Tax havens are institutions of organised crime. They, and the financial services and multinational firms that use them are, in essence, operations designed to ensure that the economic and political elites do not have to contribute to the collective good.
For years, these operations have been actively undermining democracy, extracting values from countries that desperately need them for collective action and ensuring that the elites don’t have to pay for the welfare states they have no need for.
These are the real robber barons of our era. They have worked tirelessly for decades to make sure that the elites don’t have to contribute their fair share to society. They have enabled an enormous, grey economy of power and money to circulate outside of democratic control. This hidden economy of wealth and power is probably the largest threat to democracy and the welfare state. They enable networks of enormous, unjustly accumulated power, like those of Russian oligarchs or African dictators, to expand and consolidate outside democratically controlled institutions.
And now they have been exposed for what they are. The Panama Papers, an enormous treasure trove of documents leaked to Suddeutsche Zeitung exposed the secrets of just one of the major offshore operators. We now have unbelievable documentation of an industry of fraud. A vast network of machines that produce inequality, injustice and misery. The masked, expressionless face of modern capitalism.
We are hearing now about Putin, prime ministers of Iceland and Pakistan, the king of Saudi Arabia, close family of the Chinese prime minister and the children of the president of Azerbaijan. The leaks contain evidence of use by Mexican drug lords, terrorist organizations like Hezbollah or rogue nations like North Korea and Iran. And even Jackie Chan and Lionel Messi.
These powerful actors are one facet of the tax haven scandal. But here is another: multinational corporation which you use every single day also use tax havens.
- Facebook has been repeatedly found to be funneling money away, and was recently forced to pay millions extra in UK tax.
- While Google made $5.6bn (£3.4bn) of revenues in the UK in 2013, it paid corporation tax of just £20.4m. Google has been repeatedly found to be channeling ad money through Ireland and other tax havens.
- IKEA was recently found to be secretly avoiding a billion euros worth of taxes in the EU in a report by anti-corruption activists in the European green movement.
- The so-called “Big Four” auditing firms have been repeatedly found to be creating tax structuring schemes to help their clients do tax evasions through tax havens. The Big Four audit 99% of the companies in the FTSE 100, and 96% of the companies in the FTSE 250 Index, anindex of the leading mid-cap listing companies.
- The current leaks expose UBS and HSBC and a number of other huge, multinational banks.
Piracy, theft and evasion are woven into the fabric of the modern economy, which means it is woven into your own everyday life. Just by going about our business, we are unwittingly helping this happen.
It is in many ways as well-developed an ecology of theft as the old imperial system of colonialism: Developing countries lose an estimated three times as much as they get in aid every year to tax evasion by large corporations. Think about that the next time you’re donating money to OxFam or other good aid organisations: you’re giving blood to a patient who is bleeding out. It’s a great thing to do, but we should also be stopping the bleeding.
And so we shall. First and foremost, in the days and weeks to come, when the Panama revelations start trickling in, remember this:
These are just a tiny, tiny fraction of the secrets hidden in the vastness of this grey economy. The tiniest tip of the iceberg. This is one company, the fourth biggest in Panama. A tiny cog in a vast machine. The Panama Papers are a game changer. Coordinated, international action must now happen. For that to be the case, the people will have to step up, hold our leaders accountable and demand action. If this problem doesn’t get fixed, we’ll remember them at the ballot box.
And whoever leaked this information, we are in his or her debt. They have performed a public service of immense importance. Whoever you are, I salute you.