Mennonite Weekly Review

“Client is a private investment company domiciled in the Bahamas used as a vehicle to manage the investment needs of beneficial owner, now a retired professional who achieved much success in his career and accumulated wealth during his lifetime for retirement in an orderly way.”

Kathleen Kern, of Rochester, N.Y., serves with Christian Peacemaker Teams.

Such was the Riggs Bank’s anonymity-preserving description of dictator Augusto Pinochet, whose death last month inspired thousands of Chileans to celebrate in the streets. Pinochet, in addition to having directed death squads to torture and murder thousands of his opponents, enriched himself through drug and arms trafficking and other lucrative forms of corruption.

From 1979 onward, he maintained accounts worth an estimated $6 billion to $8 billion in the Washington, D.C.-based Riggs, thus evading taxes in Chile.

Other dictators and ruling elites in the developing world have defrauded their countries by funneling huge amounts of untaxed revenue into foreign banks and tax havens, including Sani Abache of Nigeria. In the 1990s, the Central Bank of Nigeria had an order to transfer daily about $15 million into an anonymous Swiss bank account Abache maintained. (The average Nigerian earns about a dollar a day.)

In Latin America, 300,000 people hold about $3.7 trillion in assets. About 50 percent of that wealth is in offshore accounts, generating no taxes to benefit their impoverished fellow citizens.

Worldwide, High Net Worth Individuals — known as HNWIs or “hen-wees” — hold about $11.5 trillion in assets in tax-free or minimally taxed accounts. Taxed at a rate of 30 percent, these assets could generate $255 billion, which would finance the entire United Nations Millennium Project aimed at cutting poverty in half by the end of this decade.

John Christensen of the Tax Justice Network has sought to expose the complicity of Western nations in the looting of the developing world via tax evasion. He cites the above statistics in his chapter for A Game as Old as Empire, forthcoming from Berrett-Koehler Publishers in March. (I have also contributed a chapter to this book.)

After having worked for years in development economics and seen the damage that offshore banking did to poor nations, Christensen took a job in a global accounting firm based in his native Jersey — one of Britain’s Channel Islands and a major international tax haven.

The British government estimates that half of the world’s trade passes — mostly on paper — through tax havens. These havens, Christensen notes, are at the core of a global financial system designed to enrich a very few by avoiding government financial regulations. The havens conceal the identity of people like Pinochet, claiming that they want to protect people from “rapacious state power.” They have almost exclusively benefited “hen-wees” and multinational corporations.

Christensen asserts that providing aid and debt relief to poor nations will not benefit their citizens until Western nations and corporations stop facilitating tax evasion through the financial networks they control.

Indeed, developing nations’ need for aid would diminish rapidly if they could keep the wealth generated inside their countries. Making swift, meaningful changes to global economic systems is possible, he argues, if governments cooperate in exchanging information and demand that multinationals pay taxes in the nations where they create their profits.

“For those who are serious about making poverty history,” he concludes, “this is probably the best way to make it happen.”