Blog Archives

Podcast: Tax justice and public contracts, Brexit threats, criminal dodges and crackdowns in the Tax Justice Network January 2017 podcast

In this month’s Taxcast, the Tax Justice Network monthly podcast: we look at tax justice and public procurement – the efforts to hit tax dodging companies where it really hurts on a local level – trying to stop them bidding for public money for public contracts. Also:

  • how massive amounts of money are flowing into Tax Haven USA to circumvent the flawed Common Reporting Standard – South Dakota is apparently raking in tax evading capital
  • the slippery world of ‘residence planning’ and the ‘synthetic residency’ dodge
  • we discuss the UK’s Criminal Finances Bill likely to be passed this year, which includes proposals for ‘Unexplained Wealth Orders’ and holding tax evading enablers to account. An amendment to the bill could force UK satellite tax havens, the overseas territories to create public registers of the real owners of companies, something they’ve so far refused to do.
  • and we consider the British threat to the EU: ‘if you give us a bad Brexit deal, we’ll push regulation-lite, tax haven UK even further in a race to the bottom and shoot ourselves in the foot.’

(more…)

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Podcast: Iceland: offshorisation, collapse and recovery. What are the lessons?

In the October 2016 Tax Justice Network podcast: we look at the offshorisation of Iceland’s economy, its collapse and recovery. What are the lessons? Also, Brazil adds Ireland to its tax haven black list and Panama threatens anyone who dares call it a tax haven with a new law…plus more scandal and unique analysis you won’t find anywhere else. Produced by Naomi Fowler for the Tax Justice Network and featuring Sigrun Davidsdottir, journalist, blogger and podcaster, journalist Ingólfur Sigfússon and John Christensen of the Tax Justice Network.

You can download this directly onto your mobile device. phone or tablet (‘right click and save link as’ here)

“Iceland didn’t do what Europe has been doing, lingering in a limbo and not really tackling the big issues, we can see that every so often the European banking sector is struggling now with Italian banks, with Deutsche bank and so on, and this is very much down to the fact the painful things have been avoided and I often say that Iceland shows that a quick stab is better than a lingering pain. Iceland took the quick stab, it was extremely painful at the time but at least things have and are being slowly cleared out and that makes a huge difference compared to the so many European countries where the lingering pain is still there.”

Sigrun Davidsdottir, journalist, blogger and podcaster. Read her Icelog

“Panama is not just a major secrecy jurisdiction, it is a politically delinquent secrecy jurisdiction…they are moving away from a democratic country where civil society can interact freely…to an increasingly autocratic model and Panama now deserves to have strong international sanctions imposed upon it to make sure it doesn’t proceed down this highly autocratic highly secretive, highly non-cooperative model because the only people who’ll benefit from that are the criminals”

John Christensen of the Tax Justice Network

The Taxcast is also available on iTunes

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Subscribe to our youtube channel or email naomi [at] taxjustice.net

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US firms hiding $1,400,000,000,000 in offshore tax haven

US corporate giants, such as Apple, General Electric, and Microsoft are hidden nearly $1.4 trillion in dozens of offshore tax havens. That is $1,400,000,000,000.

The companies also used more than 1,600 subsidiaries in tax havens to hoard and move money around outside the reach of fiscal authorities. At the same time, the corporations keep on taking benefits from government support in their home countries paid by taxpayers.

The huge profits that major corporations have reported they are holding offshore, partly because of the high taxes they say they would have to pay for shifting the profits back to the US.

Read more: US firms hiding $1,400,000,000,000 in offshore tax haven

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HSBC’s half-baked apology doesn’t cut it. To tackle tax-dodging, we need to tackle PFI

It’s been a big week in the world of global mega-banks, financial secrecy and tax-dodging. In case you were hiding under a rock somewhere, we are talking about whistle blower Herve Falciani, ‘the worlds local bank,’ HSBC and the “Swiss leaks” scandal.

‘Too Big to Jail’ HSBC has been caught with it’s pants down yet again, this time for stashing around 180 billion of clients undeclared wealth in its HSBC Suisse branches.

Following a week of venomous press criticism and political posturing, HSBC the most secretive and corrupt of UK banks has been forced to come out with that rarest of commodities, a press statement/ non-apology from CEO Stuart Gulliver.

HSBC apology

As anyone who read up on HSBC’s Mexican money laundering activities in 2012 would attest – HSBC’s ‘financial crime compliance’ standards are not exactly what you would call world class.

HSBC is not just helping Swiss elites, terrorists and drug money launderers move money, evade taxes and break laws, there is a far more “vanilla” form of systematic tax abuse going in, plundering billions from taxpayers from right under our noses.

HSBC and its ‘offshore,’ Guernsey based offshoot HICL (formerly HSBC Infrastructure Company Ltd) are major players in the UK Private Finance Initiative (PFI) game, set up by City of London banks and accountancy firms such as PwC in the 1990’s to fund public infrastructure “off balance sheet” using private capital instead of cheaper Government borrowing.

Through PFI, HSBC and HICL have a controlling ownership stake in somewhere between 27 and 43 UK PFI infrastructure projects – mostly schools and NHS hospitals (including Barnet, West Middlesex and Stoke Mandeville). [following image via @scriptonite]

NHSBC

These public infrastructure assets, funded via UK tax revenues are now owned by HSBC, via PFI “special purpose vehicle” shell companies, registered ‘offshore’ for maximum ‘tax efficiency’ in the tax havens of Guernsey and Luxembourg.

I say HSBC owns somewhere between 27 and 43 PFI projects because as Xavier Riley of Open Corporates attests, the HM Treasury database which attempts to record the “secondary market” for the trading of “equity” ownership of PFI deals is: “hopelessly out of date.”

HMT 2013/14 data for HICL owned schools and hospitals can be seen below:

HICL PFI

Far from being discreet regarding PFI tax chicanery, HSBC kindly provides investors with the following offshore company structure diagram, illustrating the relationship between administration and investment arms in the UK, Luxembourg and Guernsey.

HSBC HICL PFI ‘special purpose vehicle’ offshore corporate structure

PFI_HSBC_HICL_Structure

It is not just HSBC’s Swiss Branches that demand the utmost secrecy. The PFI contracts entered into by HSBC and other such PFI partners are deemed “commercially sensitive” meaning the PFI contracts and the exact terms and conditions are closely guarded by Government authorities, unavailable for scrutiny in the public realm without time-consuming FOI requests.

If sunlight is the best disinfectant, what we don’t know from HSBC/ HICL’s use of complex offshore tax structure is exactly how much the company is [legally] avoiding in UK taxes.

We do know however, that HICL is incredibly profitable, they have actually gone to the trouble of noting actual vs target rates of return for investors on HSBC infrastructure projects, some exceeding 20% per annum. Projects ultimately funded by your taxes.

HSIL_HSBC_PFI_profits

To get some perspective on the tax arrangements of HSBC PFI projects, former tax inspector turned Private Eye hack and author Richard Brooks has the inside story.

Brooks latest book “The Great Tax Robbery” sets out in jaw-dropping detail how the big 4 banks and accountancy firms partner with complicit HM Treasury and HMRC mandarins such as Dave Hartnett (now HSBC) to draft tax loopholes favouring big corporates.

Nowhere is this Corporate-State collusion in tax avoidance more apparent than within the PFI industry.

The big 4 accountancy firms (PwC, EY, Deloitte, KPMG) effectively play both sides of the PFI contract negotiation process, creating tax loopholes, writing PFI contracts favouring the City and private sector and literally dripping with fat, then charging public sector ‘clients’ (i.e. taxpayers) hefty fees to renegotiate the rip-off PFI deals.

PwC PFI Private Eye

Richard Brooks on page 218 of The Great Tax Robbery states:

“All told by 2012, over 200 PFI companies were partly owned offshore, more than 70 of them running health service projects. By my calculations, 168 state schools, many of which are run under a single PFI contract are at least partly owned offshore. That so many public assets should be shunted into offshore tax havens is a remarkable outcome.”

And it’s not just our hospitals and schools owned offshore. Brooks sets out that 600 HMRC offices are owned by a PFI company based in Bermuda, while HM Treasury and HMRC’s head offices are owned via PFI company lend-lease, based in Jersey.

Ironically, the UK “Home Office” is 100% owned by HICL via the tax haven of Guernsey. You couldn’t make it up!

PFI Govt Buildings

Can we really trust the UK state to crack down on tax avoidance, when its very offices are so intrinsically linked to the practice of tax avoidance by the widespread use of PFI?

Richard Brooks estimates that while:

“Britain’s public services are hawked around, getting passed on like kids dog-eared playing cards, the PFI companies have drunk in estimated gains of £4.4 billion, almost entirely tax free!!”

It is one thing for rich elites to abuse Swiss bank secrecy laws, stashing millions of tax-free loot in HSBC vaults out of sight from the UK exchequer.

It is another thing entirely for HSBC to brazenly stash taxpayer funded NHS hospitals and schools, tax free offshore – aided and abetted by the corrupt UK state.

With £320 billion worth of PFI projects already commissioned in the UK and Labour’s Lord Adonis promising more PFI2 if Labour are elected – any Government promising a crackdown on tax avoidance whilst allowing the PFI tax dodge to continue unchecked simply is not credible.

As long as the cozy ‘revolving door’ between Westminster, Government and the big 4 banks and accountancy firms which designed and profit from PFI schemes is allowed to continue – our politicians cannot be trusted to clean up HSBC and prevent further tax evasion scandals.

For more information on fighting back against shady PFI deals, follow @pplvspfi on twitter and check out peoplevspfi.org.uk for more information.

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