April 2011 - Centre for Civil Society - University of KwaZulu-Natal

offshore havens – Joan Baxter discusses the ‘highly stratified world that
has become treacherously top-heavy’.
This year’s Forbes List of the world’s wealthiest people is out. On the
heels of the global financial crisis, with sky-rocketing food prices, climate
change already making life even more difficult for poor farmers in
developing countries, with conflict and political turmoil around the world
and with a billion or so people going to bed (if they have one) hungry every
night, the super-rich are doing very well for themselves indeed. The
Forbes List of billionaires has swollen this year to a record 1,210
individuals.[1] On a planet with nearly 7 billion people, just 1,210 people
(including 14 in Africa) possess $45 trillion, equivalent to 77% of the
world’s GDP.[2]
But the Forbes List doesn’t tell the whole story. It includes only billionaires
with publicly traded fortunes. While it does include several billionaires
who made their vast fortunes by pillaging natural resources and wealth in
Africa and elsewhere around the world, it misses their accomplices – the
billionaire leaders of a whole slew of African, Middle Eastern and central
Asian countries. The list doesn’t include men like Libya’s Muammar
Gaddafi, who controls a stash worth ‘tens of billions’ that he managed to
launder over the years using Swiss banks.[3] Nor does it include Egypt’s
former ruler, Hosni Mubarak, whose fortune is being estimated – now that
he is deposed and no longer being coddled (and financed) by his Western
friends – in the tens of billions.[4]
If one could find all of these offshore holdings and add them to the $4.5
trillion net worth of the Forbes List billionaires, the amount would be more
than staggering; it would be simply inconceivable. But we cannot track
down their fortunes because they are well hidden.
In 2005, wealthy individuals held an estimated $11.5 trillion (about a
quarter of the world’s total wealth at the time) ‘offshore’,[5] a
euphemism for tax havens or secrecy jurisdictions where it’s possible to
stash vast amounts of wealth out of sight, certainly out of the grasp of
governments in search of much-needed tax revenue. Some of these tax
havens are actually not offshore at all, such as the City of London and
Manhattan.[6] The Tax Justice Network’s ‘Financial Secrecy Index’ ranks
Delaware in the US as the number one of 60 secrecy jurisdictions, followed
by Luxemburg, Switzerland and the Cayman Islands.[7] African tax havens
include Liberia, Mauritius and the Seychelles. For every aid dollar handed
across the table to Africa, ten dollars are taken back, primarily using
Western banks and the offshore.[8]
Over the past few decades, financial markets that were once subordinate
to the real economy came to dominate it. Institutional investors took over
and the search for the maximum profit in the shortest possible time
became the only rationale for investment.[9]
Of course, not all the super-rich are created equal. Some are neither
greedy nor selfish; some are downright generous and patriotic and
acknowledge that they owe much to the society that allowed them to
become rich in the first place, and they dutifully pay taxes.
But many at the top of the monetary food chain hide their wealth in tax
havens and virulently oppose progressive taxes that would help even out
the alarming disparities and curb the dangerous accumulation of so much
wealth in so few hands. Many use the power that their wealth affords them
to engage armies of middlemen, accountants, lawyers and financial
wizards to ensure that no one can get at their money. They fund ‘think