Janine Jackson: Establishment media cover poverty sometimes, sometimes in a compassionate and compelling way. And they cover wealth and the rich, sometimes, sometimes in a thoughtful and critical way. When the discussion called for is about the relationship between the two, the limits of media’s spotlight approach are salient. Such a case may be presented by the Paradise Papers, a trove of some 13 million documents leaked to German newspaper Süddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists, that describes various tax-hiding and avoidance schemes used by politicians and celebrities, along with corporations.
Stories like the New York Times’ “Paradise Papers Shine Light on Where the Elite Keep Their Money” make it all seem pretty dog-bites-man. We read cases like that of Twitter investor Yuri Milner, who used money from a Russian state-controlled bank, or the hedge funder who hid money somehow in Bermuda. But without serious interrogation of the impacts, it comes off a bit like profiles of people who are richer than you and also smarter, especially as so much coverage seems to pivot on the fact that these activities are not illegal.
So what’s the next step on disclosures like these? How do we move them from journalistic feat to drivers of real change, and what sorts of changes do they suggest are necessary? Joining us now to discuss the Paradise Papers is investigative economist James Henry. He’s a senior adviser at the Tax Justice Network, senior fellow at Columbia University Center for Sustainable Investment, and a contributor to the 2016 book Global Tax Fairness. Welcome back to CounterSpin, James Henry.
James Henry: Good to be with you.
JJ: We can’t cover them all, naturally, but what are some of the sorts of mechanisms or maneuvers that are revealed in these documents, that mainly come from this place Appleby, a Bermuda law firm that specializes in offshore funding?
JH: The big picture take-away from this is that we have, really, a global haven industry that consists of a whole lot of enablers, like Appleby, and other law firms mentioned in this include US law firms like Baker McKenzie, the big accounting firm KPMG…. We’ve seen this pattern over and over again. But basically one story here is that this industry has now expanded to the point where at least $30 trillion of private offshore wealth, maybe $3 trillion of corporate wealth, is offshore, beyond the reach of tax authorities. So that’s about 12 percent of total world financial wealth.
And if you went back 30 years, when I started writing about this in the ’80s, they were talking about 15 havens. Now there’s more than 90 offshore. The Paradise Papers are the latest installment. A lot of the journalists writing on this are under the age of 35, and are writing about it for the first time, but I’m just impressed with how long we’ve known about it, and how little we have done effectively to clean it up.
JJ: And when you start to talk about the amounts involved, it moves us directly onto the impact. One can imagine, of course, what could be the impact of that amount of money if it was actually taxed and actually could contribute to the public coffers in the way it was intended.
JH: We have a big problem, not so much with tax-dodging, but with kleptocracy. It’s a problem of public officials helping themselves to the public wealth and moving it offshore to these havens, financial secrecy jurisdictions, where they can hide it beyond the reach of the home country. I worked on a project involving Angola, where the son of the dictator was basically using the sovereign wealth funds as a kind of ATM, $5 billion moving offshore to havens like Mauritius, which is an African tax haven, with the help of US banks and KPMG and Swiss tax advisers.
So you have to imagine the global haven industry as not just about tax havens. There’s a kind of a Star Wars bar scene of clients here. You have the kleptocrats, you have the giant multinationals like Apple, Nike. Both of them were mentioned in the Paradise Papers as moving assets offshore, beyond the reach of tax authorities, paying themselves royalties tax-free. Then you have mobsters, and then you have the royals. We saw the Queen and Prince Charles mentioned in these papers. Bono the rock star, who likes to worry about development issues; in this case, it turns out he’s been pretty aggressive in use of tax havens to shelter his own income.