Bailed Out Companies Sheltering $12 Trillion In Offshore Tax Havens

Offshore Account Subsidiaries:  (Just to name a few)

  • Bank of America       59
  • CitiBank                      90
  • Morgan Stanley      158
  • Lehman Brothers     31

It’s time to reform offshore banking, and see what untaxed wealth big business is hiding in overseas tax shelters.

Rather than continue arguing over chump change, it is long past time for the United States, with its international friends and allies, to demand accountability from the long list of tiny countries and principalities, from Andorra and the Cayman Islands to Singapore and Switzerland, where corporations, wealthy clients and unrepentant evildoers hide their assets.

The big claw-back will reach into quaint islands and mountainous principalities, because the same banks, hedge funds and private equity firms responsible for the world financial meltdown keep their profits in those “secrecy spaces” — alongside the ill-gotten gains of numerous drug dealers, dictators and delinquents of every description.

According to the Government Accountability Office, nearly all of America’s top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients’ illicit secrets is considered a matter of national pride.

But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America’s 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley’s 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don’t expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)

When the cost of these shenanigans was last estimated two years ago, the U.S. government’s annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion — considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.

Whatever the accurate accounting proves to be, it is certain to exceed hundreds of billions annually worldwide. That is money every country will need badly for years, to repay debt, finance reconstruction, and fund services, as the world economy struggles to revive itself. Even in the developing countries, where incomes are much lower and billionaires tend to be scarce, the annual revenue loss could be as much as $50 billion — enough to meet the U.N.’s Millennium Development Goals (if only the money were not stolen by local elites and wired away to numbered accounts in tax havens).

None of these tax havens could exist without the connivance or at least the cooperation of the world’s most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.

Link to the rest of the story at CommonDreams.

1 thought on “Bailed Out Companies Sheltering $12 Trillion In Offshore Tax Havens

  1. I’m expecting this to be a real issue at the upcoming G20 in Great Britain. Gordon Brown’s speech to our Congress when he visited the US a few weeks ago hinted at such. The DoJ case against UBS is still in some limbo, waiting on resolution of a case in Switzerland about giving the names of the account holders to US authorities. I’m hoping for more sunshine on these secret accounts soon. Gotta go do two more hours then I can get home and get back on here.

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