Wednesday, 22 January 2014


I cannot tell this tale better than the massed troops of the ICIJ investigative journalists do. Last year the ICIJ announced they had gigabytes of data on tax-haven accounts, including 130,000 accounts in the British Virgin Islands. This investigates 20,000 of the 130,000, so just 110,000 to be published. And that is just on or in one of the world's 90 or so tax-havens.

Is it mere coincidence or serendipity that this Chinese cracker of a bombshell explodes on the Eve of Davos, when 85 of the richest people - who are "worth" as much as several billion lesser mortals, gather with their disciples and camp followers and so called expert economists, to discuss how they can continue to starve the world of capital - and keep 50% of our youth on unemployment registers. 

Couple the investigative power of the ICIJ with the meta-data that has been collected over the past decade by the NSA and GCHQ, to mention just two of the immense dragnets cast by the world's spy agencies, and it becomes clear as to why I have been urging friends, clients and misled hapless citizens, to MOVE YOUR MONEY ONSHORE! and come clean. A few of our more thoughtful clients have taken the advice and, like the Prodigal Son, have come safely home and we have settled their tax affairs - case closed. 

We taxpayers can be sure that these revelations will pique the interest of the massed ranks of tax-collectors in the IRS, HMRC and in all OECD countries. Authoritative reports have been telling us all for at least a decade that there are trillions upon trillions of dollars hidden in tax-havens. At the last count it amounted to $32 trillion (80 million jobs for ten years) - held back from being re-invested in the countries of origin. This would pay off every OECD fiscal deficit, including the USA's "Fiscal Cliff" and feed all the starving people on the planet. Re-invested in the regions of origin, $32 trillion would boost the wealth of everyone on the planet to unprecedented heights - and open the doors to the next era of positive human development.

Some blithe spirits, innocently reporting on tax-haven schemes, still trot out the tax evasion industry mantra that "It is of course all strictly legal" (they wish). As a tax accountant for 40 years, I can assure you it is almost certainly illegal. The basic rules in all countries as tests for granting tax-relief are very simple (1) Wholly necessary expense (2) On normal commercial terms (transfer pricing) (3) Not designed to avoid tax (4) Transactions at arms-length (not with your pal, mother-in-law, yourself, your pet cat). 99% of the $32 trillion tax-evasion capital flight that has filled the tax-haven coffers is either straight forward undeclared profits (don't bother to tell the IRS about it) or tax-deductible in the country of origin, using ENRON accounting techniques - which is simply false-accounting, breaking the four accounting tests, which is criminal (...Which bunk do you prefer sir? Upper or lower?). Think of Al Capone - and worry about who signed your last ten years corporate Balance Sheets and IRS Returns (not me Judge - I was out playing golf - honest). 

Whereas the Chinese caught with their hands in the tax-haven treasure sands might be executed, imprisoned, fined and generally disgraced - western evaders usually get off with a mere 220% of the tax evaded - and a slap on the wrist with a wet flannel. Some, like Al Capone, do go to jail. And the US, the advisers go to jail with their clients. Do check your advisers' Professional Indemnity Insurance.


ICIJ has just published the latest part of the largest investigative reporting project in its 15-year history - revealing that close relatives of China’s top leaders have held secretive entities in offshore tax havens usually associated with hidden wealth.
Our work draws on confidential records obtained by ICIJ as part of its “Offshore Leaks” investigation.
The full story
Click here to read the full ICIJ report now

Among the investigation’s key findings:
  • Relatives of at least five current or former members of China's Politburo Standing Committee – President Xi Jinping, former premiers Wen Jiabao and Li Peng, former President Hu Jintao and former leader Deng Xiaoping – have held companies in the Cook Islands or British Virgin Islands, the records obtained by ICIJ show.
  • PricewaterhouseCoopers, UBS, Credit Suisse and other Western banks and accounting firms played a key role as middlemen in helping Chinese clients set up trusts and companies in tax havens.
  • China’s oil industry, which has been shaken by a series of corruption scandals, has extensive links to offshore centers. The country’s three big state-owned oil companies –CNPC, Sinopec and CNOOC -- are linked to dozens of BVI companies that show up in the ICIJ files.
  • As the country has moved from an insular communist system to a socialist/capitalist hybrid, China has become a leading market for offshore havens that peddle secrecy, tax shelters and streamlined international deal making.
Nearly 22,000 offshore clients with addresses in mainland China and Hong Kong appear in the files, including at least 15 of China’s richest citizens, members of the National People’s Congress, and executives from state-owned companies entangled in corruption scandals. The records also include details of roughly 16,000 clients from Taiwan.
The documents are part of a cache of 2.5 million leaked files that ICIJ has sifted through with help from more than 50 reporting partners in Europe, North America, Asia and other regions. Since last April, ICIJ’s stories have triggered official inquiries, high-profile resignations and policy changes around the world.
Until now, the details on China and Hong Kong have not been disclosed.

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