6 ms·

I found it pretty illuminating, in another leak, the Paradise papers, to see that the Queen of England, who is also the head of the state in Bermuda, where this

by Iv 8y ago

I found it pretty illuminating, in another leak, the Paradise papers, to see that the Queen of England, who is also the head of the state in Bermuda, where this leaked came from, had huge investments in off-shore companies: https://www.telegraph.co.uk/news/2017/11/05/paradise-papers-queen-bono-kept-money-offshore-funds-leaked/ https://www.telegraph.co.uk/news/2017/11/05/paradise-papers-... It is no secret that Juncker, the head of the European Commission, was the leader of Luxembourg when it established itself as a tax haven power house, and blocked any serious EU reform to curb tax evasion. The various leaders of the world are the first to use these services. Theses funds allow them to finance campaigns, bribe officials, and maintain the statu quo. Of course they use political power to maintain this situation. I don't often say nice things about GWB's administration but one thing that came out of their terrorist paranoia was that they managed to basically kill the tax haven status of Switzerland, where some funds transited. But it took all the weight of the USA while it was in berserk mode to shut down such a thing. There is dozen more to go.

wahern 8y ago
> I don't often say nice things about GWB's administration but one thing that came out of their terrorist paranoia was that they managed to basically kill the tax haven status of Switzerland That seems like it could have been a counter-productive strategy. Better that your enemies use a well-understood banking system with [theoretically] reliable and consistent bookkeeping than for those transactions to shift to a more disperse, more chaotic international system. Even if Swiss accounts were nominally secret, AFAIU the CIA and NSA had developed a fairly reliable system for snooping around. There's a reason New York and London continue to be world leaders in processing financial transactions--the governments have been intentionally tolerant of shady characters, shady businesses, and shady nations as long as the transactions nominally followed the law. Among other benefits, that puts you in a good position to keep track of the bad guys and, when it really counts, to take them down. If you police too heavily all that activity goes somewhere else. But it does leave you open to accusations of aiding & abetting bad behavior. There's a limit to what can be politically and legally tolerated in New York and London. But you can structure the international system to channel those intolerable transactions to the least worse alternatives. Like so much with the War on Terror, the better approach would be to improve HUMINT and investigatory resources, rather than pushing the activity further underground and playing a game of whack-a-mole.
- everdev 8y ago
  I don't think it takes long for word to spread. Once privacy is comprised your window of opportunity probably closes pretty quickly. Even a hint of government access to Swiss accounts probably sent all nefarious accounts somewhere else.
  - wahern 8y ago
    Swiss banks were still used for the 1MDB operation, which involved Saudi Arabian intermediaries who 1) presumably understood the limits to Swiss secrecy and 2) probably ran in the same circles as those associated with militant organizations. And that began after the Bush administration. Moving transactions to other systems is also risky for the bad guys, in terms of higher transaction costs and less predictability regarding the degree of confidentiality. It's like in computer security--you can't defend against an omnipotent attacker, rather you have to make some assumptions about your visibility and desirability as a target vs the strength of defenses. Choosing to go with some new, untested service may make you invisible or may leave you a sitting duck; how can you know? Moreover, while organizations like Al Qaeda would have steered absolutely clear of the normal system, they benefit when more money moves via the darkest channels. They benefit from improved consistency, reliability, liquidity, and cover traffic.
- Iv 8y ago
  To be fair I take this as a gain as I see tax haven as a much more harmful thing than Al-Quaeda ever was. It is an enabler not only of terrorism but of several crimes that causes a countless amount of death globally. And no, I don't buy the "we tolerate it so that we could watch it". Too much private money is at odds there. The truth is that this still exists because otherwise there would be no channel for the Saud family to fund the Bush one or for Russian oligarchs to pay up GOP members.
  - wahern 8y ago
    Except the crackdown has arguably led to faster evolution of tax havenry. Over the past 15 years the traditional tax havens have lost considerable business to new jurisdictions offering more complex and cheaper havens (e.g. trusts and property schemes), attracting smaller customers (e.g. small-time multi-millionaires) who previously couldn't have afforded to indulge in these activities. The market has grown. That was inevitable to some extent but when your achilles heel is your ability to respond to change (which government agencies suck at) it's a risky strategy to shake-up the system.
codeisawesome 8y ago
“All the weight of the USA while it was in ‘berserk mode’” is very evocative phrasing.
charlesdm 8y ago
The UK Queen (or her managers) invested in an offshore fund, which for UK tax purposes was tax transparent. That meant the fund itself did not pay taxes, but tax was paid "in personal name" on any gains. This results in an outcome which would've been exactly the same as if she had directly made the investments in her personal name. Meaning: a whole lot of talk about nothing by people who are clueless about tax matters. These kinds of arrangements are not the problem. Neither is Emma Watson purchasing a property through an offshore company for privacy reasons. The problem is autocrats siphoning off billions from their local economy and hiding it through layers of shell corporations across the world, which are not limited to just companies based in offshore tax havens.
- mikekchar 8y ago
  Does the UK queen pay taxes in the UK? I'm pretty sure the royal family was exempt at one point, but I haven't followed it for a long time. I think they actually receive funds from the tax payer.
  - jhayward 8y ago
    She voluntarily pays taxes on her personal income, although as Sovereign she is constitutionally exempt. She also donates all of the income from Crown holdings to government, as I recall. Most of the complainers about the royal family being taxpayer supported don't realize what a bargain the UK gets, they make a lot of money from HMTQ.
    - jacobush 8y ago
      Although I expect some of them complain because they want the whole institution of monarchy abolished. Personally, I find it quite interesting how several European monarchies within themselves managed to "strike a bargain" between old vested interests (the Crown) and commoners such that probably revolution was averted - and that this "power balance" lives on to this day.
    - bmer 8y ago
      Where are you getting this from? Here's an article, from a reputable news organization: https://www.theguardian.com/commentisfree/2014/jun/28/royal-family-value-for-money-not-worth-tuppence https://www.theguardian.com/commentisfree/2014/jun/28/royal-... More recently: https://www.theguardian.com/commentisfree/2017/jul/19/queen-spend-mushrooming-pay-revenue-estate https://www.theguardian.com/commentisfree/2017/jul/19/queen-...

by Iv 8y ago

wahern 8y ago

> I don't often say nice things about GWB's administration but one thing that came out of their terrorist paranoia was that they managed to basically kill the tax haven status of Switzerland That seems like it could have been a counter-productive strategy. Better that your enemies use a well-understood banking system with [theoretically] reliable and consistent bookkeeping than for those transactions to shift to a more disperse, more chaotic international system. Even if Swiss accounts were nominally secret, AFAIU the CIA and NSA had developed a fairly reliable system for snooping around. There's a reason New York and London continue to be world leaders in processing financial transactions--the governments have been intentionally tolerant of shady characters, shady businesses, and shady nations as long as the transactions nominally followed the law. Among other benefits, that puts you in a good position to keep track of the bad guys and, when it really counts, to take them down. If you police too heavily all that activity goes somewhere else. But it does leave you open to accusations of aiding & abetting bad behavior. There's a limit to what can be politically and legally tolerated in New York and London. But you can structure the international system to channel those intolerable transactions to the least worse alternatives. Like so much with the War on Terror, the better approach would be to improve HUMINT and investigatory resources, rather than pushing the activity further underground and playing a game of whack-a-mole.

everdev 8y ago
I don't think it takes long for word to spread. Once privacy is comprised your window of opportunity probably closes pretty quickly. Even a hint of government access to Swiss accounts probably sent all nefarious accounts somewhere else.
- wahern 8y ago
  Swiss banks were still used for the 1MDB operation, which involved Saudi Arabian intermediaries who 1) presumably understood the limits to Swiss secrecy and 2) probably ran in the same circles as those associated with militant organizations. And that began after the Bush administration. Moving transactions to other systems is also risky for the bad guys, in terms of higher transaction costs and less predictability regarding the degree of confidentiality. It's like in computer security--you can't defend against an omnipotent attacker, rather you have to make some assumptions about your visibility and desirability as a target vs the strength of defenses. Choosing to go with some new, untested service may make you invisible or may leave you a sitting duck; how can you know? Moreover, while organizations like Al Qaeda would have steered absolutely clear of the normal system, they benefit when more money moves via the darkest channels. They benefit from improved consistency, reliability, liquidity, and cover traffic.
Iv 8y ago
To be fair I take this as a gain as I see tax haven as a much more harmful thing than Al-Quaeda ever was. It is an enabler not only of terrorism but of several crimes that causes a countless amount of death globally. And no, I don't buy the "we tolerate it so that we could watch it". Too much private money is at odds there. The truth is that this still exists because otherwise there would be no channel for the Saud family to fund the Bush one or for Russian oligarchs to pay up GOP members.
- wahern 8y ago
  Except the crackdown has arguably led to faster evolution of tax havenry. Over the past 15 years the traditional tax havens have lost considerable business to new jurisdictions offering more complex and cheaper havens (e.g. trusts and property schemes), attracting smaller customers (e.g. small-time multi-millionaires) who previously couldn't have afforded to indulge in these activities. The market has grown. That was inevitable to some extent but when your achilles heel is your ability to respond to change (which government agencies suck at) it's a risky strategy to shake-up the system.

codeisawesome 8y ago

“All the weight of the USA while it was in ‘berserk mode’” is very evocative phrasing.

charlesdm 8y ago

The UK Queen (or her managers) invested in an offshore fund, which for UK tax purposes was tax transparent. That meant the fund itself did not pay taxes, but tax was paid "in personal name" on any gains. This results in an outcome which would've been exactly the same as if she had directly made the investments in her personal name. Meaning: a whole lot of talk about nothing by people who are clueless about tax matters. These kinds of arrangements are not the problem. Neither is Emma Watson purchasing a property through an offshore company for privacy reasons. The problem is autocrats siphoning off billions from their local economy and hiding it through layers of shell corporations across the world, which are not limited to just companies based in offshore tax havens.

mikekchar 8y ago
Does the UK queen pay taxes in the UK? I'm pretty sure the royal family was exempt at one point, but I haven't followed it for a long time. I think they actually receive funds from the tax payer.
- jhayward 8y ago
  She voluntarily pays taxes on her personal income, although as Sovereign she is constitutionally exempt. She also donates all of the income from Crown holdings to government, as I recall. Most of the complainers about the royal family being taxpayer supported don't realize what a bargain the UK gets, they make a lot of money from HMTQ.
  - jacobush 8y ago
    Although I expect some of them complain because they want the whole institution of monarchy abolished. Personally, I find it quite interesting how several European monarchies within themselves managed to "strike a bargain" between old vested interests (the Crown) and commoners such that probably revolution was averted - and that this "power balance" lives on to this day.
  - bmer 8y ago
    Where are you getting this from? Here's an article, from a reputable news organization: https://www.theguardian.com/commentisfree/2014/jun/28/royal-family-value-for-money-not-worth-tuppence https://www.theguardian.com/commentisfree/2014/jun/28/royal-... More recently: https://www.theguardian.com/commentisfree/2017/jul/19/queen-spend-mushrooming-pay-revenue-estate https://www.theguardian.com/commentisfree/2017/jul/19/queen-...