I have been subject to some fairly predictable verbal assaults from some in the financial services industry over the last few days, especially but not solely in Jersey.
Sane people I know read what is said and dismiss the comments as being simple abuse, and not worthy of further consideration. I'm not sure I agree. Abuse it is, but it's abuse for a reason.
I was in Oslo last week discussing illicit financial flows. Raymond Baker was there too. Ray has a simple graphic of which I don't have a copy, unfortunately. But what it shows is that total illicit financial flows from developing to developed countries each year amount to between US$500 billion and US$800 billion.
This sum is made up of between US$20 billion and $US40 billion of bribery and theft. US$170 to US$240 billion is made up of criminal activity. Between US$350 billion and US$500 billion is commercial tax evasion. Most of all this happens, of course, through the world's tax havens.
Ray's evidence is strong. The World Bank now use his data. And as Ray puts it when referring to commercial tax evasion, which is the part of this flow it is easiest to stop:
I think this is the biggest abuse of the developing world and the world's poorest people since slavery
I think that's right.
In that case I can live with some abuse. But please never forget the real abuse that the commentators seek to excuse. It's the desire to end the tax abuse of the world's poorest people that drives the Tax Justice Network. And it's an abuse that may be ten times the annual aid flow.
That's why we say that anyone who is serous about tackling poverty has to be serious about tax abuse, the use of tax havens and curtailing the activities of the suppliers of corruption services.
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[…] 3) Tax havens make the poorest in the world poorer assisting a process as abusive as slavery. See my blog yesterday. […]
Richard, you are making a lot of serious allegations against the Jersey and Guernsey Finance industries and all you are receiving are comments back from Chartered Accountants and qualified Trust officers refuting these claims.
You refuse to believe that we are a hell of a lot more professional than what you seem to suggest.
You are also cherry picking these replies.
JTM
We know there are $500 billion dollars of funds on which the income is tax evaded in Jersey
Who has them?
Please tell me.
If you can provide a specific answer I can avoid a general accusation. Otherwise you are all, collectively, responsible.
Richard
But this is the whole thing, you are pulling figures out of thin air. Be serious, where does this USD500B come from?
And how come it is Dollars? USD500M of even USD500.00, it is a stupid allegation without any proof to back it up.
Be realistic here, I do not believe this is true because this is just being pulled out from the sky. So the onus of proof is with you.
JTM
You are not looking for the evidence
Have you read Marty Sullivan’s work linked at http://www.taxresearch.org.uk/Blog/2007/11/01/jersey-a-party-to-massive-taxation-fraud/
He’s one of the best in the world. He used Jersey’s data
Tell me what’s wrong with it, in detail or give up.
Right now you are as credible as an ostrich
Richard
Tax avoidance Richard! Perfectly legal mate. And who is to say that it is all deposits by people that do tax planning anyway?
I have met multi-millionaires in Jersey who got away from the UK because of heavy taxes in the 70s. 98p in the £1.00 I heard. Now that is the fault of fiscal policy in the UK. As for all the non-doms that buy up property in the UK, especially London now, Russian business men I understand, are they avoiding tax to?
The only people that come to conclusions like this should start attacking fiscal policy in their own countries and then they will understand why money goes out of their countries. There is a balance and besides, we have very little business from the UK anyway.
JTM
Sullivan said:
At the end of 2006, there were $491.6 billion of assets in the Jersey financial sector beneficially owned by non-Jersey individuals who were likely to be illegally avoiding tax on those assets in their home jurisdictions. Rapid growth of bank deposits and mutual funds shares in the first half of 2007 easily pushes the total above $500 billion.
Note the word “illegally”
That means tax evasion
As ever, the Jersey financial services industry is seeking to make excuses for its illegal conduct
You have not answered my challenge.
I, and the rest of the world, remain convinced that the financial services industry in the Crown Dependencies is party to massive taxation fraud
And so far you have not been able to offer anything in your defence
Until you do further comments from you on this issue will be ignored as they are not adding to debate
Richard
There is no challenge. We ask all our clients for evidence of qualified tax advice. All Sullivan is doing is guessing that it is all tax evasion and not tax avoidance. I don’t dispute this activity happens all over the world, but these figures have really been pulled out if Christmas Cracker, because I can tell you for a fact that we have to hold evidence on our files that qualified tax advice has been obtained.
Therefore if people are avoiding tax illegally from their place of domicile and not telling us, then it is they that are breaking the law. But to refer to all the funds held in Jersey as ALL tax avoidance is a ridiculous assumption.
There is no challenge. We ask all our clients for evidence of qualified tax advice. All Sullivan is doing is guessing that it is all tax evasion and not tax avoidance. I don’t dispute this activity happens all over the world, but these figures have really been pulled out if Christmas Cracker, because I can tell you for a fact that we have to hold evidence on our files that qualified tax advice has been obtained.
Therefore if people are avoiding tax illegally from their place of domicile and not telling us, then it is they that are breaking the law. But to refer to all the funds held in Jersey as ALL tax EVASION is a ridiculous assumption!
JTM
So you’re clean
What about all the rest?
And how come if you’re all clean so much tax has been declared under the UK tax amnesty?
Your argument is obviously false.
Richard
We can carry on taking this debate until 2008. The onus of proof is on the offshore critics to prove that there is tax evasion going on. But I believe that is impossible because the figures that they have supplied so far are only speculative.
If you believe you can identify just ‘one’ firm in Jersey or Guernsey which is deliberately allowing customers to evade tax then people may start to take these claims seriously.
Otherwise, it is just gossip mate, and we can only move towards a stalemate.
JTM
I have argued 45,000 STRs should have been submitted
So far the evidence is 400 have been
That makes it easy to suggest those who have not submitted STRs but who should have done in my opinion
Let’s start with Barclays, Lloyds TSB, HBOS, Royal Bank of Scotland and HSBC. None of them can have reported as I think appropriate as a consequnce of the EU STD. All will have had customers who have said they do not wish to disclose details of interest paid to their home tax authorities. All should have reported that fact to money laundering authorities on the basis of this providing a reasonable basis for suspiscion of money laundering of tax evaded funds in my opinion.
All will certainly have held evaded money now declared under the UK tax amnesty
By not reporting reasonable suspiscion all these banks will by implication have helped people evade tax in my opinion
They might of course disagree, but I am asking for reason why and you have failed to supply it. Since failure to report is an offence if I can demonstrate, as I have, that reasonable grounds for suspiscion exist the onus is entirely on you to prove me wrong now
Richard
Be realistic though. It is up to these banks to answer your questions and if they ignore you then I can only assume that you have no authority to request such answers from them. I also believe the reputation of not only the Island but any bank itself would be at risk if it believed such non-disclosure had not been taken.
I also know for myself from contact with banks is that a few accounts have been closed over the years where the bank has not been satisfied with the clients apparently lack of disclosure.
So this is happening.
But I think you are in the dark here and will remain so, because until such authority is willing to answer your questions / allegations then that will be the case. Up to now though, they have been dismissed, so I think that is that.
“The onus of proof is on the offshore critics to prove that there is tax evasion going on. But I believe that is impossible because the figures that they have supplied so far are only speculative.”
Tax evasion is going on, that’s a fact – unless anyone wants to doubt the decisions of juries who have reached guilty verdicts in numerous trials.
Figures for levels of tax evaded will always be speculative –
because the only time it’s recorded is when it’s detected.
Whether or not companies in Guernsey and Jersey are deliberately
allowing their customers to evade tax may be open to debate.
However, based on reports of the numbers of disclosures from
the Off-Shore disclosure team alone, quite some numbers of people,
and a fair proportion of them use accounts in the Channel Islands,
have not accounted for the tax they should have. That’s evasion.
In most of these cases, accountancy or banking professionals woukld
have helped with the setting up of these accounts, and the transfer of
funds into them. Now either these professionals genuinely had no
idea that they were helping to facilitate fraud, in which case I personally
can’t help but think that at the very least their client acceptance procedures amounted to little more than box ticking excercises and they were being somewhat negligent, or incompetent, or they knew that there was cause to be suspicious of the source of the funds, or the reasons for transferring it off shore, and did nothing about it.
It’d be interesting to know how many of the banks mentioned by JTM as closing accounts reported those accounts accordingly.
[…] the dual curses of corruption and capital flight which together cost the developing world more than $500 billion a year, none of which would be possible without the assistance of the supplies of corruption services in […]