Where They Hide the Cash

Where they hide the cash

We help rich individuals and companies to spirit away vast sums from the developing world

By Duncan Campbell

12/05/05 "The Guardian" -- -- Five trillion dollars has been corruptly removed from the world's poorest countries and lodged permanently in the world's richest countries. That is the "conservative estimate" not of a leftwing anti-globalisation activist but of a leading American businessman and enthusiast for capitalism who has just completed a major study of how multinational corporations, wealthy individuals and unscrupulous governments are using the world's banking systems in ways that spread poverty.

<snip>

Six out of 10 US corporations pay no tax, and the recent Enron scandal demonstrated how cynically major household names in the US exploit the system. Enron used around 800 different "Caribbean financial dumps" to hide its debts. Baker argues that the west could break the back of poverty worldwide if there was political will to tackle the abuse of the tax and banking systems. Instead, western countries have been all too willing to turn a blind eye to the original sources of money.

"Laundered proceeds of drug trafficking, racketeering, corruption and terrorism tag along with other forms of dirty money to which the US and Europe extend a welcoming hand," concludes Baker, a businessman who operated in Nigeria for 35 years and is now attached to the Brookings Institution. Even since September 11, he says, the US has shown little inclination to clamp down on the illicit use of banking systems.

John Christensen of the Tax Justice Network, a former adviser to the Jersey government, says that more than 50% of the cash holdings of rich individuals in Latin America is now held offshore and that some 30% of the GDP of sub- Saharan African nations disappeared offshore in the second half of the 1990s. The situation in the Middle East and north Africa is even worse. Since the 1980s, banks have targeted the world's roughly 8 million "high net-worth individuals" and encouraged them to hide their funds offshore. As a result, around $11.5 trillion of their assets are now in tax-free or protected havens.

http://www.informationclearinghouse.info/article11217.htm