The world’s elite are extremely rich and corrupt – and you are paying for it

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Deep down, everyone has always known that the rich and powerful hide huge amounts of often ill-earned money in distant tax havens. In recent years however, with the Panama and Paradise Papers, the public has had the opportunity to see how the underground industry which helps elites do so works. Another such opportunity presented itself with what is known as the biggest offshore data breach in history.

The Pandora Papers consist of nearly 12 million files that expose the secret financial affairs of nearly three dozen world leaders and hundreds of senior officials from over 90 countries. The details make sensational headlines: The King of Jordan has a hidden $ 100 million real estate empire (including a seven-bedroom mansion in Malibu!); the Czech president acquired a $ 22 million estate on the French Riviera (the Chateau Bigaud, with five bedrooms and 9.4 acres of land nestled in rural France, next to medieval ruins) and did not never reported, despite the obligation to do so by Czech law; major UK Conservative party donors were involved in corruption (it was just a $ 220 million bribe to the daughter of the authoritarian ex-president of Uzbekistan, don’t think too much about it !); And so on.

It would be fun to see these affluent elites turn into pretzels trying to clarify why they own such great offshore shell companies (and their very interesting assets) – if not for the fact that we are indirectly paying for much of that. extravagance.

A quick reminder: there is nothing inherently illegal about shell companies, offshore trusts and other structures, even if they are located in a tax haven. Everyone has the right to privacy and security. The problem is that the secrecy offered by these structures, when combined with tax havens, is also useful to criminals, fraudsters, money launderers, tax evaders and their ilk. Likewise, these structures are useful for those who wish to indulge in the wonderful art of tax evasion: parking your money in a sunny location to legally avoid paying taxes otherwise owed.

How much are we talking about here? According to research By Professor Gabriel Zucman of the University of Berkeley in California, about 10 percent of global GDP (if not more) is slipped into tax havens. This would amount to $ 8.45 trillion in the world that is neither taxed nor spent. The OECD, for its part, put the number somewhere between $ 10 trillion and $ 11 trillion, plus or minus a few hundred billion.

Even if only a fraction of that amount were to be taxed at, say, 15%, it would still be somewhere between $ 1.27 trillion and $ 1.57 trillion that would not end up in the public treasury. How many roads could be paved with this money? How many schools or health programs could be funded? How many houses could be built? The answer to all of these questions is simply “a lot” – and that should matter.

What happened to the big promises made to crack down on this sort of thing after the Panama Papers were released over five years ago? Didn’t many world leaders sign the unimaginative name?Global Declaration Against Corruption‘? What about the promises of many countries launch public property registers to end financial crime? What About Corporate Ownership Disclosure Laws?

The sad truth is that despite some arrests, resignations and new laws, not much has really changed. Wealth management companies that help run the global ‘system’ of tax evasion have a very simple advantage, according to Brooke Harrington, professor at Copenhagen Business School: “They have ’24/7/365 to do nothing, but find ways to get around the laws you imagine”. It does not help that the elected leaders who promise to put an end to this kind of practice are themselves involved. The Czech president with the French castle? A sworn anti-corruption crusader. Kenyan President Uhuru Kenyatta, who said in 2018 that “the assets of every civil servant must be declared publicly so that people can question themselves and ask: what is legitimate”? He and his family members own five offshore companies with more than $ 30 million in assets that have not been properly disclosed. Ukrainian President Volodymyr Zelensky, a former comedian who was also elected to clean up his country’s corrupt and oligarch-dominated economy? He and his close associates are the beneficiaries of offshore companies that own expensive properties in London.

Will the United States come to the rescue? Don’t count on it. Despite President Joe Biden strong words at the United Nations General Assembly last month, proclaiming that corruption “is nothing less than a threat to national security in the 21st century,” America is not just complicit in the offshore economy , it makes it easier. The state of South Dakota, best known for its ranching and national parks, is also the privileged tax shelter for billions of dollars linked to financial criminals. Baker McKenzie, the country’s largest law firm, is described as a “pioneer of corporate tax evasion”, now acting on behalf of “notorious tycoons, arms manufacturers and authoritarian regimes operating in the underground economy”. Even the Corporate Transparency Act, a bill enacted earlier this year and billed as landmark legislation in the fight against tax evasion and money laundering, is riddled with loopholes.

All over the world, populist movements have multiplied in recent years. More and more people feel that the transnational elite class is no longer there, that the game is rigged, and that the opportunities for the average individual to move forward are rapidly dwindling. The Pandora Papers seem to prove them right. The question now is: what comes next?

Carlos Roa is the editor of the National interest.


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