DNL #15: DARK HAVENS. Panel "HIDDEN TREASURES: How the Global Shadow Economy Drives Inequality"



you so welcome everybody I am Tatiana basically the director of the disruption network Club and I'm really happy to introduce to you our 15 conference dark havens confronting hidden money and power and first of all I would like to thank my wonderful team first Lika blue her that from this year is with us the director of the activation Community Program so we have been already doing a great event so we're there and there will be another one that will follow up on April 17 and then I want to thank the wonderful team I work with Daniela Sylvester inada Bakker and Monty Harmony the project managers of the disruption network club and Frankie the designer and strategist and Joe Hoffman the Pierre manager so thanks a lot to all of you and to do a little intro about the disruption lab we are working since 2014 to examine the intersection of politics technology technology and society and the arts and as I say this is our 15 conference and is also starting the two years collaboration that we have together with transparency international and I really want to deeply thank them especially Michael Hornsby max Haywood and Myra martini because this collaboration has been so great for us so far and will be also later and we have been also constructing this program together there were a lot of sharing of discussion so thank you very much because for the disruption lab to have a partnership for you and with you is really wonderful so thank you transparency international and also I want to thank our founders the upshot cool your phone so that is the capital culture fans of Berlin the river and David Logan foundation the checkpoint charlie foundation and also the support of the open society initiative for Europe within the Open Society Foundations and we are also working in partnership with the Frieda brush Tifton and our partner venues the Kunsan Kreuzberg battalion the supermarket where we will have our workshop on Sunday and state studios where we are doing our Community Program and the tanks also to our collaboration partners the Alexander from Humboldt Institute for Internet Society and the whistle blower Network a foul and our communication partners in Welsh that and further field and then of course I want to thank all our wonderful speakers that will be with us in the next two days and introduce a bit this conference and we are following the cases of the Panama paper the bomb of leaks and also the paradise papers and by investigating this kind of subjects at the same time we want to discuss the inner mechanism of the financial systems and what we really want to point out also for the history of the disruption network club is that this kind of topics are not just related to financial issues to really technical subjects but are also connected with other effects on society and politics and the everyday life of everybody because as the whistleblower Joan was saying by speaking about tax havens offshore systems we are also speaking about social inequality and this kind of form of discrimination that are not only economically driven but also are related to the way the society then is built up and also the way inequality is formed so in this two-day conference we want to discuss these topics we have many international and local speakers that are joining us at the same time today we will show the German premiere of the Panama papers the documentary directed by Alex winter and on Sunday we will have a workshop that is AB psychogeography tool of the Berlin shell companies organized by the artists collective ryb n dot org so now that we have this introduction I'm really happy to introduce the first panel title hidden treasures how the global shadow economy drives inequality so connected to the discourse I was doing before so I'm happy to call onstage Nikolas Saxon please come and Myra martini and the panel is moderated by Simon Schuster so I go here on the side thank you for being with us and as we usually do I like to introduce the moderator Simon and then he will introduce the speakers Simon Schuster has been in Berlin since six year you told me more or less and has been the Berlin bureau chief of Time magazine since 2013 responsible for coverage of Central and Eastern Europe he is born in Moscow and raised in San Francisco and he has been working focusing on the European refugee crisis the rise of right-wing populism and the Russian hybrid warfare so thank you very much and we will enjoy the panel together thank you [Applause] hi oh thank thank you all for coming hi thank you so much for that introduction so you're introduced our guests briefly what I was given about five minutes or so to kind of introduce the topic and I wanted to start with with a reporting experience that I had on the subject of tax havens some years ago is about 2013 and and one of the characters that I came across in the story I was working on was a guy named Peter Troost he's from the small town of Skokie Illinois and his business for about 50 years was selling tombstones so if you die you can go see Peter Troost and he'll set you up with a nice stone and he made you know a few million dollars over the years in this business and because he didn't want to pay taxes he moved that money to a Swiss bank to hide it in 2013 he is informed by the American justice system that he's being charged with tax evasion very serious crime in the US and many places and his prosecution was presented by the American government in the Department of Justice as as kind of a success story as part of a much bigger crackdown on tax havens and tax avoidance the Obama administration was kind of made this a pillar of their time in office Obama famously you know touted this as a main issue in 2008 when he was on the campaign trail he pointed out the Oakland house in what was in the Caribbean or where is it Cayman Islands and he said you know there's 12,000 companies registered in this one house in the Cayman Islands and he said that's either the biggest tech scam or the biggest house in the world and indeed when he when he came to power there were some serious reforms we got the the what is it foreign account Tax Compliance Act otherwise known as NAMBLA or fat FATCA FATCA it's a serious piece of legislation and I was reporting a lot on how the United States government under Obama was going after Swiss banks in particularly for for bank secrecy and I happened to be at the headquarters of the Swiss Bankers Association when the Swiss government finally capitulated to American pressure and said fine we will open our secrecy up after decades and give you information about the clients of Swiss banks and and these guys in this the Bankers Association that day were really in a panic running around like their hair was on fire and I talked to one executive there and he said you know if you've heard the news that means the world has changed you know great quote wrote it down in my notebook but as the months went on he was clear that the world hadn't really changed all that much I then talked to a Caribbean banker sorry a Caribbean lawyer who works on tax issues and I asked them you know is it true has the world changed with with FATCA with with a lot of the initiatives that the US has implemented and he said not really well the difference is that guys like Peter Troost who's like you know a millionaire but maybe has a couple million dollars he is now screwed because this very simple mechanisms for tax avoidance that he uses don't work anymore but for the Caribbean lawyer his prices and his clients are just fine because for the more complex methods of tax avoidance that I think we're going to talk about a bit on this panel as well those continued to survive and indeed thrive in the years since then so I think more pressure came from things like the Panama papers and and the work that you guys do rather than relying on governments to sort of police these ultra ultra rich people so with that I want to turn it over to some specific cases that my colleagues here are going to talk about Nicholas I think you wanted to go first so Nicholas you were introduced he's written a couple of books on the subject most recently the finance curse which came out last year in the UK and I'll turn it over to you to get us into the Nitty Gritty of things thanks should you use this microphone or doesn't matter this one okay great thanks for that introduction so I'm gonna start actually with a very broad overview that's gonna be my presentation today I'm going to look at tax havens the subject of my book treasure islands but also try and marry it with the ideas of my latest book the finance curse which is very complimentary and use this as a pointer towards how we can think about finding solutions when these gigantic problems that we're all grappling with here a little bit of background I am a journalist by background I started in Angola back in the 90s during the war trying to understand why such an oil-rich country was so poor the war was one reason but there were lots of other reasons and just then academics were putting together this concept called the resource curse and we'll get into that but I kind of stumble I kept bumping up against tax havens when I was in Angola it was kind of the end of my investigations and later in the early 2000 or the mid-2000s I started looking at tax havens and I realized I had thought that my career was going to be looking at oil and politics in West Africa there was quite enough there to be looking at but when I met John Kristensen who had set up who was the main found with the Tax Justice Network he laid out the issue of global tax havens which then everybody saw as a kind of exotic sideshow to the global economy and I realized how huge this issue was and how interesting it was I basically from one day to the next I flipped my career I realized this was I couldn't leave this alone had to start looking at this so and that led to my book treasure islands so I'm I am going to as I said talk very kind of broadly today as a sort of introduction to this this event and I'm just going to start by some very simple ideas my own thoughts the results of my thoughts of having worked on tax havens what is a tax haven there is no generally agreed definition of tax havens there's a few technical definitions out there that focus on tax but my definition which I hope is one of the shortest definitions in the world really boils down to two words and those words are escape and elsewhere in other words you take your money somewhere else to escape whatever rules you don't like tax rules financial regulation whatever so I take a very broad view of what offshore is this broad view once you start looking at the jurisdictions that are involved you realize that what they're offering a offering tax is usually only one component of a whole range of facilities that they're offering they are offering secrecy facilities they are offering escape from certain laws that and it's nearly always either wealthy individuals super wealthy individuals in particularly in particular and multinational enterprises that are the main use of tax havens so they're able to get escape routes and impunity from democratic laws criminals of course I think that's the kind of has been until recently the popular perception of crime of tax havens it's all about crime monopolies is another interesting one market power tax havens and and we can discuss this in the questions if anybody's interested are tremendous vehicles for increasing the power of already large and powerful corporations or or even individuals they're super they're great mechanisms for controlling markets this is all about rigging markets it's about rigging the economic system rigging the capitalist system against ordinary people in favor of number of people so the theme of this talk focus is quite heavily on inequality and all of the mechanisms I'm going to talk about really have an impact on inequality political inequalities economic inequalities inequalities between countries and equalities within countries gender inequality racial inequalities all of these things are made worse by this phenomenon of offshore tax havens the other thing that some people are confused about not everything that happens in tax haven tax haven is illegal of course but a lot of stuff that gets called legal activity that gets called tax avoidance and if you look in the dictionary the English dictionaries will say tax avoidance is illegal by definition well in fact we again we can discuss in the questions a lot of what gets called tax avoidance corporate tax avoidance is not legal so I I'm a journalist but I'm also a campaigner and activist I believe I my book treasure islands is a book with very strong opinions I believe this stuff is and I guess most people in this room would agree with me this stuff is very very bad for our societies our economies I like to steer clear of technical legal definitions about what's legal and what's not if you start getting into that terrain you get bogged down very quickly and lose your way I like to focus on the political effects of this and the economic effects of this this is transferring engineering a gigantic transfer of wealth upwards from poorer sections of said wealth and power from poorer section society up to richer sections another great theme that I have found in in all tax havens and particularly the smaller havens in this case is what I call a captured state where the offshore financial sector comes to dominate not only the entire political system but it dominates and the economic system as well it tends to dominate the culture as well so you get it's very very difficult and painful for people in these places but tick small places to oppose the system I spoke to someone in Liechtenstein who had made some complaints about the offshore system there and she said that her sister now crossed the street rather than walk past her because she had gone so far beyond the pale she had questioned the cultural values of these places and they all have this kind of self belief we are clean we are well regulated we are responsible we are international financial centers we're not tax havens you'll hear this from all of them and so this is what I call you know it's a version of the captured state but the capture in these very any small havens is is really absolute and really strong so tax havens also are suffused with these offshore ideologies where the offshore interest the interest of the offshore financial sector is equated with the national interest so what supports fight finance must be good for the country it turns out that if you go to the Cayman Islands for example trillions wheeling trillions of dollars wheeling in and through the Cayman Islands the beneficiaries of that are largely white male probably middle-aged and older expatriate players who are temporary residents there there are some benefits that flow to the local population but the actual benefits that flow to the populations even of these very small places where you can have huge amounts of money coming in and potentially being spread among a very small population even in these places the actual benefits are pretty limited and I will argue later that in other countries particularly larger countries that have a very strong financial model like the UK this sector has been very very harmful to the country as a whole you see all this money coming in but it actually isn't helping the country in fact it's worse than that it's damaging the country so this is another great theme of tax havens the theme of freedom these are places that are offering escape these are places that are offering escape routes from rules and laws things that rich people and multi multinationals and criminals and all sorts of different people what they don't like they want to escape freedom is what they want and freedom is often taken to be a good thing but of course if you start thinking about freedom you want to ask who is calling for this freedom and what's their interest so I put a kind of slightly frivolous cartoon up here this is the freedom of the tax haven it's the freedom of the Fox outside the Han house saying freedom for the chickens you always want to be careful when people start wielding this argument so there's a great libertarian streak to the tax havens which is a cover for something much nastier now here's there's also a paradox at the heart of tax havens what when I wrote Treasure Island's and particularly the Swiss chapter I was always interesting it was always the first question I would ask people how do you square the fact that Switzerland and Swiss people are widely regarded as among the world's most trustworthy most punctual most honest you know cleanest streets you know all these fantastic wonderful things and at the same time Switzerland is arguably the biggest or one of the biggest dirty money laundering centres historically well there's no coincidence actually that you have this clean and dirty going on because you have a tax haven wants to be seen as clean it wants to be seen as trustworthy because it wants to attract your money they don't want you you nobody's going to send their money to a banana republic nobody's going to send you know you can think about it this way how many Swiss people will have their money in Nigeria and how many Nigerians are going to have their money in Switzerland this is a one-way flow out of poor countries unstable countries into rich countries so the cleanliness the trustworthiness is very important Britain is another example of this on the other hand these places want as much dirty money as they can because it's profitable so you have the incentives to be clean the incentives to go for the dirty stuff how do you square that circle well there's a number a number of ways but for me they're sort of central offering of these offshore tax havens is you can trust us not to steal your money but we will turn a blind eye if you want to steal someone else's we'll take your dirty money and it has been a very successful strategy for many of these people operating these tax havens and there are other mechanisms they use to square that circle and of course spin and we are not a tax haven we are clean we are well regulated is the other standard thing that we see again and again and again so this is just my kind of conceptual beginning for how to think about what tax havens are their escape routes and there's kind of you know a geography going on in Treasure Island's I kind of described five main groupings there is in my view the biggest or one of the biggest is the British Network and that constitutes of London itself the City of London itself in the United Kingdom and Scotland as well I think some of the people in this room will have investigated Scottish structures that have been used to commit some awful crimes but also the British satellites the overseas territories and Crown Dependencies in particular Jersey Guernsey the Isle of Man the Cayman Islands Bermuda Gibraltar all of these places are like satellites of the city of London and they're used to a hammering for time by the way how much time have I got left am i okay okay I've got plenty to go so there's a European there's a kind of group of European tax havens and Luxembourg is a huge one Switzerland of course sort of somewhat outside somewhat in Europe Netherlands Ireland United States is a gigantic tax haven so the FATCA program that you were talking about was all about Americans finding out about American taxpayers cheating Americans sorry oh sorry so it's kind of fact the American Cleanup crackdown with FATCA is kind of like a one-way flow America finding out information but if somebody else wants to put their money in the United States and hide from their tax authorities that's a completely different matter America is not going to be sharing that information in general terms with that country particularly if it's a if it's a poorer country and that has been a deliberate strategy and there's some very interesting documents that I found that are in Treasure Island since really since the ear of a Vietnam War War they really started thinking about this saying we want to be the new Switzerland there's a fast-growing Asian Network and there's a few kind of oddballs like Bahamas Panama Dubai which aren't particularly collect connected to any of these powerful countries and they tend to be kind of down market places because they don't have this sort of bedrock of being either a rich country or supported by a rich country so they they don't have that same element of sort of trustworthiness so they have to go for a different market and that's kind of you know shadier stuff how big is the system there's a lot of stuff being been written about this there are two main estimates out there one is from gabriel zucman a French economist based in the US I think seven half trillion there's James Henry who didn't estimate for the Tax Justice Network and updated it since they're closer to 40 trillion I think Henry's is the better estimate and we can discuss that and the questions if anybody wants to know more about that another way of looking at it is how much tax is being lost worldwide as a result of corporate tax avoidance and sorry I didn't put that in this is corporate tax avoidance six hundred billion a year that's just corporations using tax havens to avoid tax okay I think time is probably running a bit short but very quickly this is an ecosystem different places offering different facilities so via so the Netherlands for example is all about corporate tax avoidance Ireland is about corporate tax the wardens plus dodgy financial regulation Switzerland has an even broader offering London even brought a kind of all-singing all-dancing Haven that offers any kind of offshore service you want weather in London or in one of its satellites etc etc this slide I think I will skip over I think most people in this room are familiar with some of the some of the features of tax haven there are many different mechanisms this one is perhaps a little bit more unexpected I take the view that and in both treasure islands of the finance curse I looked at this in some depth offshore being about escape one of the biggest elements of this whole system is involves financial stability involves offering facilities to escape financial regulation Wall Street London have had this kind of dance where Wall Street wanted to get out of very onerous financial regulations that were underpinning some very high economic growth at the time until about the 70s and they use London as their escape route they were able is a kind of like offshore playground for financial regulation and in the finance case I kind of trace how that how London played not a tangential Robin absolutely central role in the creating the global financial crisis most people see it as an American phenomenon that kind of spilled out around the world but this actually was a very different thing London was absolutely central as an offshore playground degrading American regulations and offering this escape route at the same time and I also argue that London this financial regulatory escape route was the flip side of London's role as arguably the world's foremost dirty money hub it's the same mentality the same people the same kind of competitiveness or ideology we must be competitive we must attract this hot money by degrading our regulations it's part of the whole British philosophy I'm going to skip over this anybody can have a copy this presentation later if they want but at the end of the day all of these all of these different dimensions of offshore the crime the financial regulation the tax our secrecy all of these things generates inequality political inequality and economic inequality and all of these things by their very nature undermine democracy they escape routes these are escape routes from the rules of society from democracy and they are creating one set of rules for the winners large multinationals banks hedge funds wealthy individuals and another set of the rules another set of rules for the rest of us and that is about as damaging to democracy as you can get and it is a systemic global phenomenon so with that background on tax havens I now want to bring the finance curse concept in here I think that we need to consider new ways of fighting this phenomenon I think most people in this room probably have some interest in or involvement with trying to fight against all this terrible stuff that we're seeing spewing out of tax havens or spewing into tax havens I think we need to start by thinking about what power is why it is so difficult to shut these places down why are they so difficult to tackle well I like this quote from Lee Shepard who's one of the u.s. top tax experts and she had an article why don't we touch why don't we shut down these financial whore houses as she called them we don't shut them down because the town fathers are in there were there pants around their ankles in other words the people who are making our policies who are in charge who are running our countries are the ones who are using this system and that's just as true of rich countries as it is of poor countries it's more the case in Britain where these phenomena are central to the whole elite establishment than it is in Germany but Angola they're all using tax havens as well so it's very difficult to design strategies to tackle this stuff another way of thinking about this so going back to your example of the US Department of Justice going going after the and in the Obama administration going after Swiss banking crimes well I do not the Swiss media generally portray this is a battle of America versus Switzerland a battle of big versus big bully versus small plucky brave Switzerland and it was very successful way of getting the Swiss to stand together the Department of Justice knew this and they took a different approach they went for the bankers because a much better way to understand this phenomenon is not country versus tax haven not America versus Switzerland this is a global battle of a billionaire criminalized billionaire class against democracy against ordinary people so you need to conceptualize the geography of offshore correctly this is not country versus country you need to think this much more in political and economic terms on a global level to understand what's going on so if we're thinking about Africa this is not Africa versus the West so much as transnational networks of plunder that include African dictators but also accounting firms banks private equity firms using techniques to suck money out of Africa versus brought off African populations these are the same this is the same battlefield that we ordinary people are fighting on as well we have a shared agenda with African populations so if we want to start thinking about how to tackle the looting of Africa one of the best ways is to realize that this is not a question of altruism we we in the West need to sort of you know give money to Africa help Africa because it's very difficult to generate coalition's for this kind of change you get some NGOs interested but you won't get people out on the streets with placards in large numbers in their millions protesting about this stuff but if you can show that we have the same agenda we have a shared agenda against these transnational networks of plunder that are harming all of us then you can really start but once you can persuade people that this stuff is harming our own countries that people in the powerful countries in the West so this stuff is horrid then I think you can start really thinking about proper change so this is where my concept of the finance curse comes in money is flowing out of Africa being looted and flowing out of Africa that's obviously harming populations in Africa and in many other countries but the problem we're tackling is it people in the West see this money coming in in the UK we see this money coming in plenty coming into Germany as well and it's kind of like well we don't like what's happening in Africa but you know we like the money it's good for us so let's you know it's a difficult message very difficult message to sell and for me this is the big confusion because if we can show and we can show that these inflows are harming our own economies it's not just Africa being harmed by the outflows we in the West are being harmed by the inflows then I think we really have the potential for a proper solid big political platform for change that can really make a difference I'm afraid given the time constraints that I won't have time to go into how this all works the finance curse I've got one more minute but basically okay I will just sum it up in an in a nutshell the finance curse is a phenomenon which is now being studied by economists it is like the resource curse in Africa all this money pouring into countries like Angola seems not only not to have made angolans richer it seems to have made them even poorer and there's a lot of academic research on this it is also the case that there's a new load of research from the IMF the Bank for International Settlements and others showing that countries that have too much finance where their financial sectors are too big too bloated start to suffer lower economic growth than countries that have a financial sector that's more suited to the demands of it to the needs of its real economy and this graph I've got here is kind of like it's a graph of financial development versus growth economic growth we all need finance to start off with we all need it to you know pay our bills and stuff but once your financial sector reaches an optimal size it shouldn't go any further once it grows bigger than that then growth starts to suffer whole range of other damages ranges of dimensions of damage hit your country and this is an exciting new area of research once we understand that this this stuff is bad for us here's another dimension of damage Donald Trump he's very much a creature of capital flight after his big bankruptcies he kind of recovered particularly through getting capital flight out of all sorts of countries Russia and elsewhere the elf affair is another fascinating one I guess some of you in this room will be familiar with the elf affair the wholesale corruption of the entire French political establishment through this kind of offshore networks linked to African oil the endless corrosion of British politics which if you read private eye magazine you you will be very familiar with by offshore interests all of this stuff that's just another dimension of the damage that is coming from all this all this finance so I'm for me that is the way forward is to show people in the West that this stuff is bad for us to this my dirty money coming in from elsewhere it's not only harming the countries it's being stolen from it's hurting our own economies too in so many different ways and I can only you know do a bit of self-promotion here read the finance curse to find out more about this but I think I I do think this is this is you know a very important way of thinking about how to tackle this stuff ok thank you very much and with that note no further introductions needed really but my ear martini is with Transparency International's she was introduced before and particularly an expert in how banks are used in corruption schemes and I think that's some of what she's going to talk about so mayor over you is it on yeah you can hear me hi everyone that's fine so hi everyone is great pleasure to be here today I want to talk to you a bit about the row of banks in in corruption case I can I can perhaps and hopefully I will pick on some of the things that Nicolas just mentioned but first let me introduce to you quickly to to transparency international that's that's where I work so we are a global movement and we are present in more than 100 countries you can see there in blue where where we are and we fight corruption in in the times we are living now and I'm from Brazil so I speak from from experience I think it's always useful to remind ourselves that fighting corruption is not an end in itself so actually what we're fighting for is for a more equal and just society so just to keep that in mind once our our and when anti-corruption becomes also the puppet the populist and the the right-wing way of of campaigning so our our chapters work a lot at the national level so they have have quite great achievements in the last 25 years in fighting corruption at at the national level but it didn't take so long for us to realize that if we really wanted to make a difference we would need to look beyond one one's borders corruption is transnational and and you need a broader approach if we really want to deal with it so Nicholas was talking a bit about the role of tax havens and so on in in in corruptions exactly like this the corrupt needs a place to hide illicit assets and illicit gains no one wants to steal money and keep it under the mattress at home right you need to be able to take it somewhere where you can spend and that's why syriza jurisdictions or tax havens how you want to call it become very very attractive and we have seen that one way of doing it and it's there have been quite a lot of studies that show that majority of grand corruption case actually rely on the secrecy and anonymity so what they need is a company where they don't need to register their name and they can use this company than to do to be in many place and the problem is that is very easy to get a company without having to register your own name is what we call shell companies if they don't have any other purpose and there are many secrecy jurisdictions that offer this very easily so there is a study that was published last week by a partner organization the US the global financial integrity and they actually showed there has been a saying going around for really long that is either in the u.s. together to open a company then get a library card so they just went and tested that and they analyzed all this in all states in the US and they actually showed that so the other green there is what you need to to get a library card so you need to give your name and if to prove your identity and in red is what you need to or what you don't need to open a company in the US so that's why for a while now Center in our work it Transparency International has been calling for more transparency incorporate in corporations what we call beneficial ownership transparency is a very boring and term but it only means to really know who are the real people behind behind companies but what we also have realized when we Panama papers showed this and many other scandals show this is that it's not sufficient to have just a company right you need to have a bank account connected to it if you don't have a bank account it becomes very difficult to to actually move money and spend your money and it's true the banks are seeing as gatekeepers particularly in developed countries they're really seeing as gatekeepers enough of the financial sector and because of this they have obligations in according to international money laundering standards they have many things that they have to do I listed here like the Train three main things I think banks need to do on a daily engagement with customers the first of it being they need to understand the ownership structure of their corporate clients including identifying the real people behind those they have to have adequate mechanisms to do with high-risk customers and here I mentioned politically exposed persons that are those who have high-level positions in their countries and they need to submit suspicious activities reports to our torches that is communicating authorities that might be something wrong with that transaction so Lloyd's can do something and continue investigating Danske Bank Deutsche Bank are just two examples that have been in the media now that show that actually banks are not doing the street things that they they should be doing and today I'm we are a China we are conducting a study that looks at 50 caused by the corruption case in trying to understand better how banks are being used and if and why they have been failing to to do their jobs right the study is not finalized probably you can hear more and see it in September when we launched but today I wanted to bring one case of that we are analyzing as part of this larger study but I think it helps to illustrate a bit what is happening and how banks have been has been used so it looks complicated it's not complicated is actually a very simple money laundering scheme with and there were two main banks that were involved in this scheme they were both in Switzerland and I promised that this was not agreed that we were all gonna pick an uncertain and it's just the coincidence so this larger scheme this is just a small part of a larger scheme that took place in Brazil called carwash lavage Otto many of you might know in the the brothers came in Brazil essentially worked like this you had politicians that would nominate or indicate people to for high-level positions Petrobras Petrobras is a Brazilian state-owned company in the oil sector these people would negotiate public contracts with construction companies they would get bribes in exchange for that they would buy part of the bribery also go to the politicians that nominate them in the first place so that was the answer essence of the of the scheme and they have done this in no different sectors where Petrobras operate so this this sorry hotel and bear with me I know there would be a lot of names it's just one one of little small part of of this scheme so it always started with Petrobras in 2009 the company one of the managers of the company this Pedro Passos was approached by a company in been in this company in Benin got a concession for exploiting oil in in winning in approached Petrobras offering Petrobras 52 by 50 percent of the shares internally there was a discussion they decided it was not a good deal apparently the manager didn't accept and no as an answer I continue negotiating with this with this company in Benin in 2011 the deal came true and Petrobras bought part of 50% of this oil rights it turned out that Petra bastards paid this company money thirty five point five million you can see there in the beginning of of the info graph and immediately in the same day this company being sent the money to another company called Lusitania petroleum that is actually the mother company the the Benin companies just a subsidiary and this Lusitania Petroleum is a BVI company and offshore never had anything to do with oil in its history didn't have any assets so it's a bit of a mystery how it this company got the the concession in the first place so if any journalists in the room want to look into that that's probably something fishy so Lusitania Petroleum was on just by a Portuguese newsmen then the next day lieutenant petroleum sends part of this money so there were three different installments were sent to another of Shore company they all had accounts with BIA sizing in Switzerland called a corner a corner was let I would stop here and talk a bit about how this company was formed so econo is a fermion in the Seychelles upon the request of this guy that you can see up there next to be a size named David who was a vice president for Latin America of BSI he requested mossack fonseca the one of panama papers to open this a corner in the Seychelles after this he opened an account with vsti in this company received part of the money right the beneficial owner of the company was just some random person an intermediary no one knew what what this person had to do with this so here we can see this is the request from from David to open an account and a company named a corner those are all the other companies that he asked mossack fonseca also to open so for other journal for journalists in the room one more tip probably something wrong there so the first the first like Lusitania them first transferred ten million to to a cone and then their subsequent transfer in the following years the bank did find something was wrong and asked the first ten million and asked the manager of the count David for for more information and here you can see that his explanation was and I will call him external consultant for Petrobras for international service slash questions intermediary between Petrobras and Luz Eterna petroleum so you have ten thousand ten ten million being transferred that is like one third of the whole amount paid by Petrobras for intermediary service but this apparently was sufficient and the translation could move on unless there was a second transaction that I also raised suspicions you can see there the compliance system of the bank said oh there is a risk of money-laundering them still he says see the proven email attached but I've lying if you go today the email that was attached and finally I don't have it here he says I had conversation phone conversations with the parrot is all fine period move on you can continue so that's that's how you had in the end more than half of the total amount that was paid by Petrobras end up in a offshore account owned by a random guy that no one knows who he is in this okona was kind of center because from okona the money continued moving in in in different direct directions and I will talk a bit about the next account that that got money also with psi that is the same field same process and field was created just one month before a Petrobras signed the agreement with in Benin I also buy the manager of psi who requested that in our company's opening in Panama so he mossack fonseca was the one who opened the company and he registered the company open an account with with psi and surprise surprise the beneficial owner of the account is pedro bass the same Petrobras basses who negotiated on behalf of Petrobras the the purchase of the oil field so it's not a very difficult thing to do right the money left Petrobras passed through two offshore companies and reach the third one that actually the beneficiary is a manager of Petrobras so I would say something is is weird but the bank apparently didn't think it's weird and actually he gave as there was in the files of the accounts there was a visit card his Petrobras visit card so it was fired there so they knew pretty well who he was in and from between 2011-2013 pedro was using this account for many things he was receiving money he was buying jewelry's everywhere and funny enough there is actually a payment to customs offers in the airport of the airport of Rio de Janeiro where probably he just wanted to be able to come in with all the goods they purchase somewhere else without having to answer any questions so now let's very quickly I will move just to the other part of the scheme that involves the politician in Brazil and he was the one who actually appointed paid refer for his position this time is another Swiss bank that was involved is julius baer used to be Marian Lynch in Switzerland and the money also started to be moved from this iconic account you have 1.5 million that goes to trust I Scott from Scotland as you mentioned called ariane with judas pam and this trust existed already for a while before this transaction happened so that you can see this is a account of the trust and you can see that there was money flowing already in 2008 so before this scheme happened and this the beneficiary of distrust is called it why do cooing uh he at the time was the Speaker of the House of in the in the Brazilian Congress pride a quite important politician he kind of was the one behind the former presidents Duma impeachment and let it true so he was a benefit beneficiary of the account in he's in jail now in Brazil and being prosecuted in six different scandals which might explain a bit of the transactions prior to 2011 and I think what is also interesting to see here you can see for example there is two hundred and sixty four thousand that goes to Posada Eva see no consul tourists this is just such a corporate service provider from Uruguay who was helping him to set up different trusts and different open different bank accounts with with this bank in Switzerland and they received quite a lot of money look they appeared there three times 250 $260,000 in the money state in this account when the money arrived from from a corner in this account it stayed there for like three three years only in 2014 when the first director of Petrobras was arrested as part of the the car wash investigations he moved the money to to another account and that is this triomphe account that is a an offshore company that was established created in in Singapore and he is also the beneficiary he was a bit smarter so he created he had a trust then he had another trust and he had an offshore offshore company in Singapore and the money was moving from in this this accounts finally the mean he was the beneficiary of all these accounts there are bank documents that show that his name is there they actually did their jobs they found out he is a pap so they say yes it comes from a high-risk country yes they took the box but no problem that's perfectly fine he can move all this money and by the way in 2014 where all these transactions were taking place his tax declaration to Brazilian Authority it was saying that his income was one hundred thousand dollars per year so there is something wrong and then finally let me show just this you can see that most of the money end up in this account that calls kopeck that was awesome offshore company and the beneficial owner of this account is Claudia Cruz who is Quinn's wife and this account there were documents in the bank that show actually saying that this account is connected to a trust and it's basically just to pay credit card bills and and they they say here it's bad to read but they're saying that no one should worry that it why do Cunha her husband has gone very thorough has gone through thorough due diligence twice so everything is good you can continue and this account was then used to purchase several things they were going on Rio shopping sprees to like Miami New York Paris and Rome and visiting all the very expensive place just it's imported goods but you can see the names of the brands and the amounts they were spending in different place between 2014 and 2015 2013 in 2015 there is one I think when they went in in the beginning of 2013 they spent nine days in in Miami and they were staying in a hotel and for 9 nine nights in this hotel they spent twenty four twenty five thousand dollars which is four times queenie'll salary was far times cooing a salary as a congressman in Brazil and during those nine days their credit card bill was close to fifty thousand dollars so I think this this shows a bit that the banks did part of their jobs they actually identified all the beneficial owners behind those companies and they actually knew quite well why the transactions were happening but they fail to report and you actually you saw that the compliance system often found out so that something is wrong with this with this transactions but we're just told by the management to proceed regardless and I think it shows a bit to us that something is wrong right there needs to be better supervision in place that it cannot be that a bank can run an account such like this one between 2008 and 2016 without raising any any questions and you mentioned a bit that we have been relying on the work of whistleblowers journalists and civil side organization to bring this case to light and I think it's time that authorities take this back to themselves and also do their jobs we can't continue relying only on on others to do their jobs for them [Applause] thank you very much for the presentation lots of fascinating detail in there and I know from experience that it's it's often hard to present the complexity of text schemes like this to readers to listeners to my editors because the complexity is the point right in a lot of ways I mean the these these schemes are designed to be so complex that you know journalists and bankers investigators just get tired of trying to sift through to the beneficial owner to the person who is behind the schemes who actually owns the money so you did a very good job of cutting through the complexity so we have about 10 minutes of discussion here and then I'll turn it over I don't want to I want to get to your questions as soon as possible so just just a kind of broad one for both of you guys for me what do you see is the the weak spot in this system you know in in the the tax haven system that we're talking about what is what is the way to attack it is there one kind of silver bullet or hole we can plug that would really help help address the problems we've been discussing okay there's obviously no silver bullet that will kill the system and will always how there'll always be tax havens I would say there are two main things that are required what one is on the technical level I think we need to think about rather than going after what we need to go after all of them but if we're going to focus our attentions go off to the banks and the financial sector the private intermediate intermediaries because that's where it's all happening that's that's generally the successful way to go after these things the other thing is you know at the end of the day this is all about politics is about political change we had a global financial crisis that could have been a gigantic opportunity for reform here when it hit the analysis wasn't out there people were kind of laboring under this idea that this system was somehow benign or small or not that important and the crisis hit and we couldn't harness there was there was no analysis no real analysis there was some stuff that the Tax Justice Network was just starting to put together some kind of systemic analysis but it was still in its infancy so that opportunity was lost and I think you know opportunities for reform at the end of the day crisis is kind of required to get real change I think we're now in a slow burn crisis that's that is going on it's a different kind of crisis it's not a sharp shock but it's a rise of what some people call populism I hate the term because populism kind of equates left and right and it also suggests that's what's popular is wrong and I think the crisis and subsequent events showed us that it's the experts you got it wrong and maybe the people had it right all along but I think that we do need so this kind of a slow burn crisis that's going on is building up momentum and you spoke about the difficulties of telling these complex stories people's eyes glaze over and it's something that's always worried me you know that is this just a flash in the pan I remember when I was writing treasure islands there was some tax havens scandal that came out of cotton what it was actually but my agent sort of caught me said could you just quickly hurry your book out because you know now's the time you know we won't get another moment like this and I sort of arm I just can't you know and I sort of waited and then treasure islands came out and got a lot of attention and it was the global financial crisis I think which really lit the fire for people being willing to listen to this stuff the old system is discredited and here's you know a different kind of analysis so I think right now you know Trump administration's in power not much prospect for reform of the United States a multipolar world emerging with China and other countries becoming more relatively more powerful that don't have necessarily interests of our democracies close to it close to have close to their hearts so it's a difficult situation but I think you know there are people who saying is that there could be another gigantic sharp sharp crisis around the corner if you look at the financial system all sorts of risks are building up so we should be ready for something sharp to come along something disruptive and unexpected to come along and really use that as an opportunity to because that's when you can really push push for change that the Obama administration's attention to this that was pushed by the global financial crisis right and and it pushed them to do something it was on the agenda but they they clearly didn't go for you know far enough or to the top of the system my or would you have some ideas on how to kill the beast no no I think as we were saying no like a lot of this is driving because of secrecy so I think transparency is always the best solution so that's why we have been insisting and repeatedly saying that we need March as parents and we need to know who are the people behind this and it should be much more difficult for those wanting to hide and I think it should it should be the exception right like why do you need an offshore company in the middle of this such as simple transit is like a two-way transaction why do you need to put five of shore companies in the middle so I think it should be people should start to have I don't know to prove that there is a reason for that that offshore company to exist and more transparency for me is that the only solution another question I'd have you know I always think back to the Swiss banker who told me you know the world has changed and and then I realized that it didn't I had that feeling again that maybe you know maybe the world of at least of tax havens has changed when these big leaks come out you know Panama papers and so on what's been your experience you know it's three years now or three years out from from Panama papers that has been the impact of that you know what's changed in terms of public perception and in terms of policy that you've seen if anything I can say I think there is significant change at least at the U level I think the the n-terminal under directives and we had actually a directive short but time of period after one was adopted we had already had another one that goes way further on talking about transparency so I think there passed police positive policy change that were certainly driven by Panama papers and other scandals that came came true i I think square law has changed I've been on up on a personal level when treasure islands came out there are a lot of people saying oh he's exaggerating it's not really as bad as this and then Panama papers came out and like okay yeah it is kind of like that I think what's been happening is that the offshore system and again I'm being very broad here talking about the secrecy stuff and all the stuff that you've been talking about but also this broader system involving corporate tax avoidance and you know financial regulation and so on it develops it progresses it grows as a result of this these kind of competitive dynamics one jurisdiction puts in place a very clever new secrecy law money flux there other jurisdictions advised by their accountants and lawyers and bankers hey that jurisdictions got the secrecy law why don't you go one better and do something even more secret and even more devious here so they put that in place and you get this kind of race to the bottom and this is a kind of generic dynamic that is expanding the system pushing it forwards and also pushing it into our supposedly onshore economies because our own you know the UK I'm British we're always saying we must be competitive in this area must be the City of London must be competitive so we must degrade our regulations a little bit more because Hong Kong is going to race ahead of us so this kind of so not only is the system expanding its you know onshore is becoming more offshore or becoming more tax haven like so you have all this force pushing in one direction before the global financial crisis there was nothing really pushing in the other direction this was just growing under its own steam under this kind of free-market ideology of let it all happen let the financial sector rip and it'll generate prosperity and stuff now after the global financial crisis that complacency that ideology has been shattered and ordinary people in Britain not so much in Germany but in Britain you get people you know I hear people talking in pubs about tax dodging and tax havens and stuff like that it's it's a popular subject now it depends on the country but this kind of pressure is now rising from the streets in the other direction voters are noticing it and governments therefore are noting as they're pushing in the other direction what's the result of these two opposing forces well the result at the moment is a mess so you have the OECD a club of rich countries is putting together some initiatives the common reporting standard is in many ways a very impressive improvement on how things were before it is trying to create transparency trying to get information shared around the world it's also full of loopholes and lots of people lobbying to water it down and countries aren't implementing it properly in all sorts of stuff so there's this kind of complexity and mess emerging on the corporate tax avoidance as another thing called beps base erosion erosion and profit shifting which is kind of the corporate multinational corporation version of this same thing but in that case we're getting to a stage now where the international tax system for multinationals is kind of beginning to fall apart there's a recognition explicit recognition by the IMF just in the last few weeks and also recognition by the OECD and by others that this system ain't working and we need fundamental reform but that's not what we're here to talk about but but the general phenomenon is you have these two opposing forces and it all depends on political will and voters and we'll see where it goes but there have been some improvements and and you know things could have been an awful lot worse then we'll turn it over to questions you know as those two opposing forces kind of meet each other head-on you know the pressure to change the system and the growing complexity of it what I've seen is is an even greater stratification of the very richest levels who can afford the complexity the complexity cost money it cost money to shift to new jurisdictions it cost money to build these these architectures of shell companies and so on so the very richest still do fine they're still protected by their ability to hire these armies of lawyers right and and the the pressure to change kind of nips away at the lower level tax avoiders you know who are still in many cases breaking the law and do deserve to be punished but still isn't isn't causing systemic change so that's just something I've observed while reporting on this and and with that I really want to hear what issues you guys are interested in and what questions you have we have two microphones that should be circulating around so yeah please right there in the middle and two short questions for Nicholas what is your take on brexit from a tech 7 perspective like do you think that do you tightening onto money laundering regulations had played any role and you know deciding to get cut out of do you and second short question you didn't have Austria and Germany in the European tech sevens wide it okay I lost to the second one first cuz it's much easier yes I should have actually put Germany in there and I don't know I didn't germany definitely should be in there there is there's a book called Stoia or wiser Deutschland by Markus mind so which looks at this how Germany and if you look at the financial secrecy index of the Tax Justice Network Germany is I think number seven if I'm right something like that very high up one of those unrecognized tax havens in other words money is coming from other countries into Germany going into German real estate and all sorts of other assets and Germany's not sharing that information with the governments of the people who the rich people are putting their money in Germany so yes I should have and thank you for correcting me on that and Austria as well watch it for me is it indeed it is it has been a tax haven it's one of the smaller ones I find Luxembourg annoys me a lot more that's why it was in there but you're quite right I'm I could have included monaco liechtenstein and you know some and or some of these ministry is bigger than bigger than that um now brexit that's i hate that question because it's so complicated there is basically in the conservative party in the UK there are kind of two factions there's a pro-european faction and there's a an anti european fraction and the anti European faction has got a lot of a lot of individuals involved have got a lot of question marks over their own finances and they have got all sorts of financial investments it's not something I have followed in detail so I can't give you any details about there but there is a lot of what I would call offshore money in the brexit movement and in you Kip the party that was very instrumental in bringing this issue up so yes offshore fine and this would be an example of the damage that I was talking about these inflows coming in this connection with the offshore system you know the conservative party treasurer was some big names in Belize which is a very Michael Ashcroft very big tax haven all these characters across large parts of the conservative body but also parts of at least the historic Labour Party but talk before Jeremy Corbyn quite a lot of off offshore interests there it is the British establishment so there has been quite an offshore involvement in brexit how that has worked I have not followed in detail the other thing is there is a a faction that talks about what they call Singapore on the Thames and what that model is it's basically if we go for brexit we can then be like Singapore we can then be an offshore tax haven we'll be free to do what we want we can degrade our laws we can be more secretive we can the EU won't stop us anymore from doing all this stuff and we'll be rich and that's it's kind of one of those things they say and a number of people believe it and it's a persuasive argument for a significant section of the British population so yeah that's the kind of rambling answer but it's a very difficult question but but offshore certainly has got something to do with brakes it also the brexit vote was 52 to 48 you could say a lot of issues swung the vote because it was so close tax havens certainly swung the road not only for these reasons but also because there is now a widespread understanding in Britain of how the elites are getting away with not paying taxes with with the laws falling away and everybody else having to do what they want and they understand it's very widely understood in Britain now how important tax havens are in corrupting the entire British establishment and this anger which is also related to inequality and poverty and deprivation and all these terrible things that are happening in Britain this anger was a massive contributor to the to the to the leave campaign so for sure you know if that anger hadn't been there because of the offshore system then you know in another world it wouldn't have you know it would have swung the other way so yeah sorry that's a bit of a vague answer to help you avoid self-promotion just a point about your book I mean that argument that the money's flowing in if we become a tax haven the money's gonna flow in and we're all gonna get rich that has a very powerful effect on voters it's it's easy for politicians to say if we pass these laws the secrecy laws the money's gonna flow in the banks are gonna grow and we're all gonna get rich your book you know I think in a groundbreaking way points out that that know that the systems that develop and the way the economy changes when this type of money this type of Finance flows in is very problematic and in many ways damaging to to the economy itself where did you want to add something next question yeah please yes the gentleman there in the middle if I may broaden it just a little bit to the political question that Nikolas brought up a couple of times we've seen over the years the reaction against the lobbying of the bankers the derivatives dealers swap dealers huge sums of money that go in to stop any kind of change and I think that's one of the things that's led to what some people do ride is populism but the people across Europe and the United States are angry at the fact that people who have money are able to change the laws and to be to use that to evade taxes to launder money just one quick example in the u.s. two people who were involved in covering up money laundering were James Comey who was on the board of Hong Kong Shanghai bank and then became FBI director mr. straight arrow and Robert Muller who his FBI director covered up the BCCI scandal so I just like you to address a little bit how you take on this the flows of money that end up corrupting the politics yeah that's a very fair point that there's another interesting angle to the the BCCI scandal is is something that it kind of exploded in the 1990s this was a very British scandal which involved what for my money is probably the the rottenest bank in world history maybe not maybe there's even worse banks when BCCI but another little interesting snippet of that is that there was a plan hatched by Margaret Thatcher's advisors in the early 1990s to make her president of BCCI when she stepped down I only found out that recently so yeah this Bank this rotten Bank kind of totally infected the British establishment and the u.s. establishment as well but in this case it was generally the u.s. prosecutors that went after this British bank and that's a long-standing pattern there are there is no prayer is almost no prosecution of British bankers by the British authorities in the last few decades if you see British banks being prosecuted it's by the US authorities even though US prosecutions of the banking sector has been thoroughly degraded during the Obama administration and before and since but Britain really is a particularly rotten player in this in this game essentially politicians moving between political posts and Bank posts as bank executives I mean can you can you address a couple of examples in the US but elsewhere that shows like the problem of of lobbying in enforcement so there is recently this vet bank case that is this Sweden Bank that is involved in a huge money-laundering scheme there is also clear connections between people in the board of this Bank and supervisory authorities in Sweden that shows like how close to power these banks are and in the case that presented I actually like the psi and Angela's better were never punished there there's all this information that David this manager from BS is actually was arrested in Brazil he's in jail in Brazil and still the the thing in Switzerland the Supervisory Authority responsible for financial institutions didn't give any sort of punishments to any of these banks so I think there is the the industry is really powerful in the u.s. there are other examples that goes beyond banks so hedge funds and private equities in the US they don't have any money laundering obligation so basically they can get all the investment they want from whoever they want they don't have any obligation to know who are the people behind the money that they are getting and that's perfectly fine real estate agents in the US since 2001 I think 2001 if I'm not mistaken there is an exception to the the Patriot rules in the backgroud Act in the US that says real estate agents are exempt from these rules for a while this has been 20 years in theirs to exempt from this rule so I think it shows how powerful lobbying of certain corporations and professionals are and the impact it has on policy and on enforcement yeah I mean one policy idea to address some of the points you raise could be some kind of moratorium right so that there can be a revolving door directly from a senior political post like no FBI director directly to the to the executive suite of a major bank that was previously you know that might be a pipe dream but that that is a policy decision that that governments could make you know that there would be at least a three-year legal period or some something like that where politicians or regulators couldn't go work for a bank but it could also just be a band-aid that wouldn't really address the problem so it's a tough one any other questions in the back was the first first hand that went up there the gentleman sitting by the camera I thanks for your takes on this topics I wanted to know it's very admirable the work you do and the work your collaborators so you're not doing this alone I'm just curious to know what are the the personal costs attached to the work you're doing because obviously you're stepping on certain people's souls maybe my wife would be best to address that but yes loss of sleep maybe headaches from trying to explain what tax havens are from my perspective I because I spent more time interested in the kind of systemic Ashe aspect summer– I do you know investigate certain things but my invest my analyses generally use these to illustrate things but are not the primary purpose of what I'm doing so I generally haven't had problems with that I've had bits and pieces of slightly menacing stuff happening you know in Angola and places like that but nothing nothing too bad I think it's people like you know OSI CRP offshore corruption reporting project who really go and investigate you know gangsters and stuff like that those are the people who really at the shop and and you know some journalists are investigating a particular story but yeah so from from my perspective it hasn't been you know I I was worried about it when Treasure Island came I guess I knew I was taking on a whole system and I was also expecting you know because I was always wondering why hey why has nobody reported on this before it's not like the information is locked away you know I can find it it's hard to find but you can find it you can put it together why has nobody put this analysis together and I was kind of wondering maybe you know I've misunderstood something or got it all wrong or something and I was expecting when it was published to be a whole chorus of like you're an idiot and this is just insane and possibly something more menacing than that but when it came out I was confronted with silence and that has generally been the response to what I published not attacking me back there was one guy in the Cayman Islands chairman of the Cayman Islands monetary authority called Anthony Travers who jumped up and down saying Saxon as an imbecile doesn't know what he's talking about never with any specifics always just he's an imbecile but apart from him there really wasn't there really wasn't much and I think you know in many cases these people just kind of shrink away and and you know either they know they're doing something wrong or they don't want to listen to you know who they root people who they regard as you know leftists or whatever and they just dismiss it and they've got the money in the power and they can sit in their little bubbles and and talk to them talk among themselves and carry on their happy life drinking champagne but as I said there are other people who are much at a much sharper sharper investigative place than I am yeah I guess similar for me I think what we face sometimes is more the legal aspect of it the harassment right so we are often harassed by governments or companies that don't like what we're saying but physical threats it's not something we face do the the type of work we do but I think tomorrow you're going to listen more from people who actually have first-hand experience with dealing more with investigations and in the risks that that in girls just add yes the point about libel is very important that is for people like me libel is a huge headache you can get sued in London and from really quite trivial things and you have to nail things down very very carefully and you can get into terrible trouble if you no get tied up and lose lots of money personally so that's for me has been the biggest threat yeah one point from from the journalistic side I mean you brought up you brought up this point about the boring term of beneficial ownership transparency I mean what that means is it is exposing the money of someone who doesn't want it to be exposed and when journalists do this from my experience working in Russia and Ukraine that is the most dangerous type of work it's not people often ask me like oh how do you write these things about Putin you know are you scared you know criticizing politicians even in places like Russia generally is ok exposing how someone makes money in a way that they don't want exposed is extremely dangerous and you know this happened to me there's once a story I worked on it's like 2010 maybe it was an arms dealer who was shipping arms it's an amazing story from North Korea to Iran like the most sanctions isolated locked up countries he was shipping and he was a Russian gentleman from Kazakhstan and because of my article he wound up in a UN list of sanctioned or designated individuals and yeah he sent sent guys around to the office to try to I guess beat me up luckily I you know wasn't around at the time and I had to leave the country so these things happen like when you hone in on that beneficial owner behind these networks of companies that's the most generous work that journalists can do and and and I think you know I commend the folks at OCC RP especially who we're gonna hear from a bit later for for doing that kind of work do we have time for one more question and the whistle blows yes whistle the whistle blowers especially when they come forward yeah time for one more question please all right yes it actually touches my question on what you just said it seems to me that the dark havens the tax shelters all of this is just the tip of the iceberg and the way to put money into an incredibly large shadow banking system that's financing huge amounts of operations and illegal drug running weapons running weapon systems and transnational operations military operations that are in the interests of various parties and going all the way to the Vatican which is financing things all over so really just the dark havens are just the way to shell to put money into that system but the system itself shadows the the dark havens the the sheltering by far I mean that's just a tip of the iceberg really of the shadow banking system what you're talking about I think the system couldn't work without it would you agree yes I mean it depends what you mean by the shadow banking system I mean there's there's certain sort of players that are recognized as you know in financial regulatory circles anyway as shadow banking players hedge funds and so on is that what you're talking about once the money is in the system okay and there's trillions there's even estimates that it's bigger than our transparent system it's financing huge operations huge purchases of weapons huge purchases of drugs the whole movement all the way back from the 50s you know in Cuba and all of this was huge amounts of money Mart in Patricia Goldstein Goldstone speaks about it in interlocked Marc Lombardi did an artist the diagrams of it I mean it's talked about really in circles of course you gave an example when you really go into it your life becomes threatened when you go into a specific field that's financed by this shadow banking operation then your life becomes threatened and because as long as it's not talked about and it's not out there and the dark havens are a lot of the people who are sheltering money are not a part of this system they're just like executives that want to illegally put shelter money and not pay taxes and whatever but but this whole system of the dark havens is just the tip of the iceberg of something that has trillions behind it and that's used also transnational political things like CIA has alternative operations that are illegal that are all funded through this system well I would kind of disagree with your characterization of that actually I I think that there is this misunderstanding that that tax havens the offshore system of tax havens is some sort of exotic sideshow to something much bigger no I would argue that tax havens are right at the heart of the global economy and the financial globalization that's been going on particularly since the 1970s so this system is absolutely central to what's going on I think and yeah and and but you're right that all sorts of operations that we see are routed through every multinational in the world has lots of subsidiaries in tax havens so but it is absolutely central to everything that's happening in the financial system the global financial system I think the only similarity is that perhaps the same mechanisms are used by different groups so I'm trafficking drug trafficking human trafficking they all use the same mechanisms that are in the offshore center so I think that's that's it kind of obvious point that it would be a lot more difficult for the more violent networks drug traffickers human traffickers weapons deals it would be a lot more difficult for them to operate as freely as they do today if if they didn't have the ability to use the offshore banking system to hide their profits to move money around to make payments and so on so I think that's that's a really important thing that as a journalist I try to get across whenever and I'm sure you do to know you do as well that you know we're not just talking about businessmen in corporations hiding hiding their money we are talking about the more kind of violent and dangerous phenomena in our societies are fueled by tax havens and probably I mean I think couldn't really function at least not in the same way as easily without them yeah yeah I mean any any criminal organization say it's in the United States for example if it was not able to use offshore tax havens if it was having to do everything through US domestic bank accounts if they were bottled up at home the force of law and order would have an awful lot easier job going after them I think we have to end it there I just end by plugging a report that my ear has coming out you were innocently didn't mention it may be September but look out for it it's coming from transparency international it's in the works thank you all very much you've been a great audience and and I'll hand it over to Tatiana thank you thank you very much I think has been really a great start of our conference thanks to all of you I just want to say that now we have a 15 minute break and then to come back we will have the panel leaking massive data sets so we also enter into the deep of the data there and after this panel we will have the screening of the film of the Panama papers so please come back in 15 minutes thank you you you




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