Western tax havens slated as corrupt

Duncan Campbell in London

September 5, 2006

BRITAIN, the United States and Switzerland are among the world's most
corrupt countries, a tax expert says.

The failure of these and other developed countries to clamp down on offshore
tax havens is responsible for more hardship than any corrupt acts by Third
World leaders, John Christensen, formerly an adviser to the government of
the Channel island of Jersey and now director of the Tax Justice Network,
told the Economic Geography Research Group conference on Sunday.

"I would place the United Kingdom high on the list of most corrupt
countries," he said, citing its role as a tax haven and a defender of the
tax haven role of its overseas territories and dependencies, as well as its
"dismal role in undermining the effectiveness" of the European Union's
attempts to close tax loopholes.

Mr Christensen said there had been too much emphasis on corruption in the
Third World and not enough on the abuse of offshore tax havens by the
wealthiest nations.

Transparency International, a pressure group campaigning against corruption,
reinforced stereotypes by depicting African nations as the most corrupt, he
said.

By contrast, Mr Christensen said, many of the countries the group identified
as least corrupt were offshore tax havens, including important centres such
as Singapore, Switzerland, Britain, Luxembourg, Hong Kong, the US, and
Belgium.

Tax Havens list Britain as corrupt

Tax havens 'put Britain high on list of corrupt countries'
By Charles Clover

(Filed: 02/09/2006)

Britain is high on a list of the world's most corrupt countries, along
with the United States and Switzerland, because of the refuge it offers to
dirty money in tax havens such as the Channel Isles and the Isle of Man,
researchers said yesterday.

Britain deserves inclusion high on any list of corrupt countries
because of its "pinstripe infrastructure" of financial advisers squirrelling
away money offshore and because of its reluctance to close down its tax
havens, the Royal Geographical Society's annual conference was told.

John Christensen, of the Tax Justice Network, whose research is funded
by the Joseph Rowntree Foundation, criticised the ranking of the world's
most corrupt nations compiled annually by Transparency International, a
not-for-profit organisation, in which African countries come out as the most
corrupt.

He said the index used a too-narrow definition of corruption, mostly
bribery.

He said Britain, Switzerland, America and other countries that provide
tax havens would float to the top if the definition of corruption was
broadened to include other forms of criminal cash transfers and illicit
transactions.

While the amount of corruption in developing countries was reliably
estimated at $20 billion a year, the inclusion of corrupt transactions
across borders lifted that to $539 billion.

Mr Christensen accused Gordon Brown, the Chancellor, of failing to
carry out his promise to go after large scale corporate tax avoiders,
because of a reluctance to alter Britain's perception as a "low tax" nation.

Instead of going after the corrupt super-rich, the Chancellor had
placed the burden of taxation on people of middle and lower incomes.

Mr Christensen said that this had wider consequences than just
starving the Treasury of tax revenue because money from corruption, or
flight capital as it is sometimes known, helped to inflate property prices
and did not lead to genuinely productive economic activity.

Calling for the abolition of tax havens he said: "You cannot move
money in the quantity that has been moved out of Russia without using the
western banking network and they are all deeply implicated in the process."

Prem Sikka, a professor of accounting at Essex University, accused Mr
Brown of losing an estimated

£97-150 billion a year to organised tax avoidance by large
corporations because he was reluctant to tackle the trans-frontier transfer
of money, at preferential rates, between large corporations.

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