Super rich stash 21 trillion in offshore havens

Alex Wong / Getty Images / AFP

Source: Russia Today

http://www.rt.com/news/overshore-economy-trillions-report-789/

Wealthy tax evaders, aided by private banks have exploited loopholes in tax legislation and stashed over $21 tn in offshore funds, says a report. The capital drained from some developing countries since 1970 would be enough to pay off national debts.

­The findings show the gap between the haves and the have-nots is much larger than previously thought.

The document, entitled The Price of Offshore Revisited, was commissioned by The Tax Justice Network campaign group and leaked to the Guardian. The report provides the most detailed valuation of the offshore economy to date.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," wrote James Henry, expert on tax havens and former chief economist at consultancy McKinsey in his report.

The document cites the world’s leading private banks as cherry-picking from the ranks of the uber-rich and siphoning their fortunes into tax-free havens such as Switzerland and the Cayman Islands.

The wealth of the super-rich is "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy."

Henry writes that a large part of the trillion dollar hoard belongs to around 92,000 individuals, an elite class of super-rich who make up 0.001 percent of the global population.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network.

The report records the flow of capital from countries into offshores over the past few decades. Saudi Arabia saw almost $300 billion drained from their economy since the 1970s, while Russia saw almost $800 billion leave its economy in hidden assets since the fall of the Soviet Union. Nigeria issued a loss of $300 billion since the mid-1970s.


Henry points the finger at the world’s top ten private banks, among them UBS and Credit Suisse, for aiding wealthy clients to dodge taxes.

According to Henry’s figures, the top financial leaders processed more than $6 trillion in funds in 2010, more than double the previous year.

Banking system – rotten to the core

Last week the US Senate released a report damning the actions of the UK bank HSBC. The report highlighted evidence of the bank’s laх security policies leading to money laundering cases.

It referenced $7 billion in cash that had crossed the Mexican border into the US and been deposited in HSBC from 2007 to 2008. The report suggests that the billions of dollars could have come from drug sales in Mexico.

The probe also shed light on a number of other instances when the bank bypassed US safeguards, potentially bankrolling terrorists and drug lords in the process.

The bank had previously had to pay out $1bn to US authorities for money laundering offenses committed between 2004 and 2010.

The G20 has repeatedly made calls to end tax-free havens since the beginning of the financial crisis in 2008, but these plans have not yet come to fruition.

Obama permits offshore oil drilling

Source: Al Jazeera
http://english.aljazeera.net/business/2010/03/201033118235692566.html

Barack Obama, the US president, has unveiled a controversial new plan to extend drilling for oil and gas off America's coasts.

Obama said on Wednesday that his administration would consider new areas for drilling along the southern Atlantic coastline and the Gulf of Mexico, in a reversal of a long-standing ban on offshore drilling.

But he rejected some new drilling sites that had been planned for parts of Alaska.

"This is not a decision that I've made lightly," he said, during a speech at a military base outside Washington, DC.

"We're announcing the expansion of offshore oil and gas exploration but in ways that balance the need to harness domestic energy resources and the need to protect America's natural resources."

Obama said his decision is part of a broader strategy that also includes expanding the production of nuclear power and other clean energy sources.

But he warned that expanding drilling is not the solution to the country's energy challenges.

"Drilling alone can't come close to meeting our long-term energy needs, and for the sake of our planet and our energy independence, we need to begin the transition to cleaner fuels now."

Seeking bipartisan support

White House officials have pitched the changes as ways to reduce US reliance on foreign oil and create jobs.

Obama also indicated that his decision was based in part on winning Republican approval for a climate change bill that has stalled in congress.

Obama, a Democrat, needs bipartisan support to pass the bill that would set limits on US greenhouse gas emissions.

"I know that we can come together to pass comprehensive energy and climate legislation that's going to foster new energy -- new industries, create millions of new jobs, protect our planet, and help us become more energy independent," he said.

Some senior congressional Republicans called the announcement a step forward, but said Obama did not go far enough.

"Today's announcement is a step in the right direction, but a small one that leaves enormous amounts of American energy off limits," Mitch McConnell, the Senate Republican leader, said.

Environmental opposition


For more than 20 years, drilling was banned in most offshore areas of the US outside the Gulf of Mexico because of concerns that spills could harm the environment.

Obama's plan offers few concessions to environmentalists, who have been strident in their opposition to more oil platforms off the nation's shores.

Environmental groups and some legislators continue to raise concerns about the impact increased drilling would have on coastal areas.

Tyson Slocum, the director of the Public Citizen's Energy Programme, which advocates for affordable, clean and sustainable energy, said the plan will not contribute to a climate change deal.

"It's bad strategy from Obama's strand point to give such a significant environmental concession, without knowing exactly what he's getting in return," he told Al Jazeera.

"In terms of addressing national energy security or lowering gasoline prices, the department of energy ... found that opening these areas to expanded off-shore drilling would only reduce gasoline prices in the US by an average of three cents a gallon.

"The United States is not Saudi Arabia. We do not sit on a mountain of oil reserves. This expansion is going to come at potentially great costs to sensitive ecosystems on the coasts."

Hybrid proposal

Obama announced other energy proposals on Wednesday that were more likely to find praise from environmental groups, including plans to cut his government's direct dependence on petrol-only vehicles.

"In order to save energy and taxpayer dollars, my administration is doubling the number of hybrid vehicles in the federal fleet, even as we seek to reduce the number of cars and trucks used by our government overall," he said.

"We’re going to lead by example and practice what we preach: cutting waste, saving energy, and reducing our reliance on foreign oil."


The administration has been weighing the pros and cons of offshore drilling since it took office and put a hold on a Bush-era proposal which called for drilling along the East Coast and off the coast of California.