Shaxson - Treasure islands : uncovering the damage of offshore banking and tax havens

Perhaps the most important book published in the UK so far this year.

George Monbiot, The Guardian

Treasure Islands has prised the lid off an important and terrifying can of worms.

Literary Review

Shaxson shows us that the global financial machine is broken and that very few of us have noticed.

New Statesman

In this riveting, well-written expos, Shaxson goes deep into the largely unexamined realm of offshore money. In the process, he reveals that this shadow world is no mere sideshow, but is troublingly central to modern finance, with the US and the UK as leaders. The resulting abuses are widespread, ranging from tax revenue stripping from African nations to individuals and corporations escaping enforcement and accountability. A must read for anyone who wants to understand the hidden reasons why financial services firms have become so powerful and impossible to reform.

Yves Smith, creator of Naked Capitalism
and author of ECONned

Treasure Islands shines the light on some very dark places. It reads like a thriller. The shocking thing is its all true.

Richard Murphy, co-author of Tax Havens:
How Globalization Really Works

At last, a readableindeed grippingbook which explains the nuts and bolts of tax havens. More importantly, it lays bare the mechanism that financial capital has been using to stay in charge: capturing government policymaking around the world, shaking off such irritants as democracy and the rule of law, and making sure that suckers like you and me pay for its operators opulent lifestyles.

Misha Glenny, author of McMafia: A Journey
through the Global Criminal Underworld

Trade and investments can play a profoundly productive role on the world economy. But so much of the capital flows that we see are associated with money laundering, tax evasion, and the wholesale larsony [sic] of assets often of very poor countries. These thefts are greatly facilitated by special tax and accounting rules or designed to attract capital and embodying obscure and opaque mechanisms. Shaxson does an outstanding and socially valuable job in penetrating the impenetrable and finds a deeply shocking world.

Nicholas Stern, former Chief Economist
for The World Bank

The real challenge to Americas economy comes not from Chinabut from the Caymans, the Bahamas, and a whole hot-money archipelago loosely under the control of the City of London. If only as a civics lesson, read this astonishing book to find out the true political constitution of the world.

Thomas Geoghegan, author of
Were You Born on the Wrong Continent?

Far more than an expos, Treasure Islands is a brilliantly illuminating, forensic analysis of where economic power really lies, and the shockingly corrupt way in which it behaves. If youre wondering how ordinary people ended up paying for a crisis caused by the reckless greed of the banking industry, this compellingly readable book provides the answers.

David Wearing, School of Public Policy, UCL,
Londons Global University

An absolute gem that deserves to be read by anyone interested in the way contemporary globalization is undermining social justice. Give it to your sons, daughters, families, favorite legislators, and anyone else needing stimulation of their thought buds. This masterpiece illuminates the dark places and shows the visible hand of governments, corporations, banks, accountants, lawyers, and other pirates in creating fictitious offshore transactions and structures and picking our pockets. This financial engineering has enabled companies and the wealthy elites to dodge taxes. The result is poverty, erosion of social infrastructure and hard-won welfare rights, and higher taxes for ordinary people. Tax will be the decisive battleground of the twenty-first century as no democracy can function without it or provide people with adequate educations, healthcare, security, housing, transport, or pensions. Nicholas Shaxson has done a wonderful job in lifting the lid off the inbuilt corruption that has become so naturalized in the western world.

Prem Sikka, Professor of Accounting, University of Essex, UK

Uncovering the Damage of
Offshore Banking and Tax Havens

NICHOLAS SHAXSON

TREASURE ISLANDS
Copyright Nicholas Shaxson, 2011.
All rights reserved.

First published in 2011 by PALGRAVE MACMILLAN in the United Statesa division of St. Martins Press LLC, 175 Fifth Avenue, New York, NY 10010.

Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.

Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world.

Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries.

ISBN 978-0-230-10501-0

Library of Congress Cataloging-in-Publication
Shaxson, Nicholas.

Treasure islands : uncovering the damage of offshore banking and tax havens / Nicholas Shaxson.

p. cm.

Includes index.

ISBN 978-0-230-10501-0

1. Tax evasionUnited States. 2. Tax havens. 3. Banks and banking, Foreign. I. Title.
HV6344.U6S53 2011
364.1338dc22

2010035424

A catalogue record of the book is available from the British Library.

Design by Letra Libre, Inc.

First edition: April 2011

10 9 8 7 6 5 4 3 2 1

Printed in the United States of America.

THIS BOOK COULD NOT HAVE BEEN WRITTEN without the help of a great many people around the world. First I must thank John Christensen, who has worked tirelessly with me on this book, and who deserves much of the credit. (Any mistakes, though, are mine.) Alongside him stand several leaders in this field, each of whom has provided remarkable help and insights, and each of whom has contributed in a range of ways. This group, in alphabetical order, includes Jack Blum, Ray Baker, Richard Murphy, Ronen Palan, Sol Picciotto and David Spencer. Special mention must also go to Paul Sagar and Ken Silverstein for their terrific contributions on the history of the British spiderweb and on Delaware, respectively.

A number of others deserve great thanks too, for their time and their help in specific areas. They are Jason Beattie, Rich Benson, Richard Brooks, Michle, Elliot and Nicolas Christensen, Andrew Dittmer, Sven Giegold, Maurice Glasman, Bruno Gurtner, Mark Hampton, Jim Henry, Dev Kar, Pat Lucas and her merry team, Mike McIntyre and his brother Bob, Andreas Missbach, Matti Kohonen, Markus Meinzer, Prem Sikka, Father William Taylor, and Geoff Tily.

I couldnt have got this far without Karolina Sutton at Curtis Brown, and I would also like to give special thanks to the staff at Palgrave Macmillan, at Random House, and to Dan Hind. Second last, but by no means least, a particular thank you to the Joseph Rowntree Charitable Trust, and the Tax Justice Network, which made all this possible. And finally, I would like to offer my thanks, appreciation and respect to all those in the tax havens who have spoken out against the consensus, sometimes at great personal risk.

ONE NIGHT IN SEPTEMBER 1997 I RETURNED home to my flat in North London to find that a man with a French accent had left a message on my answering machine. Mr. Autogue, as he called himself, had heard from an editor at the