Treasure Islands - Nicholas Shaxson [104]
“The blacklist has been a sad joke,” said Professor Michael McIntyre of Wayne State University Law School, who knows this area better than almost anyone. “The OECD program has provided a patina of respectability to countries that are actively assisting taxpayers in evading taxes in their home country.”40
The blacklist, in short, was a whitewash.
After a temporary setback during the financial crisis, the offshore system is now growing again at ferocious speed. And the OECD insists to this day that its next-to-useless “on request” form of information exchange is “the accepted international standard.”
As with tax, so it goes on regulation. International authorities have long recognized the problem that the global patchwork of fragmented financial regulation offers seamlessly integrated global banks vast opportunities to play the game of arbitrage between different jurisdictions, especially offshore. So world leaders are pretending that something is being done to constrain bankers’ impulses. The Bank for International Settlements, in Switzerland, is the biggest of these, along with the Financial Stability Forum that it hosts, set up in 1999 to deal with financial risks and crises. Between them, they have presided over the biggest global financial crisis since the Great Depression.
“Whenever the cops come calling the banks have a ready response for the particular regulator in each country,” explained Jack Blum. “No one sees the whole picture and it’s really no one’s job to even try. When the big and scary stuff happens, the bankers and their friends trot out the Bank for International Settlements and the Financial Stability Forum as proof of effective coordination and regulation. But these things are glorified fig leaves. They have produced absolutely nothing of real value beyond a few minor process quick fixes.”
Rich governments cannot be trusted to do the right thing on tax havens and transparency. Many will demand more transparency and more international cooperation, even as they work to frustrate both. They will call for reasoned debate as they engage in character assassination, secret deals, and worse. They will talk the language of democracy and freedom, the better to defend unaccountable, irresponsible power and privilege.
Civil society is, thankfully, beginning to stir. The current thought leaders are Global Financial Integrity in the United States and the Tax Justice Network (TJN) in Europe, whose expertise has been invaluable for this book. John Christensen, TJN’s director, remembers holding an expert briefing on offshore for staff in the Senate buildings, in Washington D.C., and seeing a senior congressional staffer with tears in her eyes as she described her happiness at seeing civil society at last begin to engage, after spending so long battling to get any traction on offshore issues, in the face of the ferocious Washington right-wing counter-lobbies. “She said she had waited for years for civil society to take an interest in this.” A much greater mobilization is now required.
How do all these shaky doctrines—the OECD’s information exchange standards, the contradictory double act of tax-cutting increasing tax revenues, and tax-cutting acting to Starve the Beast, and Mitchell’s offshore incoherences—continue to thrive? The author Jonathan Chait provides a good answer.
“The lesson for cranks everywhere,” he wrote, “is that your theory stands a stronger chance of success if it directly benefits a rich and powerful bloc—and there’s no bloc richer and more powerful than the rich and powerful.” But the last word here goes to Bob Mcintyre of Citizens for Tax Justice, who has spent much of his life battling with the armies of lobbyists in Washington. “There are so few of us,” he sighs wearily, “and so many of them.”
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THE LIFE OFFSHORE