TWN  |  THIRD WORLD RESURGENCE |  ARCHIVE
THIRD WORLD RESURGENCE

The strange dialect and hidden tentacles of corruption

British premier David Cameron's recent move to host an anti-corruption summit in London, a city which has become a haven for stolen assets, smacked of hypocrisy, especially when he labelled some of the victims of such depredation, e.g., Nigeria, as 'fantastically corrupt'. The conference's glaring failure, in the aftermath of the shocking revelations of the Panama Papers, to take decisive action to end the nefarious role of tax havens as repositories of plundered loot also vitiated its credibility.  Jeremy Seabrook comments.


THE leak of 11.5 million documents from the database of the world's fourth largest offshore law firm, Mossack Fonseca in Panama, in April raised the curtain on the financial conjuring tricks of some of the world's richest people. The revelations related to 12 national leaders and 143 politicians around the world, their families and associates. Mossack Fonseca repudiated any 'wrongdoing', but said it could not answer for the failure of any 'intermediaries' - banks, law firms, accountants, tax and financial advisers or any other actors in chains of concealment that protect the modesty of money from the prurient eyes of the public.

According to the Tax Justice Network, between $21 trillion and $32 trillion worth of private financial wealth is located in jurisdictions around the world where there is no, or only a very light, taxation regime. Illicit cross-border financial flows are between $1 trillion and $1.6 trillion annually, eight or 10 times as much as global foreign aid of $135 billion. In the Network's ranking of secrecy, Switzerland still occupies the ignominious first position, followed by Hong Kong and the US. The United Kingdom is in 15th place, but if its Overseas Territories and Crown Dependencies were assessed together, the UK would occupy first place.

It is significant that the dictionary definition of corruption, as well as referring to illicit gain by those in power, also indicates the alteration or debasement of the meaning of words. Transparency International has obligingly published a glossary (www.transparency.org/glossary), a linguistic guide to the dialect of corruption, with its extensive euphemisms and obfuscations - including 'beneficial ownership secrecy', 'shell company', 'transfer (mis)pricing', 'procurement', 'patronage', 'revolving door', 'illicit financial flows', 'integrity' and 'asset recovery'. TI also issues an annual survey of the most corrupt countries in the world: currently this starts with North Korea and Somalia, and includes Afghanistan, Sudan, Angola, South Sudan, Iraq and Libya.

It is in this context that British Prime Minister David Cameron held a 'summit' on corruption in London on 12 May. This was, predictably, characterised by Cameron's authoritative consequentiality. It was a threadbare and perfunctory affair, despite the presence of US Secretary of State John Kerry, who praised Cameron's 'courage' in hosting the meeting and said corruption 'tears at the entire fabric of a society' and is as great a threat to the world as 'terrorism'. It seems that Cameron had never heard of the United Nations Convention on Corruption, a comprehensive charter designed to deal with corruption at all levels, drawn up in 2003 and ratified by most countries in 2005.

Cameron's event was calculated to show a businesslike determination to 'crack down', to show 'zero tolerance', to 'root out': it was a mixture of showbusiness and public relations, of which the tamasha in the ornate splendour of Lancaster House (once the most valuable private residence in London) was a particularly florid example.

Perhaps his courage had more to do with his audacity in convening such a meeting, especially in view of the fact that in 2013 he had actively intervened personally to weaken a European effort that would reveal the beneficiaries of offshore trusts; and this despite a speech in the same year at the G8 summit where he spoke of a 'transparency revolution'. There, he said: 'For too long the international community has shied away from condemning the appalling degree of corruption and mismanagement of resources and the fundamentally bad governance that is destroying lives in some developing countries.'

In April 2016, the Panama Papers revealed that his father had taken advantage of Margaret Thatcher's abolition of capital controls in 1979, which made it legal to take any sum of money out of Britain without being taxed or controlled by the UK authorities. His father was instrumental in setting up Blairmore Holdings, which was exempt from tax in the UK, in Panama in 1982, when his son was a pupil at Eton. That this was a perfectly legal activity is a measure of official government contrivance of circumstances ensuring the secrecy of the fortunes of the super-rich, which have shown a remarkable capacity to grow exponentially in the dark, like mushrooms or the useful purgative of rhubarb.

Evidence of a lack of seriousness in the anti-corruption effort lies in the failure of Western governments to make a declaration of war on corruption, which they invariably do on any other baleful abstraction they can think of - poverty, trafficking, obesity, extremism, terror. Moreover, some of the territories with the most opaque financial sector, notably the British Virgin Islands, a Caribbean paradise with a population of 28,000 - where several hundred thousand offshore companies are registered - have refused to publish any register of beneficial owners of such entities, and no representative was apparently invited to the Lancaster House 'summit'.

Cameron's conference opened with a 'call' for British Crown Dependencies and Overseas Territories to accept a 'gold standard' (unfortunate metaphor) of publishing in full lists of beneficial ownership of companies. This call was disingenuous. These territories are wholly controlled by Britain, in the main scattered shards of empire, and their assent to compliance is not required. A truer reflection of the attitude of the ruling Conservative Party to these remnants of British dominance was expressed by Sir Henry Bellingham, former Minister for Overseas Territories, who said: 'The British Virgin Islands can be held up as a shining example of a well-regulated, transparent and cooperative jurisdiction, a model even for others, a solid regulatory regime.'

In any case, when UK politicians are accused of faint enthusiasm in compelling full disclosure in its offshore territories, they point to Delaware, the second smallest state in the US, site of epic secrecy and concealment, where at one address in an unassuming two-storey building in Wilmington, 285,000 companies are registered, including holding companies belonging to noted presidential adversaries Hillary Clinton and Donald Trump. Recently, Delaware is said to have 'lifted the veil' to some extent, enacting legislation that requires minimal disclosure about ownership, but only to tax authorities and law enforcement agencies.

This is also the inspiration for Cameron's 'openness': nothing will be disclosed to an inquisitive public, which has no right to pry into certain aspects of the lives of the powerful. Indecency has been redefined: it is over the financial, not the sexual, affairs of the rich that the most decorous drapes of concealment must now be thrown.

'Tax havens' have been the subject of much discussion. The image itself suggests a safe harbour for the vessels of enterprise battered by government assaults upon honest gain; and the term throws the onus of persecution upon authorities that would relieve the heroic creators of wealth of what is rightfully their own. Taxation is always 'penal'; what more understandable that shelters should be sought, secrecy of jurisdictions which will protect the very rich from their reluctant obligations to the society which facilitates the making of their fortunes.

While Cameron was receiving plaudits from the press for his 'transparency' (a fashionable word with a ghost-like quality, suggesting insubstantiality rather than visibility), he was recorded at a reception with the Queen referring to the presence in London of the leaders of what he referred to as two of the most 'fantastically corrupt' countries in the world, Nigeria and Afghanistan. In this simple phrase, he encapsulated a whole history of imperial condescension, whereby the rich world continues to identify corruption with the world's poorest countries. It suggests an old trope, that these entities have never really been fit for self-governance, to which the venality of their regimes attests.

President Muhammadu Buhari of Nigeria insisted he wanted no apology, but he does want repatriation to Nigeria of funds deposited in London by his corrupt predecessors; a process in which the British authorities are engaged without expedition or urgency. Shortly before the London meeting, 95 anti-corruption and human rights groups in Nigeria had written to Cameron insisting that Britain end its role as a 'safe haven' for white-collar criminals who steal Nigeria's wealth and resources for personal gain.

For not only does the United Kingdom have oversight of some of the most secretive financial jurisdictions in the world, but London has become a kind of global public cleansing station for dirty money, which passes through the washing machine of its property market. The laundered money, fresh as clean linen, is made material in 44,000 expensive properties in the city which are owned by offshore companies; with a further 50,000 or so elsewhere in Britain.

And although some representatives of noted British-controlled tax havens showed up at Lancaster House, notably the Isle of Man, Bermuda and the Cayman Islands, and underwrote a vague commitment to the publication of a 'register' of beneficial owners of companies within their jurisdiction, what emerges from these transparency spectaculars is that global lawmakers - a majority of them democratically elected - are unlikely to draw a line between what is legal and what ought to be outlawed, for the simple reason that they are major beneficiaries of a system which must remain legitimate for their sake, however morally and ethically repugnant.

One of the great temptations to laissez faire in the realm of such legalised corruption is the brevity of tenure of most leaders, whether raised up by the popular vote, military coup or kleptocratic ingenuity: they are always highly aware of their political mortality, and anxious to prolong the taste of privilege for which governance has given them an appetite. Goaded by a desire to assure the future of themselves, their families and heirs, what is more natural than that they should seek a secular afterlife through the principal medium which commands universal admiration and respect, namely amassing great wealth and figuring in the 'rich lists' of the world?

It is, however, impossible to grasp how such fortunes have been acquired by a relatively small number of individuals with only minimal popular protest, without an understanding of how the meaning of 'wealth' has been transformed in the age of financial deregulation, and how this is underpinned by something little short of an ideological revolution.

There has been a reversal in popular attitudes to the super-rich. At an earlier time of the capitalist era, they were detested by those whose necessities they monopolised, the workers who toiled in want and insufficiency while the rich progressed through the great cities of the world in open carriages throwing pennies onto the road for street urchins to fight over. Their lucre was 'filthy', their money wrung out of the sweat and sinew of those who served them. Plutocrats were 'bloated', their money stank, they raked it in and made killings, quite often literally, as they wallowed or rolled in money, haunting the 'fleshpots' of luxurious and decadent living.

With the decay of socialism and the exhaustion of a rhetoric of social justice, the rich were themselves rehabilitated and reformed. Money was cleansed of its stench and lucre lost its association with dirt. Plutocrats became svelte and lean, their natural habitat the boardroom and international business meetings where they toiled and laboured in ways that put the working class to shame. In other words, they became 'wealth creators', generators of the money without which we would be unable to enjoy any of the amenities of contemporary life. It is significant that as the role of workers as the nemesis of the rich became more and more implausible, the rich themselves took on the mantle of redemption - a rare example of the powerful taking up the cast-off clothing of the poor.

So it is that the possessors of great fortunes have become the benefactors of humanity. Without the wealth creators, the rhetoric runs, how would we afford the schools, hospitals and social advantages we need? It is an epic irony that it is precisely under the cloak of this elevated status that they have begun to conceal their riches, thereby compelling governments to cut health, education, housing and sanitation budgets, and depriving the people of the very things which their extravagant wealth-generating abilities are supposed to furnish us with.

In this way, the problem becomes, less the secretive sites of dissimulated wealth and how they work, than an ideological predisposition which permits the hiding of global loot, the burying of treasure in the island sanctuaries where business is conducted. Once the rich have been sanctified, not only do they form a caste of a different kind of untouchability from that traditional in India, but the poor become scapegoats, villains, cheats and skivers whose depredations on the public purse threaten to bring the richest countries in the world to ruin.

The financial services companies, tax lawyers and accountants who nestle in havens offshore, devising legal ways in collusion with governments and ruling classes to protect the monetary modesty of the very rich, can only perform their sombre magic with the assent of the people. How, otherwise, would it be acceptable that 62 individuals own as much as half the world's population, the 3.6 billion whose income dropped by 38% between 2010 and 2015, while the amount of money held in offshore accounts has reached an estimated $7.5 trillion?

Global Witness describes secret companies as 'getaway cars for criminals and the corrupt across the globe; and the US, where you need to give more personal information to get a library card than to set up a company, is certainly the weakest link'. It is clear that the full extent of the worldwide cabal between power and wealth is only now beginning to appear. As this unfolds, will popular resentment compel them to renounce their excesses, or will a cynical knowingness admiringly acknowledge that it is nice work if you can get it?            

Jeremy Seabrook is a freelance journalist based in the UK. His latest book is The Song of the Shirt (published by Navayana).

*Third World Resurgence No. 309, May 2016, pp 9-11


TWN  |  THIRD WORLD RESURGENCE |  ARCHIVE