An US protester holds a placard during an anti-corruption demonstration. (file photo)
An unprecedented leak of documents has disclosed outrageous financial corruption among prominent political figures and billionaires across the world.
A collection of 2.5 million records obtained by the International Consortium of Investigative Journalists (ICIJ) -- a global network of journalists from more than 60 countries -- has unmasked high ranking politicians, arms dealers and other famous individuals from 170 countries operating under the cover of private trusts and businesses in the British Virgin Islands, the Cook Islands and other offshore locations.
The list includes famous names such as Azeri President Ilham Aliyev and his family, the daughter of Philippines’ former dictator Ferdinand Marcos, and Baroness Carmen Thyssen-Bornemisza, who is one of the most prominent art collectors in the world.
The ICIJ, in collaboration with 86 journalists from 46 countries, obtained the information from the contents of emails and accounting records accumulated over a period of 30 years.
The leaks, which shed light only on the covert activities of 122,000 offshore companies and 120,000 lawyers, brokers and accountants, are just a prelude to future revelations about tax havens. Extra information has been promised to be exposed to public opinion in the coming weeks.
Such a widespread investigation by 40 papers and news organizations from across the globe around “Offshore Leaks” project is unprecedented in the history of world’s journalism and is a real declaration of war on tax havens.
The time is conducive to laying bare the scandals of corrupt politicians, international traffickers, Mafia gangs and tax-evading rich people.
“I've never seen anything like this. This secret world has finally been revealed,” said Arthur Cockfied, law professor and tax expert at Queens University in Canada, who has seen the documents.
There is no clear definition for a tax haven. Nor is it clear under what conditions an island, archipelago or a country would be recognized as a tax haven.
Analysts slam offshore tax havens for promoting global corruption by enabling the wealthy to evade payment of taxes and thus shifting the burden onto the ordinary public.
Offshore tax havens also enable corrupt officials to loot national treasuries and cover up the activities of global crime syndicates.
The annual flow of global proceeds of financial crimes to offshore tax havens stands at 1.6 trillion US dollars.
In a bid to protect the identities of the real owners of companies, offshore services firms usually appoint fake directors and shareholders to confuse investigators.
A study by James S. Henry, former chief economist at McKinsey & Company, and a board member of the Tax Justice Network, shows that the estimated amount of 32 trillion US dollars stashed away in offshore havens is roughly equivalent to the size of the US and Japanese economies combined, and that half of the amount belongs to 91,000 individuals.
While the economies of the Western countries are shrinking, Henry’s study shows that offshore funds continue to burgeon, with assets managed by the world’s 50 largest "private banks" that provide access to offshore financial services, growing from 5.4 trillion US dollars in 2005 to above 12 trillion US dollars in 2010.
The ICIJ’s study estimated that offshore accounts hold more than 20 trillion US dollars.
According to the International Monetary Fund (IMF), 50 percent of international financial transactions are carried out through the offshore tax havens and the value of the assets of the companies located in these places exceeds 7 trillion US dollars.
Tax havens are also home to over 4,000 banks and two-thirds of the world’s investment funds, the IMF says.