The release of offshore banking records reveal a worldwide web of tax cheats and money launderers

Business Pirate 2

When you think of a pirate, the stereotype that comes to mind is a bearded man with a peg leg, eye patch and a parrot on his shoulder. He sails the seas looting merchant ships and buries his treasure on exotic islands where no one else will ever find it. These days that stereotype might have changed into a clean shaven man with a business suit, but he still loots and buries his gold. Of course these “financial pirates” didn’t count on anyone finding their treasure maps.

Almost a year ago, the Tax Justice Network (TJN) and the International Consortium of Investigative Journalists (ICIJ) started publishing reports about the massive amounts of money being “ off-shored” not just in the U.S., but also around the globe.

They thought these offshore accounts would come to approximately $21 trillion. What they actually found was that the number is closer to $32 trillion; roughly the same amount of the gross domestic products of the U.S. and Japan combined. All this money sits neatly tucked away in tax havens that are all too familiar with the general public: the British Virgin Islands, the Cayman Islands, the Isle of Cyprus, and the Cook Islands (in the Pacific Ocean).

The ICIJ summoned the expertise of some 86 Journalists from 46 Countries to cull through 30 years worth of ledgers, statements, and e-mails. The shear amount of information was reportedly 160 times larger than the Wikileaks outing of U.S. State Department and Defense Department documents.

image001At the end of their investigative trail, they discovered 170 Countries and Territories worldwide that offer tax havens (shelters) to bankers, con-men, drug lords, and the mega-rich. They fully expected to find this gaggle of misanthropes upon conclusion of their investigations.

What they didn’t expect to find were government officials from the United States, Canada, Russia, Pakistan, Thailand, The Philippines, Mongolia, and Azerbaijan. They also uncovered another group that you might not expect to find here: American and Canadian doctors, dentists, and lawyers; a large cadre of the Greek middle class and a front Company for Iran’s nuclear aspirations (Tamalaris Consolidated Limited).

It’s no secret that Americans like Mitt Romney have skin in this game; he’s not the only one. A few names in Canada also surfaced regarding their offshore transactions like lawyer Tony Merchant and his wife Pana, a Canadian Senator. The names matter, but they’re not as important as national governments across the globe allowing these pirates to operate in such a fashion.

It is all quite legal for these wonderful folks not only stash their cash in offshore havens, but also launder money through these channels so they can repatriate the cash without paying one red cent in taxes. Remember, none of these folks aside from the money launderers are doing anything illegal. Almost 4,000 Americans, by one count.

If you take this investigative report from the ICIJ and couple that with our Congressional hearings on the subject, it is estimated that the United States economy alone is short $1.7 trillion. That’s $1.7 trillion just sitting around basking on a warm tropical beach somewhere, doing absolutely nothing for its country of origin.

The world’s biggest banks could not resist the temptation either. It was discovered that 50 of these “too big to fail” institutions grew their offshore holdings from $5.4 trillion in 2005 to over $12 trillion in 2010. This time period loosely coincides with the housing bubble in the U.S. It was a time when even hedge funds were hedging their bets in the form of derivatives and bundled toxic mortgages.

For some unexplained reason, all efforts by the international community to break this chain, so to speak, have born little fruit in more than 20 years of investigation. The cash held offshore also translates into a huge lack of investment domestically; investments that would have a positive effect on our staggering debt, unemployment, and general financial depression.

If our brand of capitalism is to survive, corporate tax laws need to be completely overhauled. We can no longer afford this amount of money being kept out of domestic circulation. I have read about this in the past, but I had no idea the size of it all.

The justice apparatus of some western Countries is trying to deal with the problem. Their biggest hurdle seems to be the sovereign banking laws of these tiny island nations who thrive on offering complete and unobstructed anonymity to “investors”. I suppose the U.S. could initiate strict economic sanctions on them, as the U.S. is prone to doing. What a public relations coup that would be.



  1. Great Piece Hutch. I think you are good in emphasizing this particular issue in corporate politics. Too often corporations and big business want all the benefits and breaks of American tax and social law, yet when they profit from this system, they refuse to pay back into it for anyone else to profit from it. It appears like a defacto nobility in some way, they feel entitled to everything they have, and feel no sense of obligation to pay back into the system that helped them profit so much.

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