Monday, July 7, 2014

Seychelles; A rat hole for the 1%

Financial inequality is not inevitable but it will take a concentrated effort on the part of the world's governments to reign in those few who cavort and scheme to hoard wealth by hook or by crook regardless of it's destructive effects on the rest of the worlds population.

By one estimate, as much as $32 trillion in private financial wealth is hidden in offshore havens — roughly equivalent to the annual output of the U.S., Chinese and Japanese economies combined.

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money

Thanks to its offshore industry, Seychelles, an island nation with a population smaller than Davenport, Iowa, maintains a Zelig-like presence in the annals of international corruption and money laundering. Where there’s an odor of financial scandal, there’s often a good chance Seychelles is involved.

The history of the rise of Seychelles’ offshore industry offers a case study in the rise of tiny, out-of-the-way tax havens. At a time when tax havens have become an flashpoint of debatearound the world — even becoming an issue in 2012 U.S. presidential race, thanks to Republican Mitt Romney’s Cayman Islands holdings — understanding how small havens emerged and how they have prospered is important to understanding how the offshore financial system has flourished.
Like most small tax havens, Seychelles has an outsized impact that belies its modest market share. As Al Jazeera’s undercover muckrakers discovered, offshore patrons and the accountants, bankers and other operatives who help them usually don’t settle for a single offshore company or bank account. They create elaborate webs that use multiple jurisdictions, multiple front men and multiple layers of ownership. Smaller havens such as Seychelles are crucial links in these chains of secrecy and in the wider offshore system.

They support a system that, critics charge, caters to drug traffickers, fraudsters, money launderers and high-net-worth tax dodgers, fueling onshore corruption and poverty.