Does the 'Offshore Leaks' Project Mean the End of Tax Havens?

David Cameron speaking at a Trade, Tax and Transparency conference to an enthralled audience. (Image via)

Tax havens are a hot topic at the moment. Multinational corporations use them to avoid paying billions of dollars in revenue; government officials are being exposed as sending some of their assets through the money-saving channels; and, just last week, Italian fashion designers Domenico Dolce and Stefano Gabbana were given a suspended prison sentence for using a tax haven to hide hundreds of millions of euros, all while the Eurozone is crumbling to shit beneath everyone’s feet.

At last week's G8, David Cameron proposed a ten point "wish list" that outlined his plan to tackle global tax evasion. This has been met with, at best, indifferent reactions from his fellow world leaders and indignation from tax campaigners after he failed to make any real commitment to solving the problem.

The political discourse seems to be a mix of lip service and just outright hypocrisy, with no one really taking a direct stand on the issue. In fact, if a politician does take a stand, it's more than likely they'll end up admitting to using offshore trust funds themselves to avoid paying tax, just like UKIP leader Nigel Farage. It’s all a big, self-contradictory, money-laundering mess, where the fair amount of tax doesn’t get paid and everyone else in the world – ie those who can’t afford to hide their assets in the British Virgin Islands (BVI) – have to pick up the slack.

However, while our politicians fail us, the International Consortium of Investigative Journalists (the ICIJ) has been grinding away at data that allows a glimpse into this shadowy realm of bogus companies, foreign bank accounts and stacks of cash. They estimate that one third of the world’s total wealth resides in these havens, and that a half of it travels through them at some point. Recently, a chunk of this data was made publically accessible through an online database, where anyone can search, filter and scrape away at the contents.

I rang up Marina Walker, Deputy Director of the ICIJ, to talk about the importance of their work and find out why they were making the information public.

A screenshot from ICJ's database. 

VICE: Hi Marina. So, tell me, what is the Offshore Leaks project?
Marina Walker: The Offshore Leaks project is a 15-month investigation in which we collaborated with about 112 reporters around the world in order to lift the veil on a secret world: the offshore economy. The information we received is the largest leak of offshore financial data ever made available to a media organisation.

What impact has that leak made so far?
There have been official investigations into some of the people who we wrote about in five different countries. That includes India, Philippines and South Korea. In the Philippines it was the daughter of Ferdinand Marcos [the former president], who we revealed had a secret trust. There have been resignations: Austria’s most powerful banker, Herbert Stepic, had to resign from his post the day after the information was published about his secret companies in Hong Kong and the BVI. The deputy speaker of the Mongolian Parliament resigned after our reporting revealed his undeclared BVI company and Swiss bank account. So the leak and the subsequent work by the journalists have had effects all across the world.

Why has the database now been made public?
The political discourse in Europe has had a huge transformation. Four months ago, you didn’t have countries like Luxembourg saying that they were willing to change, and exchanging bank account information in order to expose tax avoiders. You didn’t have the overseas territories – albeit reluctantly, but in the end – willing to share information. The conversation is completely different – people and leaders are even talking about public registries of companies. So we thought it was the right context to make the information public and, in a way, this sets an example of what we think should be done across the world; namely transparency.

Also, even though we've done so much work with so many journalists, a large part of the data is still unused. This is because we don’t have a reporter in Kazakhstan, or the Congo, or Kenya, for example. To have those areas and their respective data looked at by locals, we've added this crowd-sourcing dimension to get more stories and create more of an impact.

Is this release aimed at other journalists, or members of the public?
Any member of the public. We have a crowd sourcing form in the database and anyone can send in a piece of relevant information or an interesting link. In the first 48 hours, we received about 150 tips from people who had recognised names of politicians and businessmen and decided to send us additional information. Anybody can do it.

What isn’t included in the public database? I understand that it’s not a "raw" leak.
You can't find documents in the database: you only have the structure of what we received. The bulk of what we received -- millions of emails, memos, corporate documents, tax filings, bank account information – all of that has been withheld, because you can’t indiscriminately put out things like that. We also withheld passport numbers, social security numbers. All of that stuff is still with us, and when a journalist from a reputable media organisation finds a name or connection that no one else has and has a great story, then we are happy to give access to any additional documents related to that person. We will then work with them to write the story.

What have you discovered about tax havens through putting together this project?
The providers of tax havens sell secrecy, regulatory insulation and lower taxes. But secrecy is still the main thing that attracts people, and that is what clients are typically looking for. The more secrecy you want, the more money you pay.

So it’s not just to avoid tax to make more money, it’s to create a shroud around your business. It could be laundered money, drug money, arms dealings.
Exactly. We've posted a disclaimer at the entrance to the database saying that not everyone who has an offshore account has it for nefarious purposes. But reporting has shown that the offshore system is extensively used by money launderers, by arms traffickers – even by people wanting to hide money from their business partners. If you look at what we’ve uncovered, you will see that story after story has to do with that sort of thing: politicians, oligarchs, fraudsters, Ponzi schemers, mining companies – the possibilities are far reaching. And these sorts of schemes are what the secrecy allows, because you can have a company and no one would ever find out, and it would be almost impossible for even a prosecutor to be able to crack that wall of secrecy.

Do you think that Cameron and Hollande’s comments at the G8 about the need to curb tax havens came directly from your leak?
I think the offshore leaks have definitely contributed to the discussion. The European Commissioner on Tax has said that Offshore Leaks has undoubtedly played a role in helping push forward this conversation, on beneficial ownership or public registries, and some of the evils that are associated with tax havens.

The British Virgin Islands. (Image via)

Do you have any predictions on what's going to come next from this crowd-sourcing avenue?
You'll see more stories coming through in the next few months, and we’re also going to be focusing primarily on Asia. There will be more revelations about Asian countries.

How long has it taken to get from the raw data to the generated visualisation?
We started in April of last year, so it’s been 15 months of work. At the start, we were working on trying to crack the data and understand what we had in front of us. It took a long time to reconstruct the regional database, because some of the tables were broken and the data was scattered. It was a huge project and a lot of journalists and programmers worked for many months to make sense of the data, then had to put it into this present form.

Were you always going to crowd-source the project?
We always had that idea from the beginning, yeah. We didn’t know what format it was going to take, or at what point we were going to make the database available. Some people thought we should make it available at the very end when we were done with the stories, but then why make it available at the end when you want to move onto the next project? Instead, we decided to make it available earlier so the citizens can make use of it and hopefully discover some hidden stories. It wasn’t an easy decision, but I think we made the right one.

Follow Joseph on Twitter: @josephfcox

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