Hurrah for the Hackers

Wednesday, 6 April 2016
Richard Dowden

When my email was hacked recently I shocked myself dreaming up the most horrific forms of torture I would personally inflict on the perpetrators. But when Mossack Fonseca was hacked last Monday – in an organised attack by journalists – I cheered the hackers.  

We at RAS have been talking about the effect of tax evasion on Africa for over a decade. We wrote about it when Prime Minister Tony Blair was trying to launder his reputation post Iraq in 2005 by escaping to Africa. His Commission for Africa called for more aid. Meanwhile the RAS called for an end to Britain’s damaging policies such as allowing tax evasion and transfer pricing so that Africa could staunch the outflow of capital. We invited Dev Kar of the New York based organisation, Global Financial Integrity, which tracks global financial flows, to speak at parliament on the subject. Only a few MPs turned up but it gave a boost to the issue in the UK and encouragement to other NGOs such as Transparency International and Tax Justice Network.  According to GFI’s most recent research “at least a trillion dollars per year is drained out of developing and emerging economies, more than these countries receive in foreign direct investment or foreign aid combined”.

Why the surprise? It has been common knowledge for decades that vast amounts of money are sucked out of developing countries and deposited in or laundered through tax havens. The money is then transferred to domestic banks  - no questions asked. London law firms handle the paper work and protect the secrets of the respectable families like David Cameron’s who retain their wealth from generation to generation while honest citizens pay heavy taxes. There is a wonderful irony here. The Prime Minister is setting up a meeting in May to discuss the issue of tax evasion and money laundering.  Now he finds himself in the thick of it. He has certainly given the conference some pre publicity.

It is the tiny remnants of the British Empire that allow the money laundering and tax avoidance to continue. The Channel Islands and the Isle of Man were once notorious for money laundering but appear to have cleaned up their act recently. But the British Virgin Islands remains unreformed, the home of the main money launderers like Mossack Fonseca.  Dominic Grieve, the former Attorney General ,  tried to defend the Virgin Island’s policy as their choice and defended the islanders’ right to set their tax rates.  The pretence that they are somehow independent of the UK is nonsense. If they passed laws to legalise cocaine or ban gay rights, Britain would step in. And to suggest that they did not know the tax avoiders were mingling their money with illegal arms dealers, dictators and drug smugglers is nonsense.

We will be holding an event with Tax Justice Network on Thursday 28th April to discusss 'Illicit financial flows after ‘Panamania’: Seizing the moment'. Register your place on Eventbrite.

Richard Dowden is Director of the Royal African Society.