Counterparties — Richie Havens: Here Comes the Sunlight

April 4, 2013

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to

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:

Long Reads
The cost of building Apple’s new headquarters has ballooned to $5 billion – Businessweek

Bold Moves
Japan embarks on “monetary easing in an entirely new dimension” – NYT

Can a judge really block the SEC’s $600 million settlement with Steven Cohen? – Theodoric Meyer
A “quintessential captured regulator” is leaving the SEC – Gary Weiss

Foreclosure reviews created a “bureaucratic maze that delayed relief” and enriched consultants – DealBook
What the GAO found: “complexity… overly broad guidance, and limited monitoring” – GAO

EU Mess
“The ECB’s main preoccupation has become the playing of chicken with governments” – Economist

Roger Ebert is dead at 70 – Chicago Sun-Times

What happened to the Internet productivity miracle? – John Cassidy
Central banks have “virtually no influence over long-term real (inflation-adjusted) rates” – Ken Rogoff

Carlyle, KKR, and Blackstone want a piece of your 401(k) – Bloomberg
Workers are getting misleading information about their 401(k) options when they switch jobs – WaPo

“Can I make the semicolon interesting to people who used to be into the kind of stuff I did at Vice?” – NYT

Best Practices
The top risk managers run spy networks that rely on human intel, not models – Jesse Eisinger

“Rents are flat or falling in markets where investors are most active” – Trulia

Physically and verbally abusive ex-Rutgers coach is due a $100,000 bonus – AP

Advanced Strategy
The laundry detergent business is almost too innovative – WSJ

Activist courts are hobbling Dodd-Frank – Mike Konczal

The death of peak oil – James Hamilton

Follow us on Twitter and Facebook.

And, of course, there are many more links at Counterparties.

One comment

Comments are closed.