Treasure Islands - Nicholas Shaxson [112]
This groupthink does not originate with the island havens, which are just fortified nodes in bigger global power networks led by Britain and other large powers. But they have, with their intolerant environments, come to host and protect cultural concentrations of antigovernment, kick-the-poor attitudes that originate elsewhere. In the absence of reliable dissent, these attitudes have flourished, unchecked.
John Christensen, Jersey’s former economic adviser who turned dissident, describes encountering extremist right-wing offshore attitudes when he returned to his native island in 1986 after working overseas as a development economist.
In this year of the City of London’s “Big Bang” of financial deregulation, he found a tax haven amid a spectacular boom. Old town houses, tourist gift shops, and merchant stores in Jersey’s beautiful capital St. Helier were being knocked down and replaced by banks, office blocks, car parks, and wine bars. An employment agency told him he could have any job he wanted; he had three offers the next day. He began employment with an accounting company, working with over 150 private clients.
The firm practiced reinvoicing: the practice I described earlier, where trading partners agree on a price for a trade but record it officially at a different price to shift money secretly across borders. Global Financial Integrity, in Washington, D.C., estimates that about $100 billion is drained from developing countries each year just from reinvoicing—about as much as all foreign aid from the rich world to the poor. It is just one part of a much larger picture of outflows of capital. “This was about capital flight . . . shifting capital out, and evading tax: the really nasty stuff,” Christensen said. “I saw this stuff coming in daily.” The accountancy firm provided a fax number, headed notepaper, a bank account, and a veneer of exceedingly British solidity and respectability.
Christensen worked there for 20 months, mostly handling clients based in South Africa (where much of the work involved evading antiapartheid sanctions), Nigeria, Kenya, Uganda, and Iran. Working undercover, he systematically combed through hundreds of client files and gradually put pieces together. He learned that a very senior right-wing French politician was using his political influence to secure planning permission on behalf of developers with whom he was involved, in a series of property deals. The Jersey link meant nobody in France could find out what he was up to. “You don’t get that information from a cursory look at the file,” he said. “I got hold of this guy’s name by talking to an office in France: they told me ‘I’ll have to speak to the Senator about that.’ If you work there long enough, they get to know you, and get comfortable telling you things. The market rigging, the insider trading: I was sitting there thinking, ‘Holy shit—this is dynamite.’ These were very prominent families; this would be on the front pages if it got out.”
But even today Christensen, like Krall, won’t tell tales about the particular secrets he encountered, having signed oaths and contracts for life. “If I transgressed those I could be thrown into a pit forever.”
Reinvoicing is just one more workaday business sector in the world of offshore finance, and his firm and colleagues saw it as good business practice. “They rationalized it in all sorts of ways: foreigners were protecting their money from political risk or unstable currencies. People in Africa are poor because they don’t work hard enough or they are corrupt; countries are poor so we send them aid money. That kind of thing. They didn’t want to think about economic systems.”
He moved through various jobs, and each time he expressed unease about the origins of some of the money, much of it from Africa, he was brushed aside. One Friday, ahead of the habitual office binge-drinking