THE US can lead the fight against corporations and the richest 1% that use shell companies and tax havens, which are located all over the Cayman Islands to South Dakota, says Chuck Collins, an American expert on the issue. , but only “if we put our house in order” with a crackdown on their home.

But it’s going to take a long time to do it, he adds.

“The wealth advocacy industry says what it does is legal,” including secret tax haven banks and law firms that create shady accounts for the rich, Collins explains in an interview with People’s World. He is director of the Inequalities and the Common Good program at the Institute for Policy Studies.

“But they write the laws and they write the regulations” that govern tax havens – or not, he says.

And the system they put in place not only enriches the 1% and hides their wealth, but “empowers criminals, dictators and kleptocrats while plundering the Global South.”

“And we are driving the getaway car” for these criminals, he adds.

South Dakota is the best example in the United States, according to the International Consortium of Investigative Journalists (ICIJ) in its Pandora Papers project, publishing and analyzing 11.9 million financial documents, memos and emails.

Disclosures of hidden wealth in shell companies, offshore bank accounts and tax havens are important to workers. The use of tax havens robs governments of the revenue they would otherwise receive and could be used for programs aimed at people, from pensions to health care to building schools, for example. And ordinary people all over the world are left with or without the bills.

“South Dakota suspended the rules” to allow itself to become a tax haven for wealthy foreigners, Collins, author of The Wealth Hoarders: How billionaires spend millions to hide billions, Explain.

“There are no taxes, there is no disclosure and there are no interest rate limits” in the deeply Republican state, he said. “In the 1980s, they changed their laws to attract the trust industry” – which contains tax havens – “and they repealed their anti-usury laws”.

The driving force behind this legislation, he noted, was Republican Bill Janklow, governor in 1979-87 and 1995-2003. “A wealthy family from Wisconsin” went to see him “and Citigroup too. “

South Dakota is not alone

But South Dakota is not alone, even though the ICIJ has reported that some $ 367 billion has been hidden there. Collins says that even though New Hampshire is not on the list of America’s top tax havens, in terms of number of accounts – a list that also includes Texas, Florida, Delaware and Nevada – even more wealth is hidden in Granite State: $ 600 billion.

“It’s another small state colonized” by a financial system Collins calls “medieval.” In states like these, “lawmakers were approached by a small trust industry that said, ‘Pass this.’ Without proper analysis and drawn to potential millions, they did.

“It would be nice if there were Congressional hearings on trust law,” Collins says.

These hearings could take place sooner than we think. A bipartisan group of lawmakers, prompted by the findings of Pandora Papers, introduced the Facilitators Act, expanding Treasury oversight, disclosure standards and controls over these accounts.

They are proposing to expand disclosure to cover a whole host of other financiers, including trusts and real estate companies – like, although they haven’t said so, Donald Trump.

The measure would require the Treasury to impose “basic rules of due diligence on the source of funds for investment advisers, art dealers, lawyers involved in financial activities, business service providers – those who start businesses for a fee – accountants, public relations firms and third parties. payment providers ”, indicates a fact sheet from lawmakers.

“A basic due diligence program could be a requirement as simple as asking if suspicious funds are the proceeds of crime,” he adds. Collins says the due diligence and disclosure required “will tell us who is really buying this luxury condo.”

Their measure would also allow “to eliminate the” temporary “exemption” – in place since 2002 – which now benefit real estate professionals and sellers of luxury cars, ships and planes from programs to fight against money laundering.

It would also “protect Americans from house price inflation, job losses, human trafficking and influence peddling,” the sponsors say.

Collins, bluntly, would go beyond mere disclosure and money laundering controls. “Trust assets should be taxed,” he says emphatically.

The ICIJ revealed that over 4,000 bank accounts were registered in various tax havens, which the wealthy then used to hide their wealth from scrutiny and tax collectors. But while past and long-standing tax havens were in countries such as the British Virgin Islands, Panama and the Cayman Islands, there are now 206 such secret bank accounts in the United States, 81 of which are in the United States. only South Dakota.

Largest guilty company is based in the United States

Virtually all of the clients who use tax haven accounts and most of the banks that manage them come from overseas. But the largest of the law firms that engage in the creation of tax havens is Baker McKenzie, based in the United States.

A spot check of prominent American plutocrats among the 1% – such as Warren Buffett, Jeff Bezos, Elon Musk, the late Sheldon Adelson and his wife and Donald Trump – shows that none of their names have yet appeared in the Pandora Papers .

ICIJ’s Pandora Papers disclosure and analysis series was its third massive financial analysis in five years. All three reveal how the ultra-rich, the 1% and various corporations have used these tax havens to protect wealth and buy everything from businesses to castles to yachts.

Prominent politicians, especially in Latin America, Eastern Europe and South Asia, have also used shell companies and tax havens to hide billions of dollars combined. The first revelations of the ICIJ, five years ago, torpedoed several political careers. The Pandora Papers revelations sank Czech Prime Minister’s right-wing billionaire Andrej Babis.

Newspapers showed Babis used shell companies to buy a $ 22 million mansion on the French Riviera. He applied for a new term as prime minister the same week on a Trump-like platform – with a red baseball cap and nationalist slogans. His party finished third.

Chuck Collins, Director of the Inequalities and the Common Good Program at the Institute for Policy Studies

Collins and lawmakers aren’t the only ones in the United States to tackle the problem of tax havens. One provision, the Business Transparency Act, in the Fiscal Year 2021 Military Expenditure Act requires more such disclosures and crackdowns. This provision was one of the reasons the AFL-CIO supported the bill, Director of Government Affairs Bill Samuel told lawmakers in a letter last December.

He calls the measure “a critical first step in addressing vulnerabilities in our government’s anti-money laundering safeguards, preventing tax evasion and strengthening our financial system with updates to our anti-money laundering laws.” .

Ironically, Congress passed this law in 2020 during Trump’s reign in the White House. He became infamous for keeping his business finances a secret. Congress and New York Attorney General Letitia James are investigating Trump Organization taxes and exemptions.

“We have to go after the latecomers and the scoffers,” Collins says.

And Citizens for Responsibility and Ethics in Washington (Crew) recently weighed in with an 11-page letter to Treasury’s Financial Crimes Enforcement Network (Fincen), which is drafting rules to enforce the new law. Crew wants the rules to be strict.

The Treasury should “demand strong disclosure of information on beneficial owners,” he said. “The United States has archaic and woefully flawed corporate transparency laws. This failure has led outside observers to rank the United States as the second worst jurisdiction in the world for financial secrets, behind the Cayman Islands.

First significant reform

“The corporate transparency law is the first significant reform in decades and Fincen must seize this opportunity to pass the bold regulatory reforms that the country’s disastrously flawed regime needs. Crew warns Fincen against designing a regulatory framework that allows entities to avoid disclosing meaningful beneficial ownership information or that creates exemptions from reporting requirements that could be exploited by bad actors.

Congressman Steve Cohen said their bill would go after facilitators, banks like JP Morgan Chase, accountants and tax lawyers.

“The Pandora Papers reveal how corruption undermines democracy. All over the world, countries are being looted and the most vulnerable people victimized by their elites. These kleptocrats then launder that money in the West, where they enjoy the high life – spending the money on fancy cars, penthouses, jets, and opulent parties, ”Cohen explains.

“Some also spend it to intervene in our democracy, gain influence in our politics and our elites and work to undermine the rule of law. In order to fight corruption, we need to curb the catalysts, ”he says.

Collins is hoping cities will also get into the act by “starting to create public ownership options, with transparency.” And he suggests that federal law should be changed to put time limits on trusts. A trust, listed in the ICIJ’s file on Deutsche Bank, began in 1949, for example.

“There shouldn’t be ‘everlasting trust’,” he remarks.

Collins also wants to curb the facilitators. But the first step is to put the spotlight on the scheme, and he said that’s what the Pandora Papers – and earlier ICIJ disclosures – have done.

“It’s important to connect the dots and the names and say why that matters,” he concludes.

Mark Gruenberg is editor-in-chief of Press Associates Inc, a labor information service, and director of the Washington office of People’s World, where this article first appeared – www.peoplesworld.org.


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