The release of 2.5 million documents by the International Consortium of Investigative Journalists (ICIJ) detailing the activities of tens of thousands of people and corporations who have an estimated $32 trillion in offshore accounts is providing a paper trail for cash-strapped governments looking to recoup lost funds.
As the eurozone lurches from one budgetary crisis to the next, British Prime Minister David Cameron has made tackling tax evasion and encouraging greater transparency and accountability a priority during this June’s G8 summit in Northern Ireland.
Small tropical islands and tiny European nations have often hidden behind sovereignty to say they do not co-operate, from a tax perspective, said Pascal Saint-Amans, director of the Organization of Economic Co-operation and Development’s Center for Tax Policy and Administration.
“Secrecy is no longer acceptable. We need to get rid of it,” Saint-Amans said in an interview from Paris. “If the rules make it possible, then, we’ll change the rules. That is what we are doing.”
Last February in Moscow at the G20 meeting, financial leaders vowed to crack down on multinational corporations trying to evade taxes in their own countries.
Nearly 260 gigabytes of emails, documents, corporate files and account ledgers were obtained by the ICIJ’s director Gerard Ryle on a hard drive, concealed in a brown envelope.
The Washington-based ICIJ then shared the information with 38 news organizations, including Canadian partner CBC. Reporters spent months verifying the documents. The CBC discovered a list of 450 Canadians who have stashed millions offshore, including Saskatchewan lawyer Tony Merchant and his Senator wife Pana Merchant.
“The fact that these things have to be disclosed by journalists and leaks is quite disturbing,” Rudy Duschek, a forensic accountant and fraud investigator with ChrisMathers Inc., told the Star.
The level of tolerance or acceptance of these kinds of tax-haven arrangements has dramatically decreased, especially after the global market meltdown in 2008, Saint-Amans said.
“Now, a lot of these schemes are in jeopardy. To be found out doesn’t mean we have put an end to it, but, it means we have the tools to do it while we did not earlier,” he added.
The ICIJ data discovery revealed nations such as Greece, which has nearly $70 billion in unpaid taxes according to the International Monetary Fund, could benefit exponentially if money could be recouped. Imposed austerity measures intended to repair the economy has crippled Greece, caused massive social unrest and the nation just posted a 26.4 per cent jobless rate.
“That is the bailout. They could bail themselves in by paying their taxes,” Saint-Amans said.
According to the ICIJ and the Ta Nea newspaper, an examination of 107 Greek companies shows citizens who either own or direct offshore companies in tax havens like the British Virgin Islands, “rarely declare them to Greek tax officials.”
In fact, only four out of 107 offshore entities revealed are legally registered. Officials have no record of the other 103 companies or whether their owners declared any assets held by the entities or paid taxes on them, Ta Nea and the ICIJ reported.
And in Britain, the Guardian, in a joint investigation with the BBC’s Panorama and the ICIJ, found an exploding offshore industry which opens the door to tax avoidance and asset concealment.
The practice of using sham directors — people who lend their names as frontmen for companies — was supposed to be curtailed in Britain, the Guardian reported. However, the team found nearly 21,500 companies have been identified using this group of 28 so-called nominee directors, who play a key role in keeping secret thousands of commercial transactions, they said.
While not illegal under U.K. law, the Guardian stated their evidence suggests this particular group of directors only pretend to control the companies they are apparently a part of.
Meanwhile, in Canada, a harshly-worded report called “Follow the Money” issued last month by the Senate’s Committee on Banking, Trade and Commerce warned that “there is a lack of clear and compelling evidence that Canada’s regime is leading to the detection and deterrence of money laundering” and other financial crimes.
The report said money laundering in Canada in 2011 was estimated to be between $5 billion and $15 billion, according to the RCMP.
“The recent Senate report clearly established that Canada needs to go back to the drawing board and rethink how we are doing things,” said Garry Clement, former director of the RCMP Proceeds of Crime 2003 branch. For 20 years, he investigated financial crimes for the Mounties and now runs his own consulting firm.
Clement said that for a long time Canada was seen as the “Maytag of the North” where money-laundering and other financial crimes flourish because of lax regulations and enforcement.
“Have we improved?” he asked. “Yes, we are still being seen as an extremely weak link.”
Original Article
Source: thestar.com
Author: Tanya Talaga and Julian Sher
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