John Christensen ■ Tax Justice Focus – The Whistleblower edition
The latest edition of our newsletter Tax Justice Focus, with a special focus on whistleblowers, is now available for download here.
Guest edited by Mary Alice Young of the University of the West of England, this edition is both an exploration of the difficulties confronting people who want to blow the whistle on companies engaged in providing financial services, and an acknowledgment of their personal courage.
For decades the world of offshore finance has been shrouded in deep secrecy. Created by and on behalf of the wealthiest and most powerful people on the planet, offshore finance has been a mechanism for them to sidestep taxation, regulation, investigation and democracy. Offshore secrecy takes many forms, and has been reinforced by the strong omertá that grips the offshore finance industry. As we have witnessed in recent years, banks and accounting firms are particularly ruthless is their treatment of whistleblowers,and they are supported by the secrecy jurisdictions from which they operate, see here and here for example. As Young observes:
“Offshore jurisdictions are in the business of making life difficult for whistleblowers through formal legislation and through the informal forcement of social codes; the unwritten rules of conduct and the herd mentality that affect those who work in the financial sector. To borrow from hackers’ slang, hostility to whistleblowers is a feature, not a bug; it is an attractive part of the financial secrecy package which offshore jurisdictions peddle to clients.”
But not every banker or accountant is gripped by the herd mentality. Exceptions stand out; people who can resist the lure of high salaries and excessive lifestyles, and who have the courage to stand up for their principles, normally at great personal price. As UBS whistleblower Stéphanie Gibaud comments in the lead feature article:
” . . when one understands that there is something wrong with private banking – in effect, offshore banking, blowing the whistle internally or externally can feel like committing suicide: a quick death or a long and painful one, but the end of a certain kind of life, nonetheless.
. . . the so-called privileged elite is extremely well organized and is united when it comes to defending their own interests. Private banking is one part, an important part, of this organization in defence of privilege.
Once you have blown the whistle in the private banking sector, well-trained managers will do all they can to crush you like an insect. Their techniques will vary in intensity from demotion and social isolation all the way through to discrimination and harassment. Your reputation will suddenly be ruined throughout the financial sector. Insurance companies and business partners but also the clients of the private banks will all hear about your supposed failings.”
Whistleblowing is not for the faint-hearted; as TJN’s director, John Christensen, himself a whistleblower, dryly observes, anyone who exposes the corrupt practices of the offshore enablers can expect “Savage kickback from employers whose business models are based on secrecy; they will do whatever it takes to punish you as a deterrent to others. The rich and powerful are at their most thuggish when their backs are up against the wall.”
In this edition:
Stephanie Gibaud reflects on her experience in private banking and explores the reality of what happens once someone decides to speak out about unethical or illegal activity, and stresses the lengths to which the banking industry will go to ensure that the whistleblower is isolated, degraded and denounced. She goes on to ask a number of searching questions about the silence that surrounds elite criminality.
John Christensen reflects on his experiences when he decided to speak out about malpractice in the highly secretive jurisdiction of Jersey, and gives a sober assessment of what whistleblowers can expect from their colleagues, employers, friends, media and judiciary once they stick their heads over the parapet.
Kenneth Rijock, both a lawyer and convicted money launderer, gives wouldbe whistleblowers a brief introduction to information security – the techniques that we can use to avoid detection by crooked employers and, ultimately, jail.
William Byrnes introduces us to three of the highest profile whistleblowers from the financial sector, and explores the relationship between whistleblowing and tax compliance and highlights the much anticipated legislation of several offshore jurisdictions who are looking to introduce statutory laws to protect whistleblowers who report tax crimes.
Radio producer Naomi Fowler talks about the extraordinary difficulties journalists face when trying to persuade editors of the newsworthiness of offshore finance. In Naomi’s words:
“As a journalist and citizen I thought these issues were dynamite, something to be shouted from the rooftops, that everyone should know about. But radio stations wanted mafia stories from Sicily or bribery stories from Latin America, where I was sometimes based. To no avail I tried to explain I had much bigger corruption stories from the City of London, of staggering global significance.”
And Dan Hind reviews Richard Murphy’s new book The Joy of Tax, reflecting that “Murphy has done terrible damage to the cosy consensus that once protected the offshore sector. In The Joy of Tax he sets out to do the same to the onshore conventional wisdom. It is one hell of a fight to pick. But he’s used to apparently impossible odds.”
Download The Whistleblower’s Edition here, and feel free to circulate it to colleagues and friends.
We want your feedback on our Financial Secrecy Index
New free book: Combating Fiscal Fraud and Empowering Regulators
Buffet of tax-evading secrecy revealed by US settlement with Swiss bank Rahn+Bodmer
Chinese Engagement in Africa: Beyond the Caricature
Capital flight from Africa: Resource Plunder and the Poisoned Paradises in Tax Havens
Beneficial ownership verification: exploring Belgium’s sophisticated system
Some things never change: the use of Swiss banks by crooks
New study and tool for assessing risks of illicit financial flows in Latin America
Vulnerability and exposure to illicit financial flows risk in Latin America
28 January 2021