Treasure Islands: Tax Havens and the Men Who Stole the World
Richardson, Matthew, Renewal
BODLEY HEAD, 2011
Treasure Islands is the story of how corporate giants and the super-rich, with their legions of bankers, lawyers and lobbyists, found a space to grow between the cracks of a globalising world, before quietly invading the 'onshore' mainland. That is, the space still inhabited by the rest of us, with its varied laws and regulations, tax and benefit systems, public services, and (seemingly impotent) politics.
It is an eye-opening and highly readable book that shifts seamlessly between investigative journalism, grand history and sober, but nonetheless impassioned, polemic against the corruption of institutions and language that made it all possible. It is also an important book, which sheds light on a system that thrives in the shadows. In the process it provides a compelling new perspective for understanding many of the key themes of post-war history, from the decolonisation of the European empires, to the travails of 'development' policy in the global south, to the rise of neo-liberalism since the 1970s and the endemic instability that has characterised the global economy ever since. Of equal interest (though less explicitly addressed within the book itself), it raises important questions about the ability of democratically elected national politicians to act in an increasingly interconnected world.
The term 'offshore tax haven' evokes the idea of a geographically peripheral and economically insignificant (in systemic terms) space where companies and rich individuals can reap the marginal gains of avoiding tax in their primary place of operations or residence. Shaxson's definition challenges these assumptions. He defines the tax haven as 'a place that seeks to attract business by offering politically stable facilities to help people or entities get around the rules, laws and regulations of jurisdictions elsewhere' (p. 8). This pulls away the double veneer of political neutrality and economic marginality that the beneficiaries of the offshore system prefer us to see. Offshore is not simply an escape from tax, but also from regulation, transparency, the law (including criminal law), and democratic politics, which is clearly far harder to justify. The proactive efforts of these 'places' to attract business, and their means of doing so also indicate that they are not simply peripheral eccentricities of the global economic system. Instead they are drivers of a process that has moved a particular set of norms and values to the heart of twenty-first century global capitalism.
Those expecting the story to start with American corporations, Saudi oil princes or Russian oligarchs may be shocked to hear that that the lead role is played by an actor much closer to home. In fact Treasure Islands will make difficult reading for anyone who holds on to the myth of Britain's dignified imperial decline and modestly positive influence in the modern world. Haemorrhaging political and economic influence following the Second World War, Britain, through an unholy alliance between its leading banks and the Bank of England, stumbled upon the 'eurodollar market'. By conducting their international lending in dollars, rather than devalued sterling, British banks found a large new market that acted as a kind of proto-tax haven. Although opposed in principle and concerned about the reaction in Washington, the Treasury turned a blind eye to the trade that was bringing much needed capital into the country.
This marked a change in British imperial strategy. As the Empire retreated over the 1950s and 60s, it left behind a 'spider's web' of colonial outposts, including, among others, the Channel Islands, Gibraltar, the Cayman Islands, Bermuda and Hong Kong. These generally small, quasi-autonomous island states began to position themselves, through competitive specialisation in low taxation, lax regulation, secrecy, or a combination of the above, as channels or safe havens for the wealth of elites in their surrounding regions. …