More than euro 17 trillion (US 21 trillion) stashed in offshore havens - exceeding combined GDP of the US and Japan

Offshore funds presently exceed the combined GDP of the USA and Japan.

Wealthy tax evaders, aided by private banks have exploited loopholes in tax legislation and stashed over $21 trillion in offshore funds, says a report. The capital drained from some developing countries since 1970 would be enough to pay off national debts.

­The findings show the gap between the haves and the have-nots is much larger than previously thought.

The document, entitled The Price of Offshore Revisited, was commissioned by The Tax Justice Network campaign group and leaked to the Guardian. The report provides the most detailed valuation of the offshore economy to date.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," wrote James Henry, expert on tax havens and former chief economist at consultancy McKinsey in his report.

The document cites the world’s leading private banks as cherry-picking from the ranks of the uber-rich and siphoning their fortunes into tax-free havens such as Switzerland, the Cayman Islands and other off-shore banking areas. Also the City of London and the state of Delaware are mentioned as major conduits for these tax evasions.

Henry points the finger at the world’s top ten private banks, including Bank of America, Goldman Sachs, Morgan Stanley SSB, JPMorgan Chase, UBS, Credit Suisse, Wells Fargo, BNP Paribas, HSBC, Deutsche Bank, for aiding wealthy clients to dodge taxes.  According to Henry’s figures, the top financial leaders processed more than $6 trillion in funds in 2010, more than double the previous year.

The world’s premier multilateral financial institutions have paid almost no attention to this ‘black hole’ in the global economy.  It has been left to groups such as TJN to support the painstaking factual analysis underlying this report.

The G20 has repeatedly made calls to end tax-free havens since the beginning of the financial crisis in 2008, but these plans have still not yet come to fruition while the global banking system remains rotten to the core.

Institutions like the World Bank, the IMF, the US Federal Reserve, the Bank of England, and the Bank for International Settlements have ready access not only to the analytic resources, but also to much of the raw data needed to more precisely quantify the dimensions of this problem.

Why have they turned a blind eye so far?

EU-Digest