Treasure Islands - Nicholas Shaxson [78]
As late as the early 1990s, mainstream development theorists trying to work out why some states were failing, or why poverty was so widespread, all but ignored the issue of corruption. Berlin-based Transparency International (TI), founded in 1993, put corruption on the map, launching its famous Corruption Perceptions Index (CPI) two years later. The Financial Times nominated 1995 as the International Year of Corruption; and the World Bank, which had previously been so polite toward developing country elites that it all but banished the c-word from its policy documents, followed TI’s lead in 1996 when its president, James Wolfensohn, accepted in a landmark speech that the bank needed to deal with “the cancer of corruption.” The OECD’s Anti-Bribery Convention came into force only in 1999, and the UN’s Convention Against Corruption was only solidified in 2003. In many OECD countries, bribery was even tax-deductible until just a few years ago.
Even so late, the shift was very good news. But now consider this.
TI’s corruption ranking is invaluable to investors trying to assess “country risk.” But Nigerians already know that their country is among the world’s most corrupt. They want to know where almost $500 billion worth of their oil money has gone. The corruption index gives no clues. After the brutal Nigerian president Sani Abacha died in 1998, poisoned while in the company of Indian prostitutes, it was revealed that he had raked off billions of dollars of oil money from state coffers. Two countries in particular had soaked up his embezzled wealth: Britain and Switzerland. The Nigerian finance minister Ngozi Okonjo-Iweala revealed the problems in an interview with journalist Paul Vallely of The Independent in May 2006.43
NGOZI: The Swiss have now returned $500 million of stolen resources. Switzerland has set the example.
VALLELY: What about the British?
She gives a long throaty chuckle.
NGOZI: Now heaven help me. It’s very hard to condemn the British. On debt relief the UK has set the example.
VALLELY: So why are the British dragging their feet on the repatriation of stolen resources?
NGOZI: It’s been more difficult with the British. Our president has raised it many times with Prime Minister Blair. Eventually he returned $3m. We understand there are other monies but while all the discussion was going on those monies left the country and went somewhere else.
TI’s rankings suggest that Britain and Switzerland, not to mention the United States, are among the world’s “cleanest” jurisdictions. In fact, about half the top 20 in the index are major secrecy jurisdictions, while the nations of Africa—the victims of the gargantuan illicit flows—are ranked the “dirtiest.”44
Clearly, something is wrong here.
In November 2009 the Tax Justice Network published a new index based on two years of work by a dedicated team. Named the Financial Secrecy Index, it ranked countries according to how important they are in providing financial secrecy in global finance. It did this by looking at a range of key secrecy indicators and structures to see how secretive a jurisdiction was, then weighting each according to the scale of cross-border financial services activity that it hosts.
Nothing like this had ever been done before, and newspapers and television stations around the globe published the results, with some of the countries traditionally seen as the “cleanest” being ranked as among the world’s least transparent.
In fifth place in the Financial Secrecy Index was the United Kingdom. Although it has by far the most important historical role in the emergence of offshore, and it is the center of the British