World wealth: some is hidden offshore

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I've had a first quick look at the World Wealth Report for 2008, published this week. The headlines are:

• 10.1 million individuals worldwide held at least US$1 million in financial assets, an increase of 6.0% over 2006
• Global HNWI wealth totaled US$40.7 trillion, a 9.4% gain from 2006, with average HNWI wealth surpassing US$4 million for the first time
• The Ultra-HNWI "wealth band" experienced the strongest growth, gaining 8.8% in population size and 14.5% in accumulated wealth
• Emerging markets, especially those in the Middle East and Latin America, scored the greatest regional HNWI population gains
• India, China and Brazil had the highest HNWI population growth at the country level
• HNWI financial wealth is projected to reach US$59.1 trillion by 2012, advancing at an annual growth rate of 7.7%

What these figures show is that, put simply, the wealthiest are getting wealthier and the most wealthy of all are pulling even further ahead of the pack. It is a trend that we have long known and predicted.

There are more stories to tell though. Most especially, offshore is hardly mentioned in the report. Ever since the Tax Justice Network used this report as one of the sources for its own report entitled "The Price of Offshore" no data on the proportion of assets held offshore has been mentioned in the World Wealth Report. I do not think that a coincidence.

That said, Cap Gemini and Merrill Lynch both recognise that offshore exists. More than that, they know and recognise that it is used for tax evasion. As they say in the report:

The financial asset wealth figures we publish includes the values of private equity holdings stated at book value as well as all forms of publicly quoted equities, bonds, funds and cash deposits. It excludes collectibles, consumables, consumer durables and real estate used for primary residences. Offshore investments are theoretically accounted for, but only insofar as countries are able to make accurate estimates of relative flows of property and investment in and out of their jurisdictions. We accommodate undeclared savings in the report.

I added the emphasis, but the point is vital. We are currently seeing tax havens make claim that they are now entirely clean and transparent. As Cap Gemini and Merrill Lynch explicitly recognise in making this comment, that is not true and there remains a significant problem of undeclared savings amongst the HNWI community.

Those who like to pretend otherwise are not just dissembling, they are just not telling the truth.