Offshore tax havens rocked by bank account leaks

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The offshore financial industry has been hit by the leak of 2.5 million secret bank accounts of companies and nationals in 170 countries to 86 journalists worldwide, under the leadership of the International Consortium of investigative journalism. Publication began this week.

 

The leak of two million emails and other documents, mostly from the offshore haven of the British Virgin Islands is expected to cause global shockwaves.

An estimated $32 trillion (€25 trillion) is locked up in the accounts, which are used by plutocrats, heads of state, and celebrities to avoid paying income tax.

The revelations come shortly after the resignation of the French Finance Minister Jérôme Cahuzac on 19 March, apparently over a secret bank account he held in Switzerland. Jean-Jacques Augier, President François Hollande's campaign co-treasurer and close friend, has also been forced to publicly identify a Chinese business partner.

Mongolia's former finance minister and deputy speaker of its parliament has reportedly said that he may have to resign from politics as a result of the investigation.

In Belgium, a first batch of revelations is expected later today on the website of the daily Le Soir.

According to initial information, the leak has enabled investigators to trace the “disappeared” fortunes of dictators, such as Ferdinand Marcos in the Philippines and Robert Mugabe in Zimbabwe.

The Guardian, the BCC and other international media will jointly publish the results of their investigations over the course of the week. According to the Guardian newspaper, the investgative project could prove extremely damaging for confidence in tax havens, used by the world's wealthiest people.

Activity by an extraordinary array of government officials and rich families across the world has been identified, from the UK, Canada, the US, India, Pakistan, Indonesia, Iran, China, Thailand and former communist states.

Positions: 

Asked to comment if the apparent blow to tax havens was good news for the EU, Commission spokesperson Olivier Bailly seized the occasion to remind that the EU executive urges member states to take up the issue of tax evasion, including by adopting a common definition of what a tax haven.

He also said that tax evasion cost "more than €1,000 billion" per year in the EU.

Bailly reminded that the Commission had made “strong” proposals on tax evasion last 6 December and that it was still waiting the agreement of the member states.

In these thirty or do measures the Commission invites EU states to make a list of tax havens and adopt series of measures to avoid loopholes favoring tax evasion.

"For the Commission, there should be no complacency whatsoever for individuals, companies or countries that circumvent international law to organize tax evasion," he said.

Bailly avoided a direct answer to the question if Luxembourg is a tax heaven. He said that "very clear" rules applied to all member states on transmission of information concerning bank accounts. "We are rather trying to have a definition of practices that would be illegal, rather than a term which crystallizes tensions and misunderstandings", he added.

“This study shows the order of magnitude of the problem. It is a major step forwards towards more tax justice”, commented Bernadette Ségol, ETUC General Secretary. “I am calling on the European Institutions to step up their action plan on tax fraud and tax evasion. Annual tax revenues of €1000 billion per year or 10% of GDP could be collected by the tax authorities, provided they are given the means to do so,” she said.

“This study shows the order of magnitude of the problem. It is a major step forwards towards more tax justice”, commented Bernadette Ségol, ETUC General Secretary. “I am calling on the European Institutions to step up their action plan on tax fraud and tax evasion. Annual tax revenues of €1000 billion per year or 10% of GDP could be collected by the tax authorities, provided they are given the means to do so,” she said.

Financial institutions that help people to commit tax offences must be prosecuted, Bernadette Ségol added: “We now have solid proof that much of the tax fraud in the Union is facilitated by criminal activities of certain large banks who help rich people to set up fake companies and secret bank accounts in tax havens. We need serious retaliation from the tax authorities, including through European criminal law, to stop them doing that”.

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