Towards Global Justice: Who Will Regulate Offshore Banking and Tax Havens?

If governments want to clean up a morally corrupt banking system for the benefit of the majority of the working people and want to stop a few profiteers of ‘creative accounting’ from exploiting societies around the world, governments have to clamp down and better regulate offshore banking and tax havens. A wikipedia article on offshore banks explains: “Offshore banking is an important part of the international financial system. Experts believe that as much as half the world’s capital flows through offshore centers. 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.” )

 Now here is a challenge which should be worth the attention of Gordon Brown’s global thinking and of all those who want to create more just and more stable economies: how do we get this capital back into credit crunched societies, for the benefit of the people from whom this capital was taken in the first place?
Furthermore, the same wikipedia article informs us that according to the ‘World Wealth Report’ for 2000, one third of the wealth of the world’s ‘high net-worth individuals’ – nearly $6 trillion out of $17.5 trillion- may now be held offshore. Some $3 trillion is in deposits in tax haven banks and the rest is in securities held by international business companies (IBCs) and trusts.
This article provides more interesting facts: the IMF has estimated that between $600 billion and $1.5 trillion of illicit money is laundered annually, equal to 2% to 5% of global economic output. Today, offshore is where most of the world’s drug money is allegedly laundered, estimated at up to $500 billion a year, more than the total income of the world’s poorest 20%. Add the proceeds of tax evasion and the figure skyrockets to $1 trillion. Another few hundred billion come from fraud and corruption. “These offshore centers awash in money are the hub of a colossal, underground network of crime, fraud, and corruption” commented Lucy Komisar quoting these statistics. Her web site can be found here: 
There is more than enough capital available globally, it just is currently hidden away and often unlawfully in the wrong hands. Without cleaning up the world of tax havens and offshore banking, as well a tighter controls on hedge funds and those financial businesses who serve anyone with money, no questions asked, it is difficult to see how a lawful banking system can be sustained. The moral hazard of fast and easy money will corrupt most bankers, unless banking is firmly regulated and bankers are subjected to law and order, just like other ‘normal citizens’.
Where are the true global leaders with a moral compass that will use this moment of opportunity to unmask the impunity of those banks and businesses which helped to hide away trillions, with no questions asked. Can we expect Gordon Brown or Barack Obama to take this decisive step forward, to show global leadership?
No doubt it would be good for the majority of citizens worldwide if there would be a worldwide repatriation of those untaxed trillions.
Finally, a quote from Prof Joseph Stiglitz, Nobel Laureate (2001) in Economics, in an interview with Lucy Komisar:
“You ask why, if there’s an important role for a regulated banking system, do you allow a non-regulated banking system to continue? It’s in the interest of some of the moneyed interests to allow this to occur. It’s not an accident; it could have been shut down at any time. If you said the US, the UK, the major G7 banks will not deal with offshore bank centers that don’t comply with G7 banks regulations, these banks could not exist. They only exist because they engage in transactions with standard banks.” (The Nation, 18 June 2001)
You can watch a video of comments of Prof Stiglitz at a meeting co-sponsored by the Tax Justice Network-USA and his Initiative for Policy Dialogue here: 

 Let’s get serious and have a long overdue, real global banking reform, for the benefit of the majority of the world population. After all governments are here to serve the people, not the elite?


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