This is well worth watching: journalist and author of Author of ‘Fragile Empire‘ and ‘This Is London‘ and Ben Judah presents his report at the Hudson Institute on how kleptocrats and what he calls the ‘global wealth defence industry’ (or the secrecy and tax avoidance/evasion industry) is wreaking havoc on the global economy and represents a serious threat to international peace and security. He draws on our research on quantifying offshore funds and our Financial Secrecy Index.
Update: now on Naked Capitalism (and note the comments underneath.)
Update 2, March 1: now with added video at the end: a Live Register report on the IFSC, from 2012.
We have written a great deal about the role of Ireland and the Irish Financial Services Centre (IFSC) and its role as an offshore haven, posing risks not just for tax but for global financial stability too. As Prof. Jim Stewart and others have pointed out: Ireland played an important role in the global financial crisis that emerged in 2007, and in the aftershocks, under a spectacularly tax haven mentality.
Now an excellent piece of digging by two Bloomberg reporters, Donal Griffin and Joe Brennan, takes the story forwards with a tale about Vneshprombank Ltd., a Moscow financial institution that has just had its banking licence revoked after Russian regulators found a $2.5 billion hole in its balance sheet, and a related Irish special purpose vehicle called VPB Funding Ltd.
In March we wrote a short article (also discussed in our Taxcast) about the U.S.’ ire about what US officials said was Britain’s ‘constant accommodation’ with China.” That followed an earlier article a TJN blogger wrote in The American Interest about Russia and the City of London. In both cases we pointed squarely to the ‘offshore’-focused City of London as the source of the trouble:
“The City of London has been licking its lips at the prospect of a lot of money from the ‘offshore Renminbi’ market, and Chinese leaders know very well how powerful a tool the City can be in getting British leaders to do what they want.
Tax avoidance by corporations is out of control. The United Nations must step in The Guardian
Comment by José Antonio Ocampo and Magdalena Sepúlveda Carmona
The Bitter Taste of Tax Avoidance Huffington Post
Finance Minister Minister announces tax amnesty for Luxembourg Luxembuger Wort
“The budget bill reserves the scheme for Luxembourg tax residents and also allows for people to make spontaneous declarations if a person is suspected of money laundering.”
Swiss banks: Secret codes used for account details, communications Business Standard
Spillover analysis of Irish tax policy Francis Weyzig’s Blog
We have for years remarked on the role of the offshore system in promoting financial instability, not least for its propensity to enable financial players to get out from under financial regulations they don’t like, then taking the cream from risky activities and shifting the risks onto others. Now, from Izabella Kaminska at FT Alphaville:
“Where did Russia’s 2014 crisis really come from? City University’s Anastasia Nesvetailova has penned a fascinating paper looking at the question.”
Well, she’s right: this really is a fascinating paper. (She spoke about this at our City University London event in June.)
A fall in oil prices is clearly one reason for Russia’s economic crisis, as this graph from Nesvetailova’s paper suggests. Kaminska again, summarising:
“It may be Russia’s complex and increasingly financialised economy — including its connections to an offshore nexus — which may prove a greater threat … financial channels which once underpinned the success of Putin’s Russia now work as crisis transmission mechanisms instead.”