DOCSLIB.ORG

Rank: 21 History of a Caribbean Tax Haven

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Rank: 21 History of a Caribbean Tax Haven NARRATIVE REPORT ON BRITISH VIRGIN ISLANDS PART 1: NARRATIVE REPORT British Virgin Islands: Rank: 21 history of a Caribbean tax haven Chart 1 - How Secretive? 60Secrecy Overview and background Score The British Virgin Islands (BVI) is ranked at 24th position in the Moderately 2015 Financial Index. It has a relatively high secrecy score of 60, secretive 3-40 though it accounts for only a small share of the global market for offshore financial services. Yet its relatively low ranking in our 4-50 index seriously understates its true importance in the world of 1 offshore secrecy, as this report explains . 5-60 The BVI is an archipelago of about 60 Caribbean islands with 6-70 fewer than 23,000 inhabitants. It is a British Overseas Territory, substantially controlled and supported by Britain, but with a fair degree of political autonomy. The UK ultimately has the power 7-80 to strike down BVI secrecy legislation, though it chooses not to. The BVI has long been linked to wave after wave of scandals; 8-90 Lord Oakeshott, a former top UK politician, said in 2013 that the BVI “stains the face of Britain.” Nevertheless, it has made Exceptionally secretive 9-00 some significant improvements in transparency in recent years, improving its secrecy score, though secrecy remains a key hallmark of its offshore sector. Chart 2 - How Big? The secrecy here comes most importantly from the BVI’s lax, flexible, ask-no-questions, see-no-evil company incorporation regime, which allows owners of companies to hide behind ‘nominees’ to achieve strong secrecy2, and to set up companies quickly and at low cost. This supposed ‘efficiency’ of incorporation has translated into carte blanche for BVI companies to hide and facilitate all manner of crimes and abuses, worldwide. This tiny state where financial services directly make up around half of government revenue (p6) is a quintessential example of a jurisdiction captured by offshore financial services, with almost no local dissent against offshore finance. The BVI is now the world’s leading centre for company incorporation, with a thriving industry selling corporate secrecy British Virgin Islands accounts for slightly under 0.3 per cent of the global market for offshore financial and over a million shell companies incorporated since landmark services, making it a small player compared with legislation was introduced in 1984. Of these, 479,000 were still other secrecy juridictions. active in early 2015: 20 for each inhabitant. On paper, the BVI was the fourth largest recipient of Foreign Direct Investment (FDI) in The ranking is based on a combination of its secrecy score and scale weighting. 2013 (p6) and the world’s sixth largest source of outbound FDI (p5). In reality, the BVI is merely a conduit or ‘brass plate’ for licit Read more and illicit financial flows between countries. → Full data → British Virgin Islands on TJN Blog → Full Methodology The IMF in 2010 estimated, very conservatively, estimated that © Tax Justice Network 2015 - 23.9.2015 If you have any feedback or comments on this report, please contact us at [email protected] British Virgin Islands DENMARK BVI companies held over $600 billion in assets.3 states, including the English-speaking BVI. The BVI has expanded its range of offshore Riegels quickly agreed to incorporate a BVI offerings since the industry really took off in the company for Butler. As his son Colin Riegels 1980s, and today it is also a leading domicile later explained, this was the opening though for mutual funds, shipping registration, hedge which a whole new world of tax avoidance funds, and captive insurance, many of which emerged. U.S. corporate business began to also use BVI companies and trusts. grow steadily and was soon producing modest fee income for the BVI (at vastly greater cost to The BVI has almost no taxes: no effective income the U.S. Treasury.) tax, no capital gains tax, no inheritance taxes, no gift taxes, sales taxes or even value added taxes. But in 1981, disaster apparently struck, nipping It raises income mainly through payroll taxes, this fledgling industry in the bud. The U.S. land taxes and various fees. This is a classic ‘tax government produced a hard-hitting report on haven’ pattern of creaming small amounts each tax evasion and tax haven abuses, fingering the time from a large numbers of transactions, and BVI in several instances, and voicing emerging relying on locals to pay the bills. concerns that it is generally a bad idea to sign DTAs with tax havens. The U.S. suddenly How the BVI became a secrecy jurisdiction terminated its double tax agreement (DTA) with The BVI’s modern offshore sector was born in the BVI, among others. 1976 when Paul Butler, a lawyer from the Wall Street firm Shearman and Sterling, called the It could have been the end for the fledgling BVI only law office in Tortola, then staffed by two tax haven. Instead: it spurred a completely new Oxbridge-educated British lawyers, Neville way of doing business. Westwood and Michael Riegels. Lift off: the International Business Companies In those days U.S. multinationals were running Act of 1984 lucrative tax avoidance schemes through the Paul Butler suggested that the best way to Netherlands Antilles (see box, and our Curaçao respond to the U.S. treaty cancellation was report). to offer a completely new offshore “product” that was not designed to provoke corporate Box 1: the Netherlands Antilles loophole. tax leakage in the United States (and thus The Netherlands Antilles wheeze worked like defensive counter-measures from the world’s this. If a U.S. corporation borrowed directly most powerful country) but would instead from overseas (most lending came from the target wealthy individuals in countries around unregulated, London-focused Eurodollar the world, particularly vulnerable and corrupt market; see our UK report) the foreign lender developing countries that would not have the would pay a 30 percent U.S. withholding tax on powers to defend themselves. the loan’s interest income. But if they borrowed via a Netherlands Antilles company instead, A so-called “gang of five” lawyers – Butler, the U.S.-Antilles Double Tax Agreement (DTA) Riegels and Westwood; the then Attorney exempted the lender from the withholding tax. General Lewis Hunte, and Richard Peters, a new The loophole worked well enough for a while, partner at Harney, Westwood & Riegels – began even if it wasn’t clear whether it was technically searching for an alternative offshore model. legal or not. It was eventually closed down in The result was the International Business 1987. Companies (IBC) Act, a radical new libertarian, lax and permissive corporate regime that th Yet many firms were unhappy about the Dutch became law on August 15 , 1984, with almost language barrier and about the questionable no interference from London. legal basis for the Antilles loophole. Butler had become aware of similarly lenient DTAs The IBC Act was a curious hybrid adapted between the U.S. and various Caribbean micro- from laws elsewhere. The strong initial U.S. DENMARK British Virgin Islands focus and Sherman & Sterling’s role meant it flowing from them - would remain firmly in the was modelled strongly on Delaware law, but it shadows. incorporated many aspects of English common law too. Colin Riegels stressed that “it is easy to Registered agents providing the nominees overlook how radical it was at the time.” could even claim truthfully that they had no knowledge of the real buyer or owner of a The new IBCs were exempt from all BVI taxes company because they took all their instructions and even stamp duty. But that was only the from a so-called ‘introducer’ based in another start of it. country – such as Panama, Nevis, Vanuatu or Dubai – where British courts have little reach. Any company incorporated under the IBC Act Often, BVI companies are owned by a trust in was “ring fenced” – prohibited from trading such locations, making secrecy even stronger. or conducting business with residents of the The IBC Act also allowed bearer shares, regarded British Virgin Islands – i.e. it was restricted to as particularly pernicious because these shares international business. ‘Ring-fencing’ is a classic are ‘owned’ by the person who literally holds ‘offshore’ approach – partly designed to protect them in his or her hands – and are therefore one’s own economy from the sector while also effectively untraceable. It was a free-for-all, rejecting any effective regulatory responsibility attractive for libertarian business interests and for the activities of an IBC, it is a tacit recognition criminals alike. that the offshore sector is toxic. Underpinning the whole game, however, was The Act gave owners and controllers of BVI the BVI’s reassuringly umbilical relationship IBCs tremendous leeway to act as they pleased, with the United Kingdom, the “mother unaccountable to anyone but themselves. For country” that underwrote its laws and courts, instance, it abolished the legal concept of ultra and even made available a court of appeal vires (under which companies are permitted to at the Privy Council in London. As with other act only within their stated corporate objectives) British Overseas Territories such as the Cayman – in fact, companies were no longer required Islands or Bermuda, this link provided the to have any stated corporate objectives at all. constitutional and legal bedrock to reassure It heavily curtailed normal requirements of investors that their money was safe and corporate benefit, where directors are required governed by a predictable legal system – while to use their powers for the commercial benefit at the same time still permitting them to get of the company and its members. It allowed away with whatever they pleased.
Load more

Recommended publications
  • Nigeria's Extractive Industries Transparency Initiative
    Nigeria’s Extractive Industries Transparency Initiative Just a Glorious Audit? Nicholas Shaxson November 2009 Nigeria’s Extractive Industries Transparency Initiative Just a Glorious Audit? Nicholas Shaxson November 2009 © Royal Institute of International Affairs, 2009 Chatham House (the Royal Institute of International Affairs) is an independent body which promotes the rigorous study of international questions and does not express opinion of its own. The opinions expressed in this publication are the responsibility of the authors. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical including photocopying, recording or any information storage or retrieval system, without the prior written permission of the copyright holder. Please direct all enquiries to the publishers. Chatham House 10 St James’s Square London, SW1Y 4LE T: +44 (0) 20 7957 5700 F: +44 (0) 20 7957 5710 www.chathamhouse.org.uk Charity Registration No. 208223 ISBN 978 1 86203 219 4 A catalogue record for this title is available from the British Library. Designed and typeset by Soapbox Communications Limited www.soapboxcommunications.co.uk Contents Preface v About the Author vii Executive Summary viii List of Abbreviations x 1. Introduction 1 1.1 Global EITI 1 1.2 Nigeria’s oil industry 3 1.3 NEITI: brief history and context 4 1.3.1 Technical and procedural context 4 1.3.2 Political history and context 6 1.4 EITI’s and NEITI’s goals 7 1.5 Rulers, oil companies, citizens – and NEITI 8 2. Reforms,
    [Show full text]
  • Whose 'Treasure Islands'? the Role of Tax Havens in the Global Economy
    (C) Tax Analysts 2012. All rights reserved. does not claim copyright in any public domain or third party content. Whose ‘Treasure Islands’? The Role of Tax Havens in The Global Economy by Robert T. Kudrle Robert T. Kudrle is the Orville and Jane Freeman Professor of International Trade and Investment Policy with the Hubert Humphrey Institute of Public Affairs and the Law School at the University of Minnesota in Minneapolis. A version of this article was presented at the 53rd Annual Convention of the International Studies Asso- ciation in San Diego on April 1-4, 2012. wo recent works with the same title suggest radi- In movies and novels, tax havens are often set- Tcally different views of the role of tax havens in tings for shady international deals; in practice the global economy. In late 2010, James R. Hines Jr. they are rather less flashy. Tax havens are coun- (2010) made the case for a largely beneficial role. Ac- tries or territories that offer low tax rates and fa- cording to Hines, the tax havens improve markets: they vorable regulatory environment to foreign inves- facilitate direct investment by improving the attraction tors....Taxhavensarealso known as ‘‘offshore of high-corporate-tax states for real investment, and centers’’ or ‘‘international financial centers,’’ they may shore up rather than degrade corporate tax phrases that may carry slightly differing connota- collections by high-corporate-income states such as the tions but nonetheless are used almost inter- U.S. They also seem to improve the competitiveness of changeably with ‘‘tax havens.’’ [P. 104.] national financial institutions and hence facilitate port- folio capital provision in both rich and poor countries.
    [Show full text]
  • Exploring the Possible Impacts of Hosting an Oversized Financial Centre
    The Finance Curse: exploring the possible impacts of hosting an oversized financial centre John Christensen,1 Tax Justice Network, Chesham, U.K. Nicholas Shaxson,2 Tax Justice Network, Berlin, Germany Contact author: John Christensen – [email protected] Draft: Not for quoting Abstract. The paradoxical situation whereby resource rich countries depending on earnings from natural resources like oil and gas can frequently suffer lower economic growth, higher inequality and poverty, elevated corruption, and stronger political repression than their resource-poor peers is recognised and widely known. It is sometimes known as the Paradox of Poverty from Plenty, or the Resource Curse. This paper explores a similar, related phenomenon that seems to afflict some countries with whose financial centres have grown very large in relation to the domestic economy. Emerging evidence suggests that Beyond a certain point, growth of the financial services sector harms the host country in various ways, including lower long-term growth, greater inequality, a propensity towards rent-seeking and accompanying loss of genuine productivity and entrepreneurial and other skills, corruption and state capture. Citing case study material from several jurisdictions hosting oversized financial centres – notaBly Cyprus, Jersey and the United Kingdom – the paper explores how economic 1 John Christensen directs the global activities of the Tax Justice Network. He is a former economic adviser to the States of Jersey. 2 Nicholas Shaxson is author of Poisoned Wells: The Dirty Politics of African Oil and Treasure Islands: Tax Havens and the Men Who Stole the World. - 1 - crowding-out, brain drain and financialisation create path dependencies that reinforce a tendency for financial services interests to dominate the domestic political, economic and cultural landscape, to the detriment of other sectors.
    [Show full text]
  • The UK Based Ngos WWF, Greenpeace
    0\WKEXVWHUV from nef and the Tax Justice Network ³$FRPSHWLWLYHWD[ V\VWHPLVDEHWWHUWD[ V\VWHP´ 1LFKRODV6KD[VRQDQG(OOLH0DH2¶+DJDQ Governments often make out that raising taxes on big business would be a terrible mistake. International corporations would take their investments elsewhere ± to countries with a so-called µcompetitive¶ tax systems ± and our position in the global market would crumble. This Mythbuster reveals just how unhealthy this emphasis on tax competition between countries is. It shows individual countries need not participate in what is essentially a global race to the bottom, and that tax µcompetition¶ harms everyone but for a wealthy few. The myth and services, at better prices. If they cannot compete they go bust and disappears. It sounds Few slogans are as easy for a politician to VDGEXWWKLVµFUHDWLYHGHVWUXFWLRQ¶LVDVRXUFHRI SURQRXQFHDVWKHFU\³We must have a the healthy dynamism of markets. Employees, FRPSHWLWLYHWD[V\VWHP´ customers and suppliers may well find equivalent opportunities elsewhere. It sounds so reasonable. Competition and competitiveness are good things, right? But the tax-cutters have hijacked this idea of healthy market competition to justify something Not in the context of tax. Such calls almost always completely and utterly different: the idea of 1 rest on a giant economic fallacy. Here is the µcompetition¶ between countries on tax. This is a problem, at its simplest. totally different economic beast. Competition between companies in a market is The theory broadly a good thing. The competitive race, for all Theoretical arguments used to support tax its warts and imperfections, makes the business µFRPSHWLWLRQ¶EHWZHHQFRXQWULHVDUHIRXQGHGRQD world go round. It means that companies must 1956 paper2 by the economist Charles Tiebout.
    [Show full text]
  • Cypriots Make a Walk on the Banks, but Still Worry Government Awaits Troika Loan, Hopes Greek Ind
    S O C V ΓΡΑΦΕΙ ΤΗΝ ΙΣΤΟΡΙΑ Bringing the news W ΤΟΥ ΕΛΛΗΝΙΣΜΟΥ to generations of E ΑΠΟ ΤΟ 1915 The National Herald Greek- Americans N c v A wEEkly GrEEk-AmEriCAN PuBliCATiON www.thenationalherald.com VOL. 16, ISSUE 807 March 30-April 5, 2013 $1.50 Cypriots Make a Walk on The Banks, But Still Worry Government Awaits Troika Loan, Hopes Greek Ind. Calmness Emerges Day Talks By Andy Dabilis Aplenty in TNH Staff Writer ATHENS - After lining up calmly in queues instead of making a New York frantic dash for their cash when banks reopened after being closed for two weeks as the gov - By Constantine S. Sirigos ernment worked out a bailout TNH Staff Writer deal with international lenders, Cypriots nonetheless walked NEW YORK – The Archdiocesan away wondering what will come Cathedral of the Holy Trinity next for them. celebrated Greek Independence With tight restrictions on Day with three entertaining and withdrawals to prevent a run on informative lectures at the the banks, the government Cathedral Ballroom on March hoped that order would con - 25. The event, which was held tinue to prevail while it waits under the auspices of the Greek for a 10 billion euros ($13 bil - Consulate, followed a reception lion) rescue loan package from hosted at the Consulate by the the Troika of the European Consul General George Iliopou - Union-International Monetary los. Fund-European Central Bank The plight of Greece and (EU-IMF-ECB). Cyprus weighed heavily on the While uninsured depositors participants. Iliopoulos told with more than 100,000 euros guests at the
    [Show full text]
  • Tax Justice Network Australia
    20 December 2012 Manager International Tax Integrity Unit Corporate and International Tax Division The Treasury Langton Crescent PARKES ACT 2600 Email: [email protected] Submission on Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013 Modernisation of transfer pricing rules The Tax Justice Network Australia (TJN-Aus) welcomes this opportunity to make a submission on the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013 Exposure Draft. TJN-Aus supports the passage of the legislation as a further step towards combating tax avoidance and tax evasion by multinational companies. Further, TJN-Aus support the introduction of this legislation to ensure that a single set of rules applies to both tax treaty and non-tax treaty cases. The TJN-Aus accepts the OECD Guidelines constitute the transfer pricing standards of many of Australia’s major investment partners and therefore applying them to revised laws makes sense at this time. Thus, the TJN-Aus supports the intention of the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013 to ensure the domestic law that references the tax treaty transfer pricing rules are applied in a manner consistent with relevant OECD guidance. While supporting the efforts to combat tax avoidance through the measures introduced in the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill 2013, the TJN-Aus remains concerned about the limitations of the ‘arm’s length’ principle (ALP), especially transactional methods, and urges supporting other methods at a multilateral level to combat tax evasion through transfer mispricing. The OECD arm’s length principle particularly has disadvantaged developing countries in combating tax evasion by multinational companies, as such countries often lack the resources to be able to investigate and prosecute multinational companies engaged in tax evasion through transfer mispricing based on the arm’s length principle.
    [Show full text]
  • Oil, Corruption and the Resource Curse
    Oil, corruption and the resource curse NICHOLAS SHAXSON What is it about mineral-dependent states? The ‘resource curse’ literature describes a tendency for them not only to fail to harness their resources for national devel- opment, but even to be harmed by them in many cases. A recent IMF paper, for example, says that ‘the living conditions in most oil producers are close to or below the average for sub-Saharan African countries’.% Oil booms, such as we are seeing today, promote bursts of temporary headline economic growth, followed by hangovers so deep that growth in the very long term is often lower than it would have been without the resource. Mineral dependence turns out to be a curse not just in terms of economic growth, but also in terms of risks of violent confl ict, greater inequality, less democracy and more corruption." This seems to a) ict countries where the resource is extracted onshore (as in the Niger Delta) or o( shore (as in Angola), although some of the dynamics di( er among the various cases. The poorer and weaker a country is before the oil discovery, the more likely it is to be harmed by it. Natural resources seem to reinforce the patronage politics so prevalent in Africa; indeed, there seems to be something almost determin- istic about the existence of the problem. ‘I do not know if this system is good,’ Gabonese President Omar Bongo once remarked of the politics of patronage. ‘But it is the only possible way!’& Several examples help illustrate the problem in Africa.
    [Show full text]
  • Tax Havens and the Men Who Stole the World by Nicholas Shaxson (Book
    Treasure Islands Tax havens and the men who stole the world Nicholas Shaxson London: the Bodley Head, 2011, £14.99, p/b ‘Reading Treasure Islands I have realised that injustice is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn’t have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge. Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal, money-laundering economy, legitimised by the pomp of the Lord Mayor’s show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account. And this government? It has learned the lesson that Thatcher never grasped: if you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth, while the rest can go to hell, you don’t declare war on society, you don’t lambast single mothers or refuse to apologise for Bloody Sunday.
    [Show full text]
  • Waking up to the True Story of Tax
    Waking up to the true story of tax In November and December 2008 heads of state and of government from around the world will attend a United Nations- sponsored conference in Doha, Qatar, to discuss financing for development. Tax is the big new issue. Powerful financial interests, notably from Britain and the United States, are lobbying against reforms in international taxation. Non- governmental organizations and individuals concerned with poverty around the world must engage fast, and decisively, to help ensure success. Nicholas Shaxson change information between each other regarding John Christensen We can no longer focus so strongly on aid, the incomes of each others’ residents, allowing Tax Justice Network without bringing tax into the core of the de- proper taxes to be paid. bate. Aid provides benefits, but perhaps its However, the EU scheme contains loopholes. biggest drawback is that it makes govern- Although some are being fixed, one big gap is that Europeans wishing to hide their money from taxation Historical background ments and other recipients accountable to (and dependent on) donors, not citizens. still can simply deposit their money elsewhere – in Near the end of the Second World War the econo- Singapore, for instance. The solution requires this mists John Maynard Keynes from Britain and Harry scheme to be applied on a global basis – and espe- Dexter White from the United States sketched how cially including developing nations. the world’s financial architecture would emerge from inadequate. We need the automatic exchange of tax Furthermore, more transparency is needed in the ashes of conflict. Their work led to the Bretton information between jurisdictions, and all developing other important aspects.
    [Show full text]
  • TAX JUSTICE FOCUS a Tool for Econopmic Development 1 Nicolaus Tideman the Newsletter of the Tax Justice Network EDITORIAL Natural Rents 3 Carol Wilcox
    TAXING NATURAL RENTS VOLUME 6, NUMBER 1 TAX JUSTICE FOCUS A Tool for Econopmic Development 1 Nicolaus Tideman The newsletter of the tax justice network EDITORIAL Natural Rents 3 Carol Wilcox FEATURES A Tax That is Not a Tax 5 Henry Law Harnessing Land Value as a Green Tax 7 Molly Scott Cato A Tale of Two Cities 9 A TOOL FOR ECONOMIC Josh Vincent REVIEW DEVELOPMENT Debt and Equity 12 Nicholas Shaxson A land value tax is a periodic tax (monthly or yearly) on those who have title to land, NEWS levied in proportion to the value that the land would have if it were not improved. A African Voices Call for Tax Justice 13 John Christensen land value tax reflects the value that is added to land by public improvements such as streets, water service, sewers, parks, etc., but not the value of structures, fences, CONFERENCE 15 Political Economy of Taxation grading, draining or other improvements to an individual parcel of land. and value taxation promotes economic taxes by transferring the land to someone else. development in at least six different By putting land in the hands of people who will Lways. First, land value taxation serves use it, such transfers of land promote economic as a regular reminder to those who have title development. to land that they are not using, that they have Second, land value taxation provides revenue something of value that could be put to use. Guest Editor: Carol Wilcox Land is often in the hands of people who have for governments, permitting them to reduce Contributing Editor: John Christensen other concerns and prefer not to think about taxes that have harmful effects on economic Design and layout: www.tabd.co.uk Email: info(at)taxjustice.net what might be done with their land.
    [Show full text]
  • Finance Curse Analysis
    Now a major new book! “Occupation Jersey” (2007). ǡ Ǥ May 2013 Nicholas Shaxson is author of Poisoned Wells, a book about the Resource John Christensen is the former economic adviser to the British Crown Curse based on 14 years’ research in west Africa; and also author of Treasure Dependency of Jersey, a pre-eminent British tax haven. Having originally Islands, a book about tax havens and financial centres. He has written regularly trained as a forensic fraud investigator, he is now the director of the Tax Justice for the Financial Times, the Economist Intelligence Unit, Vanity Fair, and many Network, a member of the OECD Task Force on Tax and Development, and a others. board member of Washington, D.C.-based New Rules for Global Finance. INTRODUCTION It is now well known that many countries poor peers. This paradox of poverty from which depend on earnings from natural plenty has been extensively studied and is resources like oil have failed to harness them known as the Resource Curse. for national development. In many cases it seems even worse than that: for all the This book asks whether some countries hundreds of billions of dollars sloshing into ϐ countries like oil-rich Nigeria, for instance, may be suffering from a similar, and related, ϐ ǡ phenomenon. economic growth, greater corruption, higher inequality, less political freedom and often ϐ more absolute poverty than their resource- – and not just for reasons related to the global The Finance Curse 2 ϐ ʹͲͲ͹ȀͺǤ ϐ more surprisingly, this phenomenon that we such as the Cayman Islands or Cyprus, are calling the Finance Curse is similar in these complexities are stripped away and many ways to the Resource Curse: there are big the phenomenon is laid bare in purer, more overlaps in both their causes and their effects.
    [Show full text]
  • Narrative Report on British Virgin Islands
    Financial Secrecy Index British Virgin Islands Narrative Report on British Virgin Islands British Virgin Islands is ranked at 20th position on the 2013 Chart 1 - How Secretive? Financial Secrecy Index. This ranking is based on a Moderately combination of its secrecy score and a scale weighting based secretive 31-40 on its share of the global market for offshore financial 41-50 services. 51-60 British Virgin Islands has been assessed with 66 secrecy 61-70 points out of a potential 100, which places it in the mid- range of the secrecy scale (see chart 1). 71-80 81-90 British Virgin Islands accounts for less than 1 per cent of the global market for offshore financial services, making it a tiny Exceptionally secretive 91-100 player compared with other secrecy jurisdictions (see chart 2). Chart 2 - How Big? Part 1: Telling the Story 6 September 2013 huge Overview The British Virgin Islands, a British Overseas Territory, is the large world’s leading centre for company incorporation, with a thriving industry selling corporate secrecy and over a million small companies incorporated since landmark legislation was tiny introduced in 1984. Of these, 459,000 were still actively trading at the end of 2012: about 40 per cent of all offshore companies around the world according to local data. The BVI is also a leading domicile for offshore trusts, the world’s second largest hedge fund domicile after the Cayman Islands, and one of the world’s largest domiciles for captive insurance. The secrecy provided by the BVI is usually obtained through its lax, ask-no-questions regime particularly for company incorporations, where for a small fee it is possible to shield beneficial owners and controllers of assets behind ‘nominee’ company agents (for more information, see here).
    [Show full text]