Thursday, April 4, 2013

Investigative Journalists Report on the Maze of Offshore Accounts as Global Problem (4/4/13)

Earlier today, a reader pointed me to a report that had gained currently overseas but apparently not in the U.S.  The link is an investigative journalism report by the International Consortium of Investigative Journalists titled Secrecy for Sale: Inside the Global Offshore Money Maze, here.  I just noticed that the New York Times and, presumably, other news organizations will pick up the story.  The New York Times story is Rick Gladstone, Vast Hidden Wealth Revealed in Leaked Records (NYT 4/4/13), here.

Excerpts from the NYT Article :
An enormous leak of confidential financial records has revealed the identities of thousands of wealthy depositors — including European officials and corporate executives, Asian dictators and their children, and even American doctors and dentists — who have stashed immense amounts of money in offshore tax havens. 
The leak of records, mainly from the British Virgin Islands, the Cook Islands and Singapore, covers 2.5 million files that disclose proprietary information about more than 120,000 offshore companies and trusts and nearly 130,000 individuals and agents, including the wealthiest people in more than 170 countries. 
* * * * 
The International Consortium of Investigative Journalists, a network of reporters that obtained the secret records, collaborated with The Guardian, Asahi Shimbun, Le Monde, The Washington Post and more than 40 other news organizations to untangle and report their contents. 
The project, titled “Secrecy for Sale,” appeared to have the potential to create political shock waves, particularly in Europe, where an economic malaise caused by the euro zone debt crisis has created enormous popular resentment toward austerity policies and widened the gap between rich and poor. The project said some of the world’s top banks in Europe, including UBS and Deutsche Bank, had “aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.”
It said the files “illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy to avoid taxes, fueling corruption and economic woes in rich and poor nations.” The current banking crisis threatening Cyprus, it said, “is one example of how the offshore system can impact an entire country’s financial stability."
While confidential bank accounts and tax havens are not illegal, the collaboration’s pullback of a curtain on the vast amounts of wealth involved had the potential to create acute embarrassments and political reverberations in many countries, if for no other reason than for revealing in detail the sums of money. The Guardian’s report on the collaboration quoted a former chief economist for the McKinsey consulting group as saying wealthy individuals may have as much as $32 trillion in undisclosed wealth stashed in overseas havens.
Addendum 4/4/13 4:45pm:

A reader just advised as follows:
An article in the Swiss paper SonntagsZeitung that was released earlier today on its web site (in German only, I am afraid) claims that the data came from two offshore trust companies: Commonwealth Trust Limited in the BVI and Portcullis Trustnet out of Singapore. The latter was (again according to the article) used a lot by UBS and Credit Suisse (through its subsidiary Clariden Leu). 

Addendum 4/6/13 8:42 am:
  1. Center for Public Integrity Press Release, here.
  2. Secret Files Expose Offshore's Global Impact (Huffington Post 4/4/13), here.
Addendum 4/7/13 8:45 am:

Scott Higham, Michael Hudson and Marina Walker Guevara, Piercing the Secrecy of Offshore Tax Havens (Washington Post 4/6/13), here.  This is a much longer article focusing on hiding criminally derived money, but talking about the tax angle as well.

Addendum on 4/10/13 4:15 pm:  The ICVJ says that it is not turning over its data to Government agencies.  See here.  Why? And, as importantly, will it really have a choice?  And, more importantly, will some of the persons (journalists, etc,) be tempted to turn over selected data to get some whistleblower award offered by the Governments involved?


  1. While we all like to beat up on Rich People who hide money in so called "Offshore Tax Havens", this is a sobering lesson about the transparency that our ideologues, the FATCAnatics, want with FATCA automatic data sharing and the global system, GATCA they are trying to create in cooperation with the OECD.

    You are seeing the future now, where all U.S. Person data and ITNs is put into more and more 3rd party hands around the globe, and then available for theft and disclosure.

    Welcome to FACEBOOK banking. I will tweet my ITN and bank account balances if you will tweet yours! Transparency, that is what we want, right? Transparent to who is the question. ICIJ members? Tell me again, how I should be celebrating this.

  2. SonntagsZeitung's dossier is here, in German:
    Their partner newspaper, Le Matin Dimanche, has published the material here in French:

  3. One would assume that these files have or will make their way into the hands of various international tax enforcement agencies. I think the article said there were some 4000 American records. Maybe some of these are declared and maybe some more have joined one of the previous disclosure programs. On the other hand, maybe the number of 2012 OVDI applicants will suddenly spike. If detailed information has already made it to the IRS, then even 2012 OVDI could be a very scary course of action. If IRS has the details, they can reject disclosures as untimely. This is bad news for anyone out there that is still noncompliant. Whats even more worrying is the recent report of applicants who got clearance to disclose then later had the clearance revoked and likely will lose some of the benefits of the programs. Is there any clear word on what this organization plans to do with all these records? Looks like there could be some interesting times ahead.

  4. Thanks for the links but I haven't found any "dossiers" on these sites. A couple dozen newspapers seem to have been given the info but except for the names of a couple of politicians not much seems to have been published naming names.


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