TJN: we were wrong about private banking
December 3rd, 2010
December 3rd, 2010
Yesterday afternoon I got a phone call from a private banking insider – somebody who knows the industry intimately – who had objected to some things we have blogged recently.
One was yesterday’s Bahamas blog; the other was a blog last month entitled Brazil gets tough on global pirate bankers. That picked up a Bloomberg story looking at the arrest of a Brazilian private banker, Alexandre Caiado, who got arrested for apparently selling tax evasion services, and who seemed mystified as to why he had been targeted. Our blog expressed approval that Brazil was getting tough on private bankers at last.
The following words are rather critical of TJN (Tax Justice Network) blogging, but we are grown ups and the message here is so important that we will simply reproduce them, unadulterated, swear words and all:
“When I read the blog post a while back on the Brazilians, I thought: you are missing the point. When you do this fanfare on private bankers getting prosecuted – No. The real powers-that-be who run this stuff from an elite level, if they sit there and read your stuff they will be sniggering. The point is that that guy is minor. It is a diversion. Maybe he pissed someone off. Maybe he got silly and was dropped from the circle. Maybe someone was afraid he would talk. They shut him up. At the same time they say to the outside world – ‘look at what we are doing. We are taking a stance against money laundering and tax evasion. There you go, civil society!’
And in the meantime, in plain sight, this shit goes on. Just look at that thing you wrote in your blog about the Bahamas. They are bragging about this in their newspaper. They are bragging about it on the website of the Bahamas Financial Services Board. Important people from the Bahamas, the Caymans and the BVI are doing this shit in plain sight. And then there is this ‘da da da!’ Fanfare! We are now complying! We are not involved in tax evasion any more!
This is why your work will be so difficult. The people in their NGOs want to get their nice little salaries to do this work, they will keep themselves in employment for a very long time – unless you recognise that that is the issue you are dealing with you will never ever ever get anywhere.
The OECD stuff is a fig leaf, a diversion. The real power mongers want the whole system to keep going, and to put out these diversions. While they are all doing all this stuff for the popular press, for the NGO world and Civil Society who don’t know how it works from the inside – at the same time they are saying to their clients (as on the BFSB website) ‘all is hunky dory in the world of confidentiality.’ They are all saying to their clients: it is business as usual.”
There is something else, too, that our correspondent wanted to mention.
“It is a fee-earning opportunity too – I don’t have any statistics on this – but you can say to your clients: ‘just for an extra level of safety, we can restructure your accounts to this or that other centre, or in this other structure’, and then they can charge fees for it.
This applied, for example, to the U.S. Qualified Intermediary program – whereby banking institutions were supposed to tell the U.S. authorities about tax-evading U.S. clients [TJN: see our memorandum discussing that here.]
“This was talked about in the UBS case in the U.S. …. all of a sudden people were put into offshore companies, and each time a new company is set up, there is a fee. Another way around it was to put the clients in mutual funds holding U.S. securities. All of that, somewhere, earned money for people in the finance industry. They get richer out of this.”
Yesterday TJN blogged John Le Carré’s new novel, “Our Kind of Traitor”. That was an important blog in its own right. In the context of the above, we thought we would add a nice quote from the book which summarises what is really going on in our globalised world:
“Bugger the people who’ve been starved, raped, tortured, died of addiction. To hell with the human cost. Money’s got no smell as long as there’s enough if it and it’s ours. Above all, think big. Catch the minnows, but leave the sharks in the water. A chap’s laundering a couple of million? He’s a bloody crook. Call in the regulators, put him in irons. But a few billion? Now, you’re talking.”
We are sure that our correspondent was quite right. And we did get the tone and message of that Brazilian blog wrong.