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UN report recommends: go after tax havens, and protect whistleblowers

From the United Nations General Assembly, the fifth report of the Independent Expert on the promotion of a democratic and equitable international order. The summary goes like this:

“The report focuses on impacts of taxation on human rights and explores the challenges posed to the international order by widespread tax avoidance, tax evasion, tax fraud and profit shifting, facilitated by bank secrecy and a web of shell companies registered in tax havens. The Independent Expert calls for resolute action by the international community, including through the creation of a United Nations tax cooperation body, the adoption of a United Nations tax convention, the phasing out of tax havens, the revision of the Guiding Principles on Business and Human Rights to include the obligation of corporations to pay their fair share of taxes and the adoption of a financial transactions tax.”

As you can imagine with an introduction like this, here’s a lot of tax justice stuff in here, and TJN gets a number of mentions. It follows our earlier blog on calls by Rafael Correa, head of the G77 group of developing countries, for an international tax body. Among other things, the UN Independent Expert on the promotion of a democratic and equitable international order discusses the definition of ‘tax havens’ and refers to TJN’s alternative term ‘secrecy jurisdiction’ while providing further details on TJN’s Financial Secrecy Index (FSI) and the top listed jurisdictions on the FSI 2015 here (p9 and in the annex).

We’ll highlight only this section below for now, which is a recommendation for the following:

Why the Swiss case against whistleblower Elmer may hurt the bankers

SonntagszeitungRudolf Elmer, the Cayman-based Swiss whistleblower who went to prison after spilling secrets relating to the Swiss bank Julius Baer, has long been victimised not only by the Swiss banking establishment, and Switzerland’s courts (which as we’ve extensively documented, seem to have played fast and loose with the law in order to nail him) – but also by much if not most of the Swiss media. In Switzerland he’s been demonised as a traitor and a criminal, and jailed too.

Such is the fate of the offshore whistleblower.

Finally, trade misinvoicing gets political

UnctadWe recently helped publicise a report by the UN Conference on Trade and Development (UNCTAD) in our blog entitled Some countries “lose” 2/3 of exports to misinvoicing. As a reminder, trade misinvoicing is a form of money laundering that involves deliberately misreporting (on an invoice to customs) the value of a commercial transaction, so as to shift money illictly across borders. The study seeks to get a handle on the scale of the problem by studying mismatches between export data from the exporting countries (Chile, Cote d’Ivoire, Nigeria, South Africa and Zambia, in this case), and values reported by the importing countries, including hubs such as Switzerland, the Netherlands, the United Kingdom and United States.

There’s been some pushback against the UNCTAD study since we wrote that, and there’s lots to welcome here. In particular, the South African component in the report has prompted both business interests and South Africa’s respected chief statistician, Dr Pali Lehohla, to criticise the assessment

Some countries “lose” 2/3 of exports to misinvoicing

UnctadFrom UNCTAD, the UN Conference on Trade and Development, via email:

“Some commodity dependent developing countries are losing as much as 67% of their exports worth billions of dollars to trade misinvoicing, according to a fresh study by UNCTAD, which for the first time analyses this issue for specific commodities and countries.
 
Trade misinvoicing is thought to be one of the largest drivers of illicit financial flows from developing countries, so that the countries lose precious foreign exchange earnings, tax, and income that might otherwise be spent on development.”

Switzerland is handing back looted money. How big a deal is this?

"Are we Swiss all criminals?" The poster asks.

“Are we Swiss all criminals?” The poster asks.

In the context of a fun Twitter fight and finger-pointing between the Swiss Bankers’ Association and the German Finance Ministry, there’s a newish story on Quartz entitled Swiss bankers swear they are trying to help Africa get its dirty money back. It begins like this:

“It irritates Valentin Zellweger that ‘no longer than six minutes into any James Bond movie, a sleazy Swiss banker still appears.’ “

This is, of course, the story that Switzerland, which is still ranked top of our last Financial Secrecy Index, has not only made *some* improvements to its egregious and globe-harming secrecy regime, but it is engaged in a furious domestic and international public-relations exercise to try and distance itself from a deeply criminal past. Nobody should ever forget Swiss bankers’ efforts to use deception, fraud and other tricks to hang onto assets belonging to the families of Jews murdered by Hitler’s regime, before being dragged into making some amends by global outrage. And as if that weren’t bad enough, there’s oceans of other murderous and criminal stuff that we shouldn’t forget either.

Well, the Quartz article continues:

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