SocialismToday           Socialist Party magazine
 

Issue 167 April 2013

Offshore banking business

Treasure Islands: tax havens and the men who stole the world

By Nicholas Shaxson

Published by Vintage books, 2012, £9.99

Reviewed by Jo Murphy

The premise of Treasure Islands is that to understand how there has been a significant transfer of wealth from the 99% to the 1% we need to study the central role played by tax havens. Nicholas Shaxson defines a tax haven as a "place that seeks to attract business by offering politically stable facilities to help people or entities get around the rules, laws and regulations of jurisdictions elsewhere".

Through the avoidance of tax, wealthy individuals and multinationals have abrogated their responsibilities to society. They do not use tax havens just to avoid paying taxes but to escape the rule of law. They are havens for corruption and fraud, used by drug barons, sex traffickers, gun smugglers, dictators, royalty and wealthy politicians alike. The book details how money has been stolen from the world's poorest countries to fill the coffers of the 1% who treat the world and its resources as one giant slush fund.

An enormous industry has grown to service these super-wealthy – not just the large banks, but the big accountancy firms, tax advisers, and the so-called regulators – all working to hide their assets away. It is estimated that half of all banking assets are routed offshore. The International Monetary Fund estimated that, in 2010, the balance sheets of small island financial centres alone added up to $18 trillion.

Small islands, though, are just the tip of the iceberg. Shaxson examines the development and spread of tax havens in Switzerland, Luxembourg, and the US (especially Delaware). However, the world centre for this trade is none other than the City of London.

British capitalism and the Bank of England sit at the heart of a massive web of corruption and fraud – spinning out to Jersey, Guernsey, the Isle of Mann, Caribbean islands and Hong Kong. These capture foreign trade and channel it to London. They act as a money-laundering filter allowing the City to be involved in the dirty business while providing enough distance to maintain plausible deniability. Shaxson’s focus on Jersey reveals the terrible corrupting influence on the island at every level.

Offshore tax havens are all about placing your money 'elsewhere', where no questions are asked, where you will be guaranteed secrecy, where ‘democracy’ is not going to get in your way. The book is informed by a number of whistle-blowers who eventually felt sickened by the corruption and fraud perpetrated, and who now live in fear of reprisals for speaking out.

Nicholas Shaxson describes ‘offshore’ as not just a place but a process – a race to the bottom where regulations, laws and the trappings of democracy are steadily degraded – the battering ram of deregulation. He shows the part that offshore tax havens have played in poverty in Africa, deregulation, globalisation, the rise of debt and towering inequalities, the drugs industry, gun smuggling to terrorists, and financial fraud. Treasure Islands shines a torch into the shadowy world of offshore banking, revealing a world that the super-wealthy would rather we were not aware of.


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