Counterparties — Richie Havens: Here Comes the Sunlight
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The International Consortium of Investigative Journalists has quantified the size of the offshore tax haven bubble, and is doing its darndest to burst it.
The group, led by Gerard Ryle, and working with 38 media outlets, has amassed 2.5 million documents containing details of more than 120,000 offshore companies and trusts, as well as the identities of almost 130,000 individuals.
The documents implicate a wide-ranging and sleazy set of the global elite: politicians, despots, and their aides and associates; the oldest daughter of former Philippine dictator Ferdinand Marcos; a wealthy Spanish art collector; arms dealers. Also mentioned is Denise Rich, the wife of the controversially pardoned oil-trader Marc Rich.
Der Speigel writes that the details in the documents go back nearly 30 years. The 200 gigabyte leak, the German paper writes, is 160 times larger than the cables released by Wikileaks in 2010. Gawker has a good run-down of the important details that have been released so far.
A former chief economist for McKinsey estimates there could be as much as $32 trillion in offshore taxhavens. Creating sham corporations in offshore locations, and stocking their boards with phony directors, is a lucrative cottage industry. One British couple on the the island of Nevis served as directors for 2,000 companies.
Individuals aren’t alone in seeking fairer climates for their assets to winter in. The biggest US companies increased their untaxed offshore cash piles by $183 billion, or 14.4%, in 2012. Victor Fleischer, a tax law professor, details the arcane mechanisms companies use to get and keep that money in low-tax jurisdictions. Some of the more common strategies include alternating short-term loans between foreign and domestic subsidiaries, and transferring intellectual property abroad. Starbucks, like Google and Microsoft, is among the companies that use these techniques.
Ending these practices may involve more data dumps like today’s. Last year, both the European Union and the UK announced their intention to crack down on tax havens. A key tactic? Naming and shaming companies and individuals that use legal tax-avoidance schemes. — Ben Walsh
On to today’s links:
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