Nick Shaxson ■ HSBC, tax evasion and the link to lax financial regulation
Two quotes of the day, both from an article by Prof. Bill Black, a former U.S. bank regulator:
“Taxes were once termed the price we paid for civilization, but they now represent the price the wealthy brag to each other about refusing to pay as they pillage civilization.”
And then, in the following sentence:
“Because the City of London “won” the “regulatory race to the bottom” it is the worst “vector” for the epidemic of sleaze led by our most elite bankers.”
The first quote is, as we will explain, the direct consequence of the second, with the result being what the Washington Post call places like London “Tax havens for despots, criminals and the Fortune 500.”
As the WaPo notes of the latest HSBC tax evasion scandal:
“The [HSBC] report alleges that the bank serviced a mix of tax-dodging plutocrats, dictators’ bagmen, blood-diamond dealers, cocaine traffickers, and Al Qaeda financiers.”
Bill Black calls HSBC
“the modern incarnation of BCCI (the Bank of Crooks and Criminals International)”, [registered in Cayman and Luxembourg but headquartered in London.]
BCCI is a hell of a noxious bank to be bracketed with. There are of course a number of BCCI-related things (such as being involved in trafficking nuclear materials) that we don’t suspect HSBC of being involved in, but still: goodness, that’s bad. [We should note here that the BCCI scandal was broken open partly by Tax Justice Network Senior Adviser Jack Blum]
So: how are tax evasion and lax financial regulation related?
One of the easiest ways to attract hot money and élite wealth managers and their élite clients, of course, is to assure them (discreetly, of course) that they won’t be prosecuted for misdemeanours. That has long been part of the City of London’s ‘competitive’ business model.
Another way is to ensure that they won’t be regulated effectively, allowing them to do what they want.
But these two things are all part of the very same criminalising business model: an offering to the world’s hot money that is based on an insidious version of the concept of trust, which goes like this:
“You can trust us not to steal your money – but we will deliberately turn a blind eye if you want to steal someone else’s.”
And as a result of this race to the bottom, we get statistics like this:
a) Number of prosecutions for (mostly poor) people who failed to buy a television licence: almost 200,000
b) Number of prosecutions among the 6,800 (wealthy) people on HSBC list of Swiss account holders: one.
One set of rules for the rich and powerful, another set for the rest of us.
The Finance Curse, in action.
More on the links between tax havens and the financial crisis here. And Bill Black’s short article on London is excellent: read it.
A tide-turning moment in the global struggle for tax justice
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Taxing Wall Street: the Tax Justice Network December 2020 podcast
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20 November 2020