Some think of offshore tax havens as business as usual, but journalist Oliver Bullough says they’re an urgent problem (Getty: John Lund)
Many of the world’s problems — from declining public services to corruption — can be explained in two words: offshore wealth.
That’s according to investigative journalist Oliver Bullough, who is working to unravel the intricate global web of money and power.
“I think the damage that is being done by this is now more and more visible and more and more obvious,” he says of offshore tax havens and widespread kleptocracy.
And while he says the problem is big, it’s also relatively new.
“I think officials have probably always stolen from the people they rule, but essentially 60, 70 years ago if you stole money, you could put it in a hole in the ground but that was more or less all you could do with it, you couldn’t really enjoy it properly,” he told RN’s Geraldine Doogue.
But the invention of offshore finance by bankers in London and Switzerland in the 1950s changed that, he says.
“You didn’t need to put money in a hole in the ground any more, you could steal it, stash it, and then miraculously they liberated it, they set it free — and then you could spend it,” Bullough says.
Now, the super-rich grow nest eggs and siphon funds into offshore tax havens, and corruption inflicts damage on political and democratic institutions across the world.
Bullough came up with the term ‘Moneyland’ to describe the world of offshore finance (Unsplash: Vu Nguyen)
Bullough says, simply put, money is “stolen from poor and unstable countries”, then “laundered in offshore jurisdictions” and spent “in a small number of wealthy stable countries”.
“There is a constant flow of money from the people who actually need it to the people who really don’t,” he says.
Welcome to Moneyland
One of the greatest stumbling blocks in addressing the issues around offshore tax havens, Bullough says, is that the very term is relatively ambiguous and generally difficult to conceptualise.
“‘Offshore’ isn’t a place, it’s not the British Virgin Islands or Hong Kong or whatever,” he says.
“‘Offshore’ just means not here; elsewhere.
“It’s a legal construct that essentially means something can hide without being anywhere in particular.”
To try and de-mystify the idea, Bullough came up with his own word: Moneyland.
“I invented ‘Moneyland’ to try and get my own head around this problem, basically,” he says.
Moneyland — also the name of Bullough’s book on the issue — makes up roughly 10 per cent of the world’s wealth, he says.
“If you look at its economy, it is the third biggest economy in the world after America and China, it’s absolutely massive,” he says.
Bullough declares London to be the likely capital of Moneyland, followed closely by New York.
And he believes we are all beneficiaries of this system.
“We are all guilty to a lesser or greater extent, we all like this money,” he says.
“In the rich countries we like it, we want it to come in and invest in our property market, in our bonds and so on.
“So Sydney has been very favoured by certain classes of Moneylanders, Miami by others, Vancouver by others.”
Bullough adds that the assumption that corruption is confined to particularly ‘corrupt’ countries is wrong.
Corruption, he says, is in fact transnational.
“The money is stolen in a poor country (almost invariably) and it’s laundered in a small country (almost invariably), and it’s hidden in a rich country,” he says.
“So this idea that corruption is something like a football league that stays within a country, it is totally wrong.
“It’s actually harmful to our understanding of what’s really going on to look at the world that way.”
The system, he says, is a major factor in the rise of inequality.
“If you steal money or just obtain it any way you like, you stash it in Moneyland and it’s safe forever,” Bullough says.
“According to Oxfam, the top three-and-a-half dozen people in the world this year owns the same amount of stuff as the bottom 3.5 billion people in the world.
“This is a result of Moneyland.”
How do you change the system?
By its very nature, Bullough says, offshore finance operates in an incredibly complex and secretive way, making the task of policing it even more difficult.
“Money is borderless, but laws have to stop at borders.
“So if you own money you can put it wherever it will be best treated.”
When it comes to exposing offshore finance, tough libel laws, particularly in Britain, mean even writing about it can be tricky.
“What we really need is a systematic transparency, so it’s not possible to hide your ownership of shell companies any more.”
Bullough sees the only real solution as a global approach.
“So if, say, Britain decides tomorrow … that it would crack down [on offshore finance], that it would essentially impose all the laws … would do the checks people wanted it to do, to give the police the money they needed to do their job, the money could just go to America or could just go to France or go to wherever,” he says.
“So it’s a global problem that requires a global solution.”
Despite the scale of the issue, Bullough is positive that the level of awareness around the issue has risen in recent times.
“I think for a long time this has been happening and we’ve all been content to let it happen because the people who mattered were making money from it and no-one else knew,” he says.
“That isn’t really the case any more.”
However, he warns: “We are very, very far behind the curve in terms of dealing with this.”