The Offshore Wrapper: A week in tax justice

   0   0 AllAfrica, AllNorthAmerica, Blog, Regular Features
The Offshore Wrapper is written by George Turner

Elephant in the roomThe Elephant in the sitting room v2

 The Africa-EU Summit took place this weekend. The high-level event saw the heads of state and government from Africa and the EU discussing “investing in people, prosperity and peace”.

 One would have thought that tax justice, offshore finance and illicit financial flows would have been top of the agenda. As reported in last week’s Wrapper The High Level Panel on Illicit Financial flows had just released a report to show that Africa is losing between $50-60bn a year in illicit financial flows. More than received by the continent in Foreign Direct Investment. And the assumed FDI amount is probably an over-estimate if we factor in round tripping.

 This could have been a really important opportunity to address one of the most pernicious systemic issues of our time, especially as the EU is a major Foreign Aid donor, a major investor and has significant influence over the international tax system.

 Well folks it seems that the joint efforts of the 60 representatives present at the summit fell asleep at the wheel. There was just one mention of tax systems in paragraph 35 of the final communiqué. There was no mention of offshore finance. Sigh.


Hear no evil…

 Some of the representatives at the summit would have had personal reasons for not wanting to discuss the issues of illicit financial flows. But European institutions do not have a glowing record either.

 In 2011 the European Investment Bank was found to be lending money to a company in Zambia which was avoiding tens of millions of dollars in local taxes.

 NGOs have been seeking to follow up with the bank, asking the EIB to publish a report into the affair. The EIB hasn’t even bothered to reply. Poor.


French bank accused over Libyan bribes??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

 It doesn’t stop there either. France’s Societe General has been accused of stuffing the pockets of the Gadhafi regime with bribes. In a court case currently pursued by the Libyan Investment Authority, the bank is said to have given $58m to a friend of Gadhafi in order to secure investments. The funds were transferred via a Panama based company.

 Still despite all this, no mention of offshore finance at the summit. Hmmm.


Maine event

 The small US state of Maine may be about to take a brave stand against global tax avoidance. The state’s legislature has approved a bill attempting to claw back some of the profits made in the state and moved offshore.

 The law will require corporations operating in the state to report income from a list of 38 tax havens. A proportion of this is then taxed. Similar laws have been passed in Montana and Orgeon which seem to be working. Oregon is expected to recover $18m this year. Whatever next?


Swiss neutrality – good news for Russian oligarchsFSI

 Switzerland has dealt a blow to attempts to sanction allies of Russian President Vladimir Putin over the crisis in Ukraine.

 The country has said that those on the European Union sanctions list will be barred from “new business”.

 This presumably allows them to keep any ill gotten gains until the crisis has all blown over. But those on the US sanctions list will face no restrictions at all.

 According to Swissinfo there are over $15bn in Russian assets in Swiss banks, not including, private banking funds, real estate and gold.


Deficit? What deficit?

 Finally, readers of the Wrapper who are interested in the distributional impacts of changes in tax policy may want to read this article from our friends at Citizens for Tax Justice.

 For the last few years Congress has been trying to rein in public spending, often threatening to shut down the government if the President does not meet their demands.

 The usual argument is that the government cannot afford to keep spending at the current rate.

 However, it seems that a host of ‘temporary’ tax breaks for corporations, which have been rolled over more times than a loan from a pay-day lender, give away half the money saved through cuts in government spending. 

 It seems that Congress is keener on giveaways than it would like you to think.


Related Posts

New estimates reveal the extent of tax avoidance by multinationals

Price Waterhouse CoopersNew figures published today by the Tax Justice Network provide a country-level breakdown of the estimated tax losses to profit shifting by multinational companies. Applying a methodology developed by researchers at the International Monetary Fund to an improved dataset, the results indicate global losses of around $500 billion a year. The figures appear in a […]


Banking Secrecy in China, its related territories and Taiwan

Hong Kong from Sky 100Foreword. The Tax Justice Network is a non partisan network of experts working towards transparency, so we do not take any position about countries’ territorial and political claims. However, we do expect countries with a de jure (legal) or de facto (in practice) influence over other territories, to take responsibility for their power. We point […]


Is tax avoidance at the heart of Ireland’s economic miracle?

AIB International Finance Centre Dublin - By Estoy Aquí (Own work) [GFDL ( or CC BY 3.0 (], via Wikimedia CommonsComing out of the economic crisis Ireland was one of the best performing economies, with GDP growth rates of 8.5% in 2014 and an extraordinary 26.3% in 2015. But how much of this economic activity was real, and how much a fiction created by Ireland’s tax haven status? A new paper by Heike Joebges of the University […]


New Report: HMRC’s “Building our Future” programme

bigben-mcbigbenfaceYesterday the Tax Justice Network was in the UK Parliament to launch a report it co-produced with the Public and Commercial Services Union. The report, entitled “HMRC, Building an Uncertain Future” is a study of HMRC’s (the UK tax authority) reform plans which it is calling “Building our Future”. The report published yesterday analysed the […]


Financial secrecy in football: time for action

bigben-mcbigbenfaceEveryone has known for years that football is rotten to the core and financial secrecy is at the heart of the problem. Why then is no one doing anything about it? This post from the Offshore Game project originally features in the Independent. 


Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top