our various instruments of representation. Without bridging the gap between democracy, human rights, development and tax – the latter, limited not simply to just legislation, but also the political will required to enforce the law, we will already have lost."
  2. A human rights approach to taxation: some brief comments - "Articulates the procedural, substantive and other shape of a rights-based approach to taxation."
  3. When ‘rights’ undermine ‘right’: Exploring the reality of South Africa’s constitutional right to water - "Unveils how the guarantee of rights does little good when resources are limited because of corporate tax exemptions and cheap state services to rich people that are all too often subsidized by the labour of the most impoverished."
  4. Transparency and rights: who benefits? - "The article on Zambia’s copper industry describes how the neoliberal understanding of ‘development’ – and the ‘accountability’ industry, such as the Extractive Industries Transparency Initiative (EITI), deployed to monitor revenue flows - enables the use of national resources for private, corrupt gain, rather than equitable national development."
  5. Human Rights and tax justice - "Explains the quality of citizenship as the means of assessing the realization of economic and social rights."
  6. News and events - Includes Civil Society Organisation (CSO) Tax Justice Training Workshop, in Zambia May 2011, and the 13th Annual Strategy Meeting of the African Initiative on Mining, Environment and Society (AIMES), in Zimbabwe June 2011
  7. Profile: The centre for research and development – Zimbabwe - "As exemplified by the Zimbabwe-based Center for Research and Development (CRD),arguably billions of dollars’ worth of diamond wealth has been misappropriated, under the guise of development via the vehicle of the ‘resource curse’ (i.e. opaque exploitation of resources).
The report is published by the Tax Justice Network-Africa, with Guest Editor Khadija Sharife and Contributing Editors TJN-A's Sandra Kidwingira and Vera Mshana.


Russia's Illicit Financial Outflows - GFI Reports

Press Release from Global Financial Integrity
December 8, 2011

Amid Unrest in Moscow, New Research Finds Russia Lost US$501.3 Billion in Illicit Financial Outflows from 2000-2009

Nation Was Third Largest Hemorrhager of Illicit Flows Worldwide According to Forthcoming Global Financial Integrity Report

WASHINGTON, DC – Russia hemorrhaged over US$501 billion in illicit financial outflows in the ten years following Vladimir Putin’s rise to power according to a forthcoming report from Global Financial Integrity (GFI), a Washington-based research and advocacy organization. The study, Illicit Financial Flows from Developing Countries over the Decade Ending 2009, finds the nation lost more than US$50 billion per year from 2000 through 2009—making it the third largest victim of illegal capital flight.

The data, revealed in a blog post today by GFI Economist Sarah Freitas on the website of the Task Force on Financial Integrity & Economic Development (, is even more damning, writes Ms. Freitas, in the wake of Sunday’s Parliamentary elections, which have been met with wide-spread allegations of fraud.

Elaborating on her findings, Ms. Freitas, who co-authored the upcoming GFI report with GFI Lead Economist Dev Kar, writes:

There are several reasons as to why capital flight could increase this year. First, Putin’s promise to restructure his cabinet post-presidential elections in March worries companies that have shady dealings with bureaucrats. Second, in a country where tax evasion and transfer pricing are commonplace pastimes, Russia is finding that its revenues are not quite up to par for debt repayment—especially when one considers the projected drop in oil prices. A global recession has caused investors to look to the dollar as a safe haven, implying a fall for weaker currencies like the ruble. In an attempt to avert a depletion of reserves, Russia has capped purchases of foreign currency. In a lucky twist, food and commodity prices have moderated, leading to a decline in consumer inflation deceleration. Despite this, we see two unsustainable outcomes from illicit money transactions: step-wise devaluations in the Russian currency and increases in rates of core inflation (which abstract from food prices).

It is clear that Russia, a country with growing income inequality, cannot continue to hemorrhage scarce capital without serious consequences. Russians should demand that their government fight tax avoidance through automatic tax information exchange and strengthening anti-money laundering laws. With efforts to strengthen regulation and oversight in these two areas, Russia can better monitor corrupt practices, improve corporate governance and responsibility, and increase tax collections.

The full blog post can be read here.

Russia will not be the only nation featured in the organization’s upcoming report. Indeed, in similar blog posts published within the past week, Ms. Freitas reveled illicit outflow data on Syria and Ethiopia—two more of the 160 different developing nations included in the study. The report, which is scheduled to be published Thursday, December 15, 2011, is the annual update to GFI’s previous studies measuring the illicit financial flows from the developing world. This will be the first of GFI’s studies to include data for the year 2009.


Journalist Contact:

Clark Gascoigne
+1 202 293 0740 ext.222