Wednesday, March 28, 2012

The Conservative donor scandal shows why public funding of all candidates at elections would save taxpayers a fortune

I’m about to say that all candidates at elections should have their campaigns publicly funded and that we should make taking private political donations a criminal offence. This usually brings on the ‘not a penny more of my money for politicians and political parties’ response. I can understand why, but this response ignores the fact that by paying that money you would save 10 or 100 or 1000 times as much, because as long as parties can take private donations the super rich and big banks and companies will keep on being able to buy political influence with which to get themselves big government subsidies – which mean higher taxes or cut public services for taxpayers – and big tax breaks and toleration of tax havens – which mean the same.

When someone very wealthy or a big bank or company donates to a political party’s campaign funds they are usually making an investment. By funding a party for £50,000 or  £250,000 they may well end up getting subsidies or tax breaks of millions, tens of millions, hundreds of millions, sometimes even billions – or deregulation of their industry which lets them make big profits in the short term at the cost of a crisis and recession in the long term, like the financial crisis and subsequent recession, caused by banks and hedge funds being able to lobby for deregulation with the aid of big donations.

A cap on private donations to political parties or to candidates’ campaign funds will leave lots of loopholes. Where it’s been done in the US the billionaires and big firms just split a big donation up among 10 or 100 or 1000 employees to get round the cap.

The only way to avoid loopholes and end the influence of big money on politics is to have a strictly limited level of public funding of all candidates in all elections – enough to get one single colour, double sided A4 election communication leaflet printed for every household in the constituency, ward or list area, plus enough to run a website and maybe petrol costs for canvassing.

One of the reasons the government hasn’t re-regulated the financial sector properly is that donations from banks and financial firms to the Conservatives have doubled since 2005 (according to research by the Bureau of Investigative Journalism).

In addition we’d need a ban on elected officials and civil servants who are regulating an industry being employed by any company in that industry for say 5 to 10 years after leaving office – and similarly banning anyone employed in an industry regulated by a government body from being in any elected or government body involved in regulating that industry for the same period. This would eliminate the “revolving door syndrome” in which big companies buy influence with government by offering paid employment or cushy jobs to people in government who do them favours.

Then make it a criminal offence for any elected official or political party to accept any donations to their party or election campaign – and similarly a criminal offence to break the rules on ‘revolving doors’ between government and business.

That might all cost millions at each election, but would save between hundreds of millions and tens of billions between elections.

The big parties will be opposed to this, because it would eliminate their funding advantage over small parties and independent (non party) candidates.

We can expect that the Conservative donations for access scandal will lead them to suggest a ‘reform’ which would benefit them – one putting a maximum cap on donations from organisations, but not from individuals, aiming to reduce trade union funding to the Labour party while maintaining their own donations from big banks, hedge funds and some of the very wealthy.

Labour and the Conservatives and Lib Dems will all keep suggesting greater transparency – making large donations known to the public through the register of members’ interests. That would be an improvement, but wouldn’t eliminate big money’s influence on politics, it would just make it better known.

Tuesday, March 27, 2012

Free Yemeni journalist Abdulelah Haider Shaye

According to American and British journalists who know him a Yemeni journalist called Abdulelah Haider Shaye who is in jail in Yemen on charges of “associating with Al Qaeda” is not an Al Qa’ida supporter, but embarrassed the US and Yemeni governments when his investigations contradicted their claims. He was pardoned by Al Saleh, the dictator of Yemen, but a phone call from President Obama expressing ‘concern’ that he was to be released has resulted in him being left in jail (1).

Jeremy Scahill of the Nation magazine and a British journalist, who both know him, say he has never supported Al Qaeda. He used his contacts in Yemen to get interviews with  ‘Al Qa’ida in the Arabian Peninsula’ leaders in Yemen and asked them many critical and hostile questions about how they could justify supporting terrorist attacks, as well as general ones about their aims and motives (2).

He also reported on what the Yemeni government had claimed were Yemeni airstrikes on Al Qa'ida targets. He found evidence from shell and missile fragments that these were actually US missile and drone strikes and that while the US and Yemeni governments reported each strike to have killed many Al Qa'ida members, in fact the majority of the dead were civilians, including women and children and few of those killed were Al Qaeda. In particular he found one strike that they had reported as a great success and which supposedly killed 34 Al Qa'ida men actually killed mostly women and children.

Amnesty International and an investigation by a Yemeni parliamentary committee confirmed what Haider had reported (3).

He was also reporting that the Yemeni government were exaggerating the numbers of Al Qa'ida in Yemen in order to ensure they kept the same level of US military aid funding.

He was then jailed on charges of supporting Al Qaeda by a dodgy court set up by the Yemeni dictatorship (see Human Rights Watch's 2012 report on Yemen (covering 2011)) . At one point the regime was considering releasing him. Then President Saleh (the dictator of Yemen) got a phone call from President Obama saying he was very concerned about the possible release - and so he was kept in jail (4) – (6).

Investigative journalism to try to discover the facts is not supporting terrorism. The US ambassador to Yemen, when questioned on how Haider’s imprisonment would affect reporting by other journalists in Yemen, laughed and answered that they had nothing to worry about so long as they didn’t do what Haider did (i.e embarrass the US government and it’s client dictatorship in Yemen?).

There's a petition you can sign calling for Haider’s release here.

There are links to Committee to Protect Journalists reports on the case and other actions you can take here.

Glenn Greenwald on the case here.


(1) = Al Jazeera English 26 Mar 2012 ‘The dangers of reporting the 'war on terror'’, http://www.aljazeera.com/programmes/listeningpost/2012/03/2012323201744332607.html

(2) = see (1) above

(3) = Amnesty International 07 Jun 2010 ‘Images of missile and cluster munitions point to US role in fatal attack in Yemen’, http://www.amnesty.org/en/news-and-updates/yemen-images-missile-and-cluster-munitions-point-us-role-fatal-attack-2010-06-04

(4) = Human Rights Watch World Report 2012 : Yemen, http://www.hrw.org/world-report-2012/world-report-2012-yemen

(5) = White House press relase 03 Feb 2011 ‘Readout of President's Call with President Saleh of Yemen’, http://www.whitehouse.gov/the-press-office/2011/02/03/readout-presidents-call-president-saleh-yemen

(6) = The Nation 13 Mar 2012 ‘Why Is President Obama Keeping a Journalist in Prison in Yemen? ’, http://www.thenation.com/article/166757/why-president-obama-keeping-journalist-prison-yemen

Friday, March 23, 2012

Alfie Meadows charges parallel Mark Kennedy tactic of charging victims of police violence

Alfie Meadows, the student who almost died after having his skull fractured by a policeman during the student protests – and who other police tried to prevent getting to hospital afterwards – is still facing a trumped up charge of violent disorder, presumably intended to make it look as if ‘he was asking for it’ to save face for the police and avoid charging the police officers responsible, despite his mother and his lecturer being among many witnesses who say he was not involved in any violence towards police (1).

Meadows has to appear in court next month.

This parallels other cases in which police who have made unprovoked attacks on protesters have charged the victim with violence or assaulting a police officer – including charges brought against undercover police officer Mark Kennedy. During protests against the Drax power station in 2006 Kennedy recalled intervening to stop police hitting a woman protester with batons. They knocked him to the ground and jumped up and down on his back, causing permanent injuries to his spine, then charged him with assaulting a police officer. The charges were only dropped once it was found out he was an undercover officer himself (2) – (3).

You can sign the petition calling for charges against Meadows to be dropped on this link and if you want to help the campaign in other ways you can find out more on this link.

EDIT 25th April 2012 : It seems the Meadows case may not be as straightforward as it first seemed as Meadows seems to have admitted to having taken part in lifting and pushing metal barriers towards police (4).

(1) = Barnett & Whetstone Press 05 May 2011 ‘Injured Alfie faces violence charge at demo’, http://www.barnet-today.co.uk/news.cfm?id=16190
(2) = Guardian 02 Feb 2012 ‘Beaten by colleagues, mishandled by bosses: how Mark Kennedy went rogue’ , http://www.guardian.co.uk/environment/2012/feb/02/how-mark-kennedy-went-rogue
(3) = Channel 4 (UK) 14 Nov 2009, 9pm GMT ‘Confessions of an undercover cop’, http://www.channel4.com/programmes/confessions-of-an-undercover-cop
(4) = Channel 4 News 10 April 2012 'CRIME: Alfie Meadows on trial for violent disorder during student protests', http://www.itnsource.com/en/shotlist/ITN/2012/04/10/T10041257/

Hundreds of MPs and Lords with financial interests in private healthcare firms revealed showing conflict of interest on NHS ' reforms'

The excellent Social Investigations blog  has found hundreds of conflicts of interest and financial interests of MPs and Lords who have voted for the Coalition government’s NHS reforms , relating to private healthcare firms (plus there are some among the right of the Labour party who are supporters of PFIs or PPPs ).

This post on Conservative members of the House of Lords’ links to private healthcare firms is particularly eye-opening.

I’d already posted reports from the Guardian on some of the private healthcare firms whose executives donated money to the Conservative party – and on one adviser to the current government moving to the healthcare division of a major accountancy firm, but from Social Investigations’ work, this seems to have been only the tip of the ice-berg.

Things are almost as bad as in America where many of both main parties’ members of congress are in the pockets of private healthcare firms, though some Democrats remain above board in this respect and so do many Labour MPs.

Texas study actually shows fracking industry does contaminate water - and Institute which conducted it is funded by fracking company

Much of the media are reporting that a new study has supposedly shown that there is no evidence of fracking contaminating water. If you read the full study it says ‘no direct evidence’ (implying there is indirect evidence) and is also playing with words by pretending that drilling the well for fracking, lining it and transporting chemicals used in fracking above ground are not fracking – as they are separate stages of the process. This is like arguing that the BP / Halliburton DeepWater Horizon spill in the Gulf of Mexico was nothing to do with the oil drilling industry because it was the result of the casing of the well being done imperfectly. It’s just playing with words. The reality is the fracking industry does contaminate water (and also air through flaring).

You can even find out half of this from the press release from the University, never mind the original study (1).

On top of that the people quoting this study are ignoring the fact that it was done by the Energy Institute of the University of Texas, which is funded by ConocoPhillips with at least $1.5million, ConocoPhillips being an oil and gas company currently facing law suits relating to it's fracking activities. That’s only the money we know about, because many American universities are refusing to say whether particular studies were funded by private companies or not, let alone which companies or by how much (2) – (3).

Even leaving aside the bias and conflict of interest in the study due to it's funding by a company involved in fracking (which means it has no credibility anyway), if you actually read the whole study, it's full findings are very different to the carefully misleading wording used in claiming that there's "no evidence that fracking contaminates water"

Time magazine reports that the study found that "Instead, researchers concluded that the problems associated with fracking tend to be due to mistakes made in other parts of the drilling process, like casing failures that allow drilling fluids and gas to escape from a well, poor cement jobs and spills on the surface. “These problems are not unique to hydraulic fracturing,” Charles Groat, an Energy Institute associate director and the lead author of the study, said in a statement." (4) So in other words fracking does cause these problems – but so does drilling for oil on land (something everyone knows already, so redundant).

It found that fracking does contaminate water in practice, because mistakes are made and short-cuts taken, leading to breaches in the casing during fracking and spilling of fracking chemicals above ground just as with drilling for oil, except that fracking pollutes ground water on land and so our drinking water.

Additionally the study admits that methane and various toxic materials present in the earth before fracturing begins may be released into wells and ground water due to fracturing, contaminating it - which shows how dishonest the summary claiming 'no evidence of contamination due to fracking' is.

See page 19 of the original study on this, which says "It appears that many of the water quality changes observed in water wells in a similar time frame as shale gas operations may be due to mobilization of constituents that were already present in the wells by energy (vibrations and pressure pulses) put into the ground during drilling and other operations rather than by hydraulic fracturing fluids or leakage from the well casing. As the vibrations and pressure changes disturb the wells, accumulated particles of iron and manganese oxides, as well as other materials on the casing wall and well bottom, may become agitated into suspension causing changes in color (red, orange or gold), increasing turbidity, and release of odors." (5)

Also note the ‘may’ – not very definite language.

So saying fracking doesn't cause it is misleading if the drilling to prepare for fracking the transportation of chemicals for fracking and the lining of the drilled wells does.

When this study and other proponents of fracking claim that water or air contamination is “not caused by fracking” it’s like claiming that the BP / Halliburton DeepWater Horizon oil spill was not due to drilling for oil because it was due to faulty capping of the well with concrete – it’s playing with words. In fact the fracking industry’s activities do cause water and air pollution just as oil drilling does cause oil spills and water and air pollution. The difference with fracking is that it's on land where spills can pollute water supplies and gas from flaring is likely to have dispersed less than gas flared on oil rigs by the time it reaches land, meaning it will affect more people breathing it in.


(1) = Energy Institute of the University of Texas press release 23 Mar 2012 'Study Shows No Evidence of Groundwater Contamination from Hydraulic Fracturing', http://energy.utexas.edu/index.php?option=com_content&view=article&id=154:study-shows-no-evidence-of-groundwater-contamination-from-hydraulic-fracturing&catid=34:press-releases&Itemid=54

(2) = University of Texas ‘ConocoPhillips Gives $1.5 Million to Fund Cutting-Edge Energy Research’, http://giving.utexas.edu/2010/11/01/conocophillips-energy-research/

(3) = BreakingLawSuitNews.com 23 Jan 2012 ‘Lawsuit Filed Against ConocoPhillips for Alleged Fracking-Related Water Contamination’ http://breakinglawsuitnews.com/lawsuit-filed-against-conocophillips-for-alleged-fracking-related-water-contamination/

(4) = Time 17 Feb 2012 ‘Shale Gas: It’s Not the Fracking That Might Be the Problem. It’s Everything Else’, http://ecocentric.blogs.time.com/2012/02/17/shale-gas-its-not-the-fracking-that-might-be-the-problem-its-everything-else/#ixzz1pKQpiwwM

(5) = Groat, Charles G. & Grimshaw, Thomas W. ( 2012) ‘Fact-Based Regulation for Environmental Protection in Shale Gas Development’,  Energy Institute of the University of Texas, February 2012, http://www.velaw.com/UploadedFiles/VEsite/Resources/ei_shale_gas_reg_summary1202[1].pdf (seems to download ok after a couple of refreshes on Internet Explorer, but won’t download on Firefox)

Thursday, March 22, 2012

The failure to charge Trayvon Martin's killer shows racism is still endemic in the Southern states of the US

Trayvon Martin, an unarmed 17 year old black boy, was shot dead by George Zimmerman, a latino member of an informal neighbourhood watch group in Florida earlier this month. Police and prosecutors in Florida have so far claimed there is insufficient evidence to charge Zimmerman with any crime.

Zimmerman phoned 911 to tell the police that he thought Martin was acting suspiciously (Martin had bought a drink and some sweets from a shop and was walking home). He says he followed Martin in his truck, got out of it when he couldn’t see where Martin had gone – and that Martin then jumped him from behind as he walked back to his truck and was punching him, leading Zimmerman to fear for his life, at which point he shot Martin twice in self-defence.

This story seems unlikely given that Zimmerman was an armed man, while Martin was an unarmed boy. The fact that Martin was 6 foot 3 inches tall and weighed 140 pounds, while Zimmerman is 5 feet 9 inches tall and weighs 250 pounds may make things marginally less clear cut.

Three witnesses – people who lived on the street Martin was killed on – say they heard what sounded like a boy crying in fear for help and begging for his life, followed by two shots.

While Zimmerman’s story sounds far fetched, some say a ‘Stand Your Ground’ law passed by the State of Florida would mean that if his story was true he could be argued to have been acting within the law.

The relevant section of the law reads A person who is not engaged in an unlawful activity and who is attacked in any other place where he or she has a right to be has no duty to retreat and has the right to stand his or her ground and meet force with force, including deadly force if he or she reasonably believes it is necessary to do so to prevent death or great bodily harm to himself or herself or another or to prevent the commission of a forcible felony.’

However, looked at from Martin’s likely point of view, even if Zimmerman’s story was true, Martin might be the one who had the right to defend himself with any means he thought necessary if he thought his life was in danger – which he reasonably could when approached by a man who had been following him and who was armed with a gun.

The current and former members of the Florida state legislature who drafted the law say that Zimmerman can’t use it as a defence whether his version of events is true or not as he was told by the 911 operator that he did not need to follow Martin as police officers were on their way.

What is completely unacceptable about this case is that Florida police and prosecutors have so far refused to bring any charges against Zimmerman. Their claim that there’s insufficient evidence even to bring charges seems far fetched given the three witnesses who heard the events combined with phone call recordings of Zimmerman’s 911 call and Martin’s phone call to his girlfriend.

Zimmerman’s 911 call is on youtube here – at 1 minute 39 seconds he tells the operator ‘They always get away’. At one minute 52 seconds he can be heard saying “fucking coons”.

 It is inconceivable that if the dead boy was white or latino and the killer was black that the police would not have arrested and charged them by now. Unless Zimmerman is charged the message sent to Americans – and to the rest of the world – will be that the Southern states of the US have not really changed since the segregation and lynchings of black people by the Klu Klux Klan in the past – that twenty-first century America is still a country of white supremacists in which black people can be killed without consequences. If that message is sent, expect a big fall in tourism to Florida and the rest of the US.

George Zimmerman’s father Robert has claimed in interviews that there had been repeated burglaries by black youths in the neighbourhood – but he also claimed before the 911 recording was released that Zimmerman had never followed or confronted Martin at any point – something contradicted by his son’s own account to the 911 operator ; and even if there were these burglaries there was no justification for killing Trayvon, though Zimmerman also said in the 911 call that Martin was putting his hand to his waist-band and was holding something (this turned out to be a can of iced tea and a packet of skittles (sweets)).

Even if Zimmerman did believe Martin was a burglar ‘casing’ houses, as he suggested in the call, this would still mean Zimmerman is a dangerous man, prone to suspecting people based on little or nothing and to follow them armed with a gun which he is very willing to use.

For a comprehensive summary of the facts of the case and links to the various mainstream media in Florida and the US reporting them, see this link.

To sign the Martin family’s petition to the Florida police and legal authorities demanding that Zimmerman be charged and tried for Martin’s death click this link

Tuesday, March 20, 2012

We need tax havens closed down to avoid another financial crisis and increase revenues , the 50p tax rate is a side issue, the mansion tax a gimmick

Chancellor George Osborne's cut in the 50p top rate of tax is supposed to bring in extra revenue by making the wealthiest pay tax in the UK, while business Minister Vince Cable is calling for a “mansion tax” supposedly to target the “super rich”. Another Lib Dem – Lord Oakeshott – says it’s because otherwise taxing the super rich is like pinning down jelly. In fact the real problem – the thing allowing the super-rich and big firms to avoid taxes; and the thing that caused the financial crisis and will cause another if they’re not closed down –is tax havens. Some will tell you closing them down is impossible – they’re wrong. It’s been done before and it can be done again.

Deputy PM Nick Clegg suggest a minimum tax rate, which is a better idea, but both avoids the main problem – tax havens, including the City of London ‘Square Mile’, which is governed only by the Corporation of the City of London – mostly bank and hedge fund executives.

To listen to most politicians you’d believe that they’ve now re-regulated banks and financial firms as much as is possible and that taxing and regulating big firms, banks and billionaires further is impossible as they’d just go elsewhere .  Nicholas Shaxson’s book ‘ Treasure Islands ’ shows this is a long way from the truth. It should be required reading for every voter in every country in the world (1).

The ‘Mansion Tax’ might get a little extra tax out of some of the super rich (while also e.g punishing widows and people who’ve retired for having a bigger than average house or a house in an area with high property values, the same way the Rates used to). It will barely make the super-rich of big firms blink though. If you want to get significant taxes out of them, you have to close down the tax havens

Bretton Woods

Shaxson shows that after World War Two the Bretton Woods agreement between the western European countries and the US imposed capital controls – i.e limits on how much money could be transferred from one country to another by private individuals and companies, with any large amount requiring an explanation of the reason and approval by government, which would not be granted unless benefits to the country the money was coming from could be shown.

There were also fixed exchange rates between the dollar and other currencies, avoiding currency speculation of the kind that led to Black Wednesday and the Asian Financial Crisis in the 1990s.

(Other aspects of Bretton Woods, such as the Gold Standard, were more questionable)

However from the day Bretton Woods came into force, bankers, the financial industry and politicians they lobbied were looking for ways to get around it and weaken it to the point it would collapse entirely. By 1971 they managed to achieve that.

How tax havens cause financial and economic crises – and will cause more if they aren’t closed down

Their main method has been tax havens, not only because of low (or no) taxes, but also because tax havens provide secrecy, allowing banks and companies to avoid regulation. They do this in several ways. For instance by allowing banks and companies and people to registering their company or shell companies or accounts in tax havens. Tax havens also allow professional front-man directors, managing executives, treasurers etc who are listed as the executives of thousands of different firms registered in that haven. So if anyone tries to find out about who owns and manages that company, they’ll only find the front people. Secrecy is the most important aspect, because if no-one knows who really runs an account or firm or what company or individual is putting money into it or taking it out (e.g to donate to political parties’ or politicians’ campaign funds), no-one can regulate them.

Enron, World.com, Parmalat and Long Term Capital Management for instance were all registered or had shell companies in the Cayman Islands, a British dependency.

While many tax havens are small islands and so ‘offshore’ some of the onshore tax havens like the US State of Delaware Luxembourg, Switzerland and the City of London (Square Mile) mentioned earlier are even bigger centres of corruption. Delaware has more companies registered in it than any other tax haven due to it’s lack of regulation, almost zero taxes and high level of secrecy.

The ‘financial derivatives’ like ‘Collateral Debt Obligations’ which led to the financial crisis were mostly invented and issued by firms registered in tax havens.

The onshore and offshore tax havens are similar in being small, largely being governed by the heads of companies in the tax haven (Jersey, City of London) or by governments so small that they are captured easily by big banks’ and companies’ lobbying and donations (Delaware).

The City of London is governed by the City of London Corporation headed by the Lord Mayor (no relation to the democratically elected mayor of the rest of London). City of London Corporation elections work like those of a medieval city dominated by merchant guilds rather than a modern democracy. There are 9,000 ordinary electors, but 39,000 votes held by companies. The votes held by companies are held by their Chief Executives, who get a number of votes based on their number of employees. (Tony Blair, who dropped the Labour party’s previous policy of abolishing the Corporation in 1996, passed legislation in government increasing the number of votes in it going to company executives from 26,000 to 39,000).

When Labour party member Maurice Glasman stood against one of the candidates in a Corporation election, it was unprecedented. The heads of the companies in the Square Mile are almost always elected unopposed by any other candidate.

This means that, in practice, as many of the UK’s banks and other financial companies are in the Square Mile governed by the Corporation, the UK’s financial industry remains entirely unregulated. Neither the British government nor the Mayor of London, nor the London Assembly, nor the EU, can regulate what goes on inside the Square Mile under their ‘Ancient Charter’ dating to before the Norman conquest of England.

What’s more the City of London Corporation and the firms that make it up are in denial about CDOs and other financial derivatives having caused the crisis and continue to lobby the government to avoid ‘unnecessary’ regulation of the financial sector and to allow it to continue to create now and ‘innovative financial products’ of the kind that caused the crisis.

If the tax havens aren’t closed down another crisis is not just a possibility – it will almost inevitably happen again, because the banks and firms involved are so big they can always extort a bail-out to avoid taking down the entire economy with them – and then re-invest some of the money they get from that in lobbying and donations to party funds.

How Tax Havens push up taxes for the majority

Shaxson found that an estimated $12 trillion – a quarter of the world’s wealth – is untaxed in tax havens, put there by individual people or their financial advisors. The amount put in them by banks and big companies is not known, but we do know that every major company and bank in the UK, from RBS to Tesco has dozens of subsidiaries, ‘joint ventures’ or ‘associates in tax havens like Jersey – and that the purpose of these subsidiaries and other agreements is to avoid tax. So at a guess at least half the world’s wealth is going untaxed in tax havens.

We also know that the Inland Revenue, which would jail ordinary people or heads of small businesses for evading or avoiding tax, instead negotiates ‘sweetheart deals’ with big banks and firms, allowing them each to avoid tens to hundreds of millions each a year – and that’s only from the accounts the Inland Revenue knows about.

That pushes taxes up for everyone else – all the ordinary people and small businesses who can’t afford the lawyers and accountants they’d need to avoid tax.

If that money was taxed, so those who can afford to pay paid what they can afford, taxes for everyone else would fall, extreme cuts in public spending would be unnecessary as tax receipts would rise and the kind of fraud that allowed the financial crisis to happen could be prevented.

How Tax Havens allow developed and developing world corruption

It also helps corrupt governments and dictatorships around the world – including in the poorest countries – to divert taxes and aid money into secret accounts in tax havens. So the next time you hear someone complain about how corruption makes aid pointless, point out that it couldn’t happen on the scale it’s happening without the tax havens and lack of controls on capital transfers, which are the result of the actions of developed world governments like the US, Britain, France and Switzerland. The centres of corruption are tax havens in the developed world.

Tax Havens launder drug , criminal and terrorist money

The secrecy which tax havens provide which is designed to allow people and companies to avoid or evade tax also allows drug traffickers, organised crime and terrorist groups to launder money. Shaxson provides several concrete examples including the BCCI affair and the Florida mafia

The Fiction that most Tax Havens are independent

The British government maintains a fiction that it has no control of what goes on in it’s tax haven dependencies – especially the Cayman Islands, Jersey and the Isle of Man. Shaxson’s book provides plenty of examples of them being able to get their way when they want something in these places – and plenty of quotes showing the British government giving their dependencies a nod and a wink on how it would be better if matters were ‘resolved’ without the UK government having to act itself and end the convenient fiction.

The biggest threat from tax havens – and how they can be closed down, as they were under Bretton Woods

The most frightening thing about tax havens though is that they are all still operating, providing secret accounts and shell companies for banks and firms worldwide – and as long as that’s the case another global financial crisis could happen tomorrow.

The ‘nothing can be done’ excuse – and why it’s false

Most of the politicians and bankers and billionaires will tell you that there is nothing that can be done about this – that modern technology and business practices have gone beyond the ability of governments to regulate them. That’s nonsense. It was possible to transfer money between countries fairly rapidly in 1945-1970, but Bretton Woods prevented it being done constantly without good reasons – and growth rates in that period were far higher (at an average of 4% a year) in the developed world than they have been since 1970. Before 1945 there was the same chaos in international finance, leading to the same problems – the 1929 Great Crash and the global Great Depression. So this is not a matter of new developments making new capital and exchange rate controls impossible – they are just as possible as they were in 1945 to 1970.

The ‘lack of political will’ excuse – and how to create the political will

Many will tell you that the problem is a lack of political will – again, nonsense. If enough people demand that their governments close down tax havens and impose regulation on them, it can be done, just as it was done after World War Two. Tax havens rely on money being able to get in and out. Simply ban all money transfers in and out of them until new regulations are in force and enforce full sharing of all information on accounts and companies registered in them.

The problem is that the billionaires and big firms and the newspapers and TV stations they own and the politicians they lobby and donate to have persuaded everyone that the people costing them money are fraudulent welfare claimants, when in fact, for instance, only 0.6% of benefit claims in the UK are estimated to be fraudulent. As long as the majority allow themselves to be conned in this way there certainly won’t be the political will to do anything about the tax havens that are really pushing taxes up for the majority and causing economic crises. If they are informed and persuaded of the real problems – and that allowing the tax havens to remain will result in another financial crisis and recession if they’re not closed down, that will rapidly change though.

Politicians lack the ‘political will’ to do anything about tax havens as long as the majority don’t realise how they’re suffering due to them because the same big firms and super rich people benefiting most from tax havens are also the ones donating most to the funds of the big parties and spending most on lobbying government.

The ‘requires an international agreement we can’t get’ excuse – and the alternative of leading by example

Then there’s the excuse that it would require an international agreement and that that’s not possible. In fact it’s been done before (Bretton Woods) and progress can be made even without one – because if one country starts closing down it’s tax havens then the voters in others won’t accept that closing down tax havens is impossible any more -  and the dominoes will start to fall.


Sources


(1) = Michael Shaxson (2011) ‘Treasure Islands: Tax Havens and the Men who Stole the World’ Bodley Heads, London, 2011

(2) = Guardian DataBlog October 2011 ‘Tax havens and the FTSE 100: the full list’- The top 100 British multinationals have declared full or joint ownership of 34,216 companies - 25% of which are located in jurisdictions classed as tax havens. http://www.guardian.co.uk/news/datablog/2011/oct/11/ftse100-subsidiaries-tax-data

(3) = Guardian 20 Dec 2011 ‘HMRC hid 'sweetheart' tax deals for big business, MPs say’, http://www.guardian.co.uk/politics/2011/dec/20/inland-revenue-sweetheart-tax-deals