How Offshore Tax Havens Enslave the World

The Spider’s Web: Britain’s Second Empire

Directed by Michael Oswald (2017)

Film Review

The Spider’s Web is about the network of secret offshore tax havens that has allowed Britain to financially enslave much of the Third World. The film begins by describing the special status of the City of London corporation, a special enclave within greater London that services as Britain’s financial district.

The City of London has a private police force and private courts, Unable to conquer this area of London during the 1066 invasion, William the Conqueror negotiated a treaty making it virtually self-governing.

After an attack on the British pound during and after the 1956 Suez Crisis (see Suez: Britain’s Illegal War Against Egypt), the British government implemented two important measures to stem the hemorrhage of pounds overseas: 1) it temporarily restricted foreign investment and 2) it created a City of London eurodollar market to accept foreign investments in US dollars.

Keen to escape US regulation, US banks flocked to set up international operations in London. At the same time, City of London bankers augmented their eurodollar market by drafting secret and illegal regulations to make the Cayman Islands (still a British colony) a secret haven for tax evasion and money launderers.

Eagerly creating similar offshore havens in Bermuda, Virgin Islands, Jersey and other colonies, by 1997 City of London banks controlled 90% of all international loans via their eurodollar market. The filmmakers blame the creation of this vast offshore banking network for the “financialization” of both the US and UK economies (ie the decision by US/UK banks in the mid-seventies by major US/UK banks  to invest in financial instruments rather than manufacturing).

Africa is the region most heavily exploited by this illegal financial network. Between 1970 and 2008, African elites in cahoots with multinational corporations moved $944 billion in oil, gold, diamond and rare earth revenues into offshore tax havens. This was five times the amount of global debt ($177 billion) Africa owed in 2008.

The most interesting part of the film is an interview with former Chase Manhattan economist Michael Hudson about the State Department approaching him in 1967 for his help setting up a US offshore tax haven to stem the flow of US dollars overseas for Vietnam-related military expenditures.

Paradise Papers Expose Trump Administration Tax Cheats

10 Minutes: the Paradise Papers

Press TV (2018)

This short video provides a capsule summary of the Paradise Papers, 13.4 million electronic files leaked in November 2017 about the wealthy tax dodgers who use offshore tax havens to avoid taxes and conceal illegal financial dealings.

Although the Paradise Papers scandal has received less publicity than the Panama Papers did in 2015, its list of culprits is far more comprehensive. At the top are the Queen of England, Madonna, Bono, Apple, Nike, the Queen of Jordan, the ministers of finance of Canada and Brazil, US Commerce Secretary Wilbur Ross (who used tax havens to conceal illegal dealings with sanctioned Russian businessmen) and Gary Cohen, who wrote Trump’s new tax law. The EU has slapped a $13 billion fine on Apple for tax evasion, which they refuse to pay.

Analysts who have studied both the Paradise and the Panama Papers estimate that approximately $7.8 trillion is held in offshore tax havens or 10% of global GDP.

The best known tax havens are Ireland, the Netherlands, Switzerland and British-controlled Cayman Islands, Bahama, Jersey and the Isle of Mann. There is growing pressure on the British government to crack down on tax and banking policies in their tax haven colonies.