Analysis shows £1.3tn of assets from Russia sitting offshore, as David Cameron prepares to host anti-corruption summit.
Russian banknotes. A detailed 18-month research project has uncovered a sharp increase in the capital flowing offshore from developing countries, in particular Russia and China. Photograph: Maxim Zmeyev/Reuters
Heather Stewart in The Guardian
More than $12tn (£8tn) has been siphoned out of Russia, China and other emerging economies into the secretive world of offshore finance, new research has revealed, as David Cameron prepares to host world leaders for an anti-corruption summit.
A detailed 18-month research project has uncovered a sharp increase in the capital flowing offshore from developing countries, in particular Russia and China.
David Cameron under pressure to end tax haven secrecy
The analysis, carried out by Columbia University professor James S Henry for the Tax Justice Network, shows that by the end of 2014, $1.3tn of assets from Russia were sitting offshore. The figures, which came from compiling and cross-checking data from global institutions including the International Monetary Fund and the United Nations, follow the Panama Papers revelations of global, systemic tax avoidance.
Chinese citizens have $1.2tn stashed away in tax havens, once estimates for Hong Kong and Macau are included. Malaysia, Thailand, and Indonesia – all of which have seen high-profile corruption scandals in recent years – also come high on the list of the worst-affected countries.
Henry, a former chief economist at consultancy McKinsey, told the Guardian his research underlines the fact that tax-dodging is not the only motivation for using tax havens – criminals and kleptocrats also make prolific use of their services, to keep their wealth secret, and their money safe. He said the list of users of offshore jurisdictions is like the cantina scene in Star Wars, where a motley group of unsavoury intergalactic characters is assembled. Henry said: “It’s like the Star Wars scene: you have the tax dodgers in one corner, the arms dealers in another, the kleptocrats over here. There’s also those using tax havens for money laundering, or fraud.”
Oil-rich countries including Nigeria and Angola feature as key sources of offshore funds, the research finds, as do Brazil and Argentina. Henry said the owners of this hidden capital are often so keen to secure secrecy and avoid their wealth being appropriated back home, that they are willing to accept paltry financial returns rather than investing it in ways that might promote economic development. Charging just 1% tax on this mountain of offshore wealth would yield more than $120bn a year — almost equivalent to the entire $131bn global aid budget.
The TJN is urging Cameron to push for agreement on a series of issues at this week’s summit, including a tougher crackdown on the banks, lawyers and other professionals who facilitate financial secrecy; and an obligation on all politicians to make their personal financial situation transparent.
The prime minister published a summary of his tax affairs last month, after the Panama Papers leaks revealed that his father had set up an investment fund, Blairmore, based in the offshore jurisdiction of Panama.
Henry argued that when senior figures in authoritarian states such as China use tax havens to guard their money safely, they are effectively free-riding on the legal and financial systems of other countries. “All of these felons and kleptocrats are in a way essentially dependent on the rule of law when it comes to protecting their money,” he said.
He said it was not just exotic locations such as the Cayman Islands where money can effectively be hidden, but also some US states, such as Delaware, where it is possible for foreign investors to start up and run a company without making clear its ultimate ownership – something all UK firms will have to do from later this year.
Shobhaa De in
Politically Incorrect |
India | TOI
They call them the Terrible Twos. I can confidently confirm that. My neighbour has a cuddly grandson who just turned two. I have been observing him closely — not only because he is their first grandchild, but because, he was born at about the same time a brand new political force came into existence. The grandson took over our hearts. The political force took over the country.
Last year, around this time, I was watching the neighbour’s kid take his first few baby steps. He fell, got up, fell again. I clapped. I encouraged him to try again. I rewarded him with hugs, smiles and kisses. Occasionally, I dangled carrots as incentives. He was cutting his teeth. He was nearly potty-trained. There were a few accidents. But he could tell from our reactions that we wanted our Bharat to be swachh — starting with the drawingroom carpet. We indulged him. Bachche toh bachche hain, we said, as he ran around, refusing to stay put in any one place for long. We noticed he was more willing to make friends with strangers than with his own folks. He’d meet new kids in the garden and promptly invite them home. He was keen to share his favourite toys with padosis but not that keen on sharing the same with his brothers. He liked all the foreign kids he met in the park. And they seemed to like him, too. Except when he hugged them, squeezed them and refused to let go till his pictures were clicked. This led to a few embarrassing situations. While American kids reciprocated, sort of, European bachchas gave him the cold shoulder. Especially, the Italians. We told him not to feel bad. He was too inexperienced to understand how far he could go with foreigners and those bear hugs.
His popularity in the neighbourhood was high. If one overlooked the usual dog-in-the-manger attitude kids display when their playthings are being snatched. Several kids attended his birthday party that first year and everybody had a ball. You see, an elaborate magic show had been orchestrated for the benefit of guests, and the clever magician was busy pulling all sorts of wonderful things out of his hat. The kids were mesmerised and thrilled. They wanted the magician to reveal how he performed all those fantastic tricks making objects — and people — disappear. Of course he didn’t oblige. The kids were most disappointed and started chorusing “Cheater! Cheater!” Kids can be very blunt, and very cruel. Adults are more accommodating. They know exactly the sort of tricks magicians play on gullible audiences.
Then there was the other big problem faced by our two-year-old. He couldn’t — and still can’t — separate fact from fiction, fantasy from reality. In his mind, there is only one version of the truth — his. Idle bystanders accuse us of being intolerant when we try and correct him in public. We are not happy with these interventions, since we believe we are entitled to our opinions when it comes to an obstinate two-year-old who refuses to see reason. But then we are always outnumbered!
Actually, it’s fun being a two-year-old. Zero responsibilities and lots of noise! Two-year-olds are compulsive attention-seekers. They love the spotlight on them and are pretty good at hogging the show. Of course, they are selfish and selfcentred. A toddler gets away with virtually anything! People nod understandingly and say, “Give some more time… be patient. Wait for improvement.” Our little fellow is a fast learner. He knows he has to compete and beat that kid next door. The dimpled cutie who is still a mama’s boy and, gulp… is still learning how to talk. But he has the best toys in the neighbourhood — Italian choppers, etc.
Our kid does talk. But not to us. He prefers to talk to himself. Last week we overheard him muttering “achhe din… achhe din” over and over again. We clapped and patted him on the back. Next week our kid has a big test to clear. It is an entrance exam to get into a good primary school. Stiff competition is posed by aggressive rivals. But our two-year-old is super confident. He has armed himself with a big stick to beat those who stand in his way. Once a brat, always a brat, they say.
PTI in Times of India
India is ranked ninth in crony-capitalism with crony sector wealth accounting for 3.4 per cent of the gross domestic product (GDP), according to a new study by The Economist.
In India, the non-crony sector wealth amounts to 8.3 per cent of the GDP, as per the latest crony-capitalism index.
In 2014 rankings too, India stood at the ninth place.
Using data from a list of the world's billionaires and their worth published by Forbes, each individual is labelled as crony or not based on the source of their wealth.
Germany is cleanest, where just a sliver of the country's billionaires derive their wealth from crony sectors.
Russia fares worst in the index, wealth from the country's crony sectors amounts to 18 per cent of its GDP, it said.
Russia tops the list followed by Malaysia, the Philippines and Singapore.
"Thanks to tumbling energy and commodity prices politically connected tycoons have been feeling the squeeze in recent years," the study said.
Among the 22 economies in the index, crony wealth has fallen by USD 116 billion since 2014.
"But as things stand, if commodity prices rebound, crony capitalists wealth is sure to rise again," it added.
The past 20 years have been a golden age for crony capitalists--tycoons active in industries where chumminess with government is part of the game.
Their combined fortunes have dropped 16 per cent since 2014, according to The Economist updated crony-capitalism index.
"One reason is the commodity crash. Another is a backlash from the middle class," it said.
Worldwide, the worth of billionaires in crony industries soared by 385 per cent between 2004 and 2014 to USD 2 trillion, it added.
Pervez Hoodbhoy in The Dawn
When Pakistani students open a physics or biology textbook, it is sometimes unclear whether they are actually learning science or, instead, theology. The reason: every science textbook, published by a government-run textbook board in Pakistan, by law must contain in its first chapter how Allah made our world, as well as how Muslims and Pakistanis have created science.
I have no problem with either. But the first properly belongs to Islamic Studies, the second to Islamic or Pakistani history. Neither legitimately belongs to a textbook on a modern-day scientific subject. That’s because religion and science operate very differently and have widely different assumptions. Religion is based on belief and requires the existence of a hereafter, whereas science worries only about the here and now.
Demanding that science and faith be tied together has resulted in national bewilderment and mass intellectual enfeeblement. Millions of Pakistanis have studied science subjects in school and then gone on to study technical, science-based subjects in college and university. And yet most — including science teachers — would flunk if given even the simplest science quiz.
How did this come about? Let’s take a quick browse through a current 10th grade physics book. The introductory section has the customary holy verses. These are followed by a comical overview of the history of physics. Newton and Einstein — the two greatest names — are unmentioned. Instead there’s Ptolemy the Greek, Al-Kindi, Al-Beruni, Ibn-e-Haytham, A.Q. Khan, and — amusingly — the heretical Abdus Salam.
The end-of-chapter exercises test the mettle of students with such questions as: Mark true/false; A) The first revelation sent to the Holy Prophet (PBUH) was about the creation of Heaven? B) The pin-hole camera was invented by Ibn-e-Haytham? C) Al-Beruni declared that Sind was an underwater valley that gradually filled with sand? D) Islam teaches that only men must acquire knowledge?
Dear Reader: You may well gasp in disbelief, or just hold your head in despair. How could Pakistan’s collective intelligence and the quality of what we teach our children have sunk so low? To see more such questions, or to check my translation from Urdu into English, please visit the websitehttp://eacpe.org/ where relevant pages from the above text (as well as from those discussed below) have been scanned and posted.
Take another physics book — this one (English) is for sixth-grade students. It makes abundantly clear its discomfort with the modern understanding of our universe’s beginning. The theory of the Big Bang is attributed to “a priest, George Lamaitre [sic] of Belgium”. The authors cunningly mention his faith hoping to discredit his science. Continuing, they declare that “although the Big Bang Theory is widely accepted, it probably will never be proved”.
While Georges Lemaître was indeed a Catholic priest, he was so much more. A professor of physics, he worked out the expanding universe solution to Einstein’s equations. Lemaître insisted on separating science from religion; he had publicly chided Pope Pius XII when the pontiff grandly declared that Lemaître’s results provided a scientific validation to Catholicism.
Local biology books are even more schizophrenic and confusing than the physics ones. A 10th-grade book starts off its section on ‘Life and its Origins’ unctuously quoting one religious verse after another. None of these verses hint towards evolution, and many Muslims believe that evolution is counter-religious. Then, suddenly, a full page annotated chart hits you in the face. Stolen from some modern biology book written in some other part of the world, it depicts various living organisms evolving into apes and then into modern humans. Ouch!
Such incoherent babble confuses the nature of science — its history, purpose, method, and fundamental content. If the authors are confused, just imagine the impact on students who must learn this stuff. What weird ideas must inhabit their minds!
Compounding scientific ignorance is prejudice. Most students have been persuaded into believing that Muslims alone invented science. And that the heroes of Muslim science such as Ibn-e-Haytham, Al-Khwarizmi, Omar Khayyam, Ibn-e-Sina, etc owed their scientific discoveries to their strong religious beliefs. This is wrong.
Science is the cumulative effort of humankind with its earliest recorded origins in Babylon and Egypt about 6,000 years ago, thereafter moving to China and India, and then Greece. It was a millennium later that science reached the lands of Islam, where it flourished for 400 years before moving on to Europe. Omar Khayyam, a Muslim, was doubtless a brilliant mathematician. But so was Aryabhatta, a Hindu. What does their faith have to do with their science? Natural geniuses have existed everywhere and at all times.
Today’s massive infusion of religion into the teaching of science dates to the Ziaul Haq days. It was not just school textbooks that were hijacked. In the 1980s, as an applicant to a university teaching position in whichever department, the university’s selection committee would first check your faith.
In those days a favourite question at Quaid-e-Azam University (as probably elsewhere) was to have a candidate recite Dua-i-Qunoot, a rather difficult prayer. Another was to name each of the Holy Prophet’s wives, or be quizzed about the ideology of Pakistan. Deftly posed questions could expose the particularities of the candidate’s sect, personal degree of adherence, and whether he had been infected by liberal ideas.
Most applicants meekly submitted to the grilling. Of these many rose to become today’s chairmen, deans, and vice-chancellors. The bolder ones refused, saying that the questions asked were irrelevant. With strong degrees earned from good overseas universities, they did not have to submit to their bullying inquisitors. Decades later, they are part of a widely dispersed diaspora. Though lost to Pakistan, they have done very well for themselves.
Science has no need for Pakistan; in the rest of the world it roars ahead. But Pakistan needs science because it is the basis of a modern economy and it enables people to gain decent livelihoods. To get there, matters of faith will have to be cleanly separated from matters of science. This is how peoples around the world have managed to keep their beliefs intact and yet prosper. Pakistan can too, but only if it wants.
