A story goes global, and damns the self-styled elite

UK debt versus GDP…would be transformed if tax evaders paid their way

The amount of tax-haven monies controlled by British banking is estimated to be £1.26trillion. That is six NHS budgets, twenty defence budgets, eighteen welfare budgets, and five UK State pension budgets planned for the UK’s 2014 fiscal year. The evasion total is the same size as the entire public sector pension fund, and only slightly smaller than Britain’s total national debt.

Last Friday, every French newspaper’s front-page from the Rightist Le Figaro to the Leftist Liberation led with the series of offshore tax haven scandals now threatening to overwhelm President Francois Hollande. In the UK, the Virgin Islands name-and-blame game has put David Cameron very seriously on the back foot. And the obvious connection between Tory newspaper The Daily Telegraph’s ownership and the Sark tax-evasion scandals there has shaken many from their torpor of bland acceptance. Throughout Europe’s citizenry this morning, there is a growing feeling that – far from being a tiny minority – rich-businessman tax evasion is the norm.

The Irish Times last Saturday threw up a staggering statistic: over 30,000 Irish firms have directors registered in offshore jurisdictions. Furthermore, in Sark specifically – population 600 – there are more than 11,000 bank accounts of directors registered to Irish firms – 18 for every island resident. There are roughly 560,000 business enterprises in the Irish Republic, of which no more than 240,000 could be described as turning over enough to make directors’ offshore holdings worthwhile. Thus an incredible 1 in 8 of the country’s business élite is stealing from the taxman.

This isn’t going down well among Ireland’s poorer classes – not least because Enterprise Ireland’s own data showed that over a thousand of its business members received government funding in 2010, with a total of 86 receiving commitments for financial support in excess of €100,000 for significant R&D projects. Life is a thing of give and take, but for Ireland’s top earners it seems to be all take and no give.

Coming in the wake of similar behaviour over the last five years from the West’s bankers and the Greek econo-political class, there is something about offshore – and the Virgin Islands story in particular – that seems to have completed a synapse connection….thus allowing the penny to drop at last: the ordinary folks are being gang-raped by greed on all sides.

As many of us always suspected, the insouciant wealth-accumulation obsession  of frontal-lobe afflicted bankers is what joins them at the hip with the top earners in business – regardless of which country or culture one surveys. The ever-unpleasant HSBC’s Guernsey operation was last November shown to be shielding £699m in 4,388 accounts in Jersey – with one investor holding £6million. The average balance is £337,000. Equally, the true extent of  American and German fat cat tax-evasion has been unearthed by the German Federal Intelligence Service. It is conducting a widespread investigation into Lichtenstein banking – and that of Luxembourg – where tens of thousands of US and Bundesrepublik tax evaders are hiding massive amounts of cash.

A 2012 study of 60 large US companies found that they deposited $166 billion in offshore accounts during 2012, sheltering over 40% of their profits from U.S. taxes.  Yet Wolfgang Schäuble has invested a great deal of spin-time trying to suggest that Cyprus shielding the wealth of crooked Russians was atypically evil enough to warrant Berlin’s snaffling of the island’s potential energy economy. This is now shown to have been bollocks not just as a rationale, but also in its alleged uniqueness. And some of Wolfie’s mates appear to be up their eyes in similar operations around the world.

But the burgeoning scandal is more embarrassing for David ‘Legup’ Cameron than any other leader because, as the Guardian for once reported accurately at the weekend, ‘one nation in particular has ties to offshore havens everywhere. It’s a veritable nexus of offshore influence, related to havens in the Caribbean, and much closer to home. That nation is, of course, the United Kingdom.’

As so often happens today, without the leaking of more than 2m offshore files to the International Consortium of Investigative Journalists (ICIJ), the extent of this three-faced hypocrisy would be unknown to us still. So while George Osborne talks a good game about “all being in this together” – and Cameron witters on about “not wanting to associate with” tax evaders – the reality is their administration and bankrolling ranks are crammed with some of the worst offenders and facilitators. Lord Green ran HSBC for years, Jeremy Hunt is an aggressive tax-avoider, the Barclay Brothers run Sark, Boris Johnson is a particular favourite of the Sarkist-Banking fraternity, and numerous large Tory donors are among the wealthy ripping off Sovereign revenue offices: more than 175,000 UK companies have directors in offshore jurisdictions.

The ICIJ’s project uncovered a network of empty holding companies and names essentially rented out to fill out boards of non-existent corporations, including a British couple listed as active in more than 2,000 entities. This is a mirror image of the tiny survey conducted by The Slog last week into the identity of those who were early departees from the Cyprus depositor haircut.

For me, however, it is a calculation of the totals involved globally that change these revelations from being just another “it’s the rich what gets the sorrow” yarn into something that just might – we live and hope – finally get Middle England off its sofa and angry enough to demand justice.

A 2012 report from the Tax Justice Network (a UK company) estimated that between $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. Tax havens have 1.2% of the world’s population and hold 26% of the world’s wealth – including 31% of the net profits of United States multinationals. We are indeed talking about ‘a tiny minority’ here – the usual suspects – but also a colossal percentage of the money that should have been paid in Sovereign taxes. Financial opinion leaders I asked last week for an estimate of the percentage of offshore monies administered by British banking thought the number to be between 40 and 60%.

Being kind to the perpetrators and assuming (a) the lower end of those estimates and (b) lowest assessments of global market size and (c) a net tax rate of 15% being evaded, the Government of the United Kingdom knowingly loses almost exactly a trillion pounds in tax revenue thanks to the havenism endemic in the banking system it is supposed to regulate.

That is six NHS budgets, twenty defence budgets, eighteen welfare budgets, and five UK State pension budgets planned for the UK’s 2014 fiscal year. The evasion total is the same size as the entire public sector pension fund (itself a disgrace of illegal embezzlement) and only slightly smaller than Britain’s total national debt.

It is a mind-boggling 70% of United Kingdom GDP.

But here’s the final brass-necked irony: stand by for an attempt by the Global Looters to use this tax evasion reality as the excuse for stealing the savings of everyone with over £100,000 in a bank account that isn’t offshore….and represents the life-savings of a law-abiding taxpayer.

Yesterday at The Slog: Unnatural selection and the UK 2015 election