Tax havens; a Trojan horse within multilateralism

Dear UN Secretary-General Antonio Guterres

IN advancing the UN General Assembly theme for this year that will mark its 75th anniversary this month on 21 September 2020, titled; ‘The Future We Want, the UN We Need: Reaffirming our Collective Commitment to Multilateralism’, I believe the theme is superficial – a political calendar countering on the growing nationalistic views and sovereign driven objectives while balancing the international public good and order.

The theme indeed avails a golden opportunity for world leaders, particularly that of Africa, in giving prominence and weigh in their insights into the agonising, contentious and static millennial misrepresentation on mobile capitals that destabilised Africa’s economy through tax havens, tax shelters, multinational companies, and stolen public funds in the development of the offshore sector.

This osmosis chance repositions a possibility to extensively deal with the legality that shields the legitimised robbery at multilateral level. Hence, the upcoming UN General Assembly must foster and support a collective united front against the manifold menace of offshore secrecy robbing Africa through tax havens. Many African presidential speeches are expected as usual to feature the alienation of Africa from the monopolistic multilateral arrangement of the UN Security Council permanent seat but at this opportune time heads of states must take a stand in fixing the international loopholes on tax havens.

The Tax Justice Network estimates that corporate and personal tax avoidance costs the world governments $700 billion a year in tax receipts. The 2019 UN report on Financing Sustainable Development shows that the total amount stashed away offshore is likely to be around USD20-30 trillion.

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Thanks and hallelujah to the consequential indecisiveness of multilateralism in my immodest form of modesty. What a human touch! Additionally, the latest 2020 estimates according to Merissa Parietti’s article titled, ‘The top 10 European Tax Havens,’ shows that ‘tax avoidance has led to up to $32 trillion in lost revenue in banking systems across the world’. With such infuriating statistics, it begs an earnest question within the UN theme’s ‘breadth and diversity’ on why the blindness and inactiveness on tax havens within a wobbly world trading system under the UN stewardship? A UN that once carried a shared belief which strongly denounced all forms of exploitative ills. One would wonder if the UN is still a catalyst of global action on this passive disaster grappling the third world nations.

Tax havens are frequently smaller island nations with little or no other economy from sugarcane plantations to tourism. Some turned into scientific hubs and military bases of the west. Lately, tax haven nations devised citizenships-through-investment schemes which have been used by worthy fugitives, domiciled questionable billionaires and criminals to hide their ill-gotten worth – an unjustifiable bonus to the elevation and pursuit of Gandhi’s ‘wealth without work and commerce without ethics’. Orbitax reported that according to the new Tax Code, a country is recognised as a low-tax jurisdiction if the individuals and business tax rate in that country is no more than 10 percent or the country has a law on confidentiality of financial information. Another criterion that is the hallmark of injustice is the secrecy laws under which information about factual owners of property, income, a company’s founders and shareholders is invisible – more ominous glimmer to a Trojan horse.

Trojan horse premised an ideology of a deep deception from ancient Greek literature through its religion and mythology in 500 BC. ‘The Trojan horse story from the Trojan War is about the Greeks entering the independent city of Troy to win the war. After a fruitless 10-year siege, the Greeks constructed a huge wooden horse and hid a select force of men inside. The Greeks pretended to sail away, and the Trojans pulled the horse into their city as a victory trophy. That night the Greek force crept out of the horse and opened the gates. The rest of the Greek army that sailed under cover of the night entered. The Greeks destroyed the city of Troy, ending the war’. (‘Trojan Horse’, n.d., para 1) The exact moral equivalent motive effect of tax havens is the core key element – the history of deep deception repeating itself.

The worst Trojan deception arrived at the gate of post-independent Africa throughout the past decades but not within a form of a wooden horse but with instruments of Transnational Organised Crime through tax havens and Offshore Multilateral Companies. Let not this year’s UN theme on multilateralism be ceremonial rhetoric. Instead, world leaders must champion the multilateral alliance to engage in more Socratic discourse analysis and take an assertive role to leverage world financial transparency, anti-corruption and poverty eradication towards the third world nations.

African leaders must question the World Trade Organisation (WTO) in all these trillion capital shiftings since one of its aims is ‘to help developing countries benefit fully from the global trading system. The capital-exporting nations are relatively favoured on the expenses of the interests of the sourcing countries by the Organisation for Economic Cooperation and Development. (OECD) Why the interests are disproportionate on offshore investments and trusts? As the international order is reshaped for a new century, so shall it be with the UN arrangements on conventional policy conundrum on trade, taxation, and anti-corruption responding to the artful dodgers and bizarre merchants in the name of tax havens as the modern Trojan horse of the century.

It would be an absolutely oxymoron for the UN in its current theme hailing multilateralism, not to include the issue of monumental injustice of tax havens. On a humanistic and from an African lens, with such trillion shifting estimates, the theme for this year would be perceived as celebrating a hypocritical dream that becomes a nightmare to Africa and its people through offshore tax havens profit shifting and tax avoidance. As a multilateral custodian of the UN, the WTO failed in global economic management on tax havens.

Tax havens secret jurisdictions’ have done more destruction to Africa’s economies and the sustenance of its development as it continues to shrink the fibre of its people. From grappling with revenue bill decline to debt consolidations, budget cuts, deepening inequality, underdevelopment, and lack of opportunities for young people to thrive, they fuelled corruption as the main elephant in the room.

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Come 21 September 2020 world leaders must properly interrogate tangible outcomes of multilateralism with tax havens in mind because being silent on this topic can only accentuate to confer a moral legitimacy at the behest of our ignorance and exploitation. Being voiceless on this massive deception would mean as Africans we are the chief perpetrators of our own victimisation.

What seems to be glitter in multilateralism has always never been gold to the third-world nations. Swissinfo reported in 2016 that there is growth in the list of illicit potentate funds that have been seized in its Swiss banks and returned.  The plunders and source countries include Montesinos (Peru), Mobutu (former Zaire), Dos Santos (Angola), Abacha (Nigeria), Salinas (Mexico), Duvalier (Haiti), Ben Ali (Tunisia), and Mubarak (Egypt). This happened in the backyard of the World Economic Forum that is known to be the world economic great philanthropist – if only reverse hypocrisy could be a country. And the question remains; where was the Swiss moral legitimacy, transparency, and the love for humanity during the initial banking stage of this whole Swiss-rot with all these plunders? As if tax havens use a different Bible, Torah or Koran, Switzerland displayed the Trojan horse hypocrisy.

A refutable call by one of the voice of reason; South African Chief Justice Mogoeng Mogoeng ‘appealed to researchers, scholars and article writers to zero in into the problems of Africa; more specifically the illicit money flow that is keeping the continent forever poor because nothing much is being done in arresting these tax havens’. (University of KZN, September 2019 Graduation) 

Chief Justice Mogoeng furthered his conviction with questions like, ‘Why is that a continent so rich in mineral, water and fertile soil yet we are counted among the beggars? How countries that have nothing like the UK, are rich? Where do they get their wealth? The Independent reports that Italian anti-mafia journalist Roberto Saviano in 2016 said, “Britain’s existing offshore financial model makes it the most corrupt place on earth”. He continues to say, “It’s not the bureaucracy, it’s not the police, it’s not the politics but what is corrupt is the financial capital. Ninety percent of the owners of capital in London have their headquarters offshore”. That alone seems to answer Justice Moegoeng’s questions.

To further Saviano’s point on offshore UK corruption in art proportion, the usage of epithets might help; if the UK was a painting, it could never be a Mona Lisa. If the UK could be an actor in a play, it could never be Hamlet nor Sphinx if it could be a monument. The same can be with the UN without a monumental decision on the multilateral arrangement that deals with tax havens. 

Heeding to Justice Mogoeng’s call, the following is what I believe the UN General Assembly under its current theme must give consideration;

1. Establish a UN Multilateral Tax Treaty as regulatory pressure and impose sanctions and blacklist tax havens to compel opening up of banking information systems and relaxing their aggressive avoidance.

2. Establish an International Litigation Court that deals with public looters and plunders within the multilateral and offshore sector. Similar to the International Criminal Court of Justice, an international civil judicial body can foster good commercial governance, openness, transparency and will deter engaging in the act of shadiness by the greatest-enablers of tax avoidance and leaders-turned-plunders.

3. Review the UN Convention against Corruption to empower civil society.

4. Review the 56-page document of the UN Convention against Corruption of 1997 that guides behaviours, conduct, and action of each ‘State party’ in its execution\function of anti-craft.

Since Africa had seen its fair share of state captures and the betrayal of trust and democracy within its anti-craft public institutions, the UN should consider empowering civil societies as soft power to constitute legal actions against transnational companies on behalf of ‘The Nation States’ in case those representing the face of the ‘State Party’ are unwilling to protect its sanctity or are in the complicit of conflict of interests of the said conducts. Article 13 on Participation of Society alone is not enough without the empowering provision with the growing understanding within the civil awakening that the right of the nation is not always the right of its citizens.

For instance, Namibia is buried in statistics of corruption and looting by Samherji; the Icelandic seafood multinational company that initially bribed its way into Namibia’s marine resources and deceivingly used tax havens such as Cyprus, Belize, UAE and Mauritius to safely channel billions that were supposed to uplift the livelihood of its people.

Since the Swapo governing party is complicit in what is now known as the Fishrot scandal, Namibian citizens who wish to take legal actions against Samherji have little legal prospects without a legal empowering framework. The provision must come with the state budgetary in confronting a Transnational Organised Syndicate that would require other States’ involvement. Namibians are contemplating on an International Commission of Enquiry into the fishing industry and the imminent litigation possibility against Samherji HF amounting to ‘N$8 billion more than US$500 million (calculations of damages made on the Namibian people by Samhejri).

With such a review on that provision, nations through civil society will have alternatives to reclaim their exported wealth. 

For the UN theme not to remain to be seen as a distortion between perceptions and reality, it must reconcile with the struggle vested in the characters of those at mobile capital-sourcing nations. It must be rephrased and read; The Future We Want. The UN We Need, Reaffirming our Commitment to a Justified Multilateralism.

Tobias Nande Nandjigwa is a social science educator. He is a Namibian anti-corruption populiser inspired by Angolan President Joao Lourenco’s stance on white collar crime.

He is armed with the convictions of mama Africa, Dr.Arikana Chihombori Quao.