A corporate tax haven is pretty much what most people would imagine it to be: a jurisdiction that provides facilities to help multinationals escape taxes elsewhere. More formally, we define it as

A jurisdiction that seeks to attract multinational companies by offering facilities that enable them to escape or undermine the tax laws, rules and regulations of other jurisdictions, reducing their tax payments in these jurisdictions.

Current data and research suggests that governments around the world lose over US$ 500 billion — half a trillion dollars — in tax each year due to corporate tax havens. The IMF,  for instance, recently estimated that rich countries lose some $450 billion annually to tax-haven related corporate tax dodging, while lower-income countries lose $200 billion (which represents a bigger share relative to their smaller economies).  But remember: tax losses are just one dimension of the damage. The harm that corporate tax havens inflict on democracy, on society, and on our trust in politics and markets, is incalculable.
Financial Secrecy Index – 2020 ResultsMake Taxes Work For Women

Al Jazeera Investigations:
A satirical look at the dubious characters and state officials who buy nationality as if it’s a luxury car. Al Jazeera’s Investigative Unit obtained a leak of documents that we’re calling The Cyprus Papers.

If you can afford $2.5 million to purchase a passport to Europe, then you’re probably already on someone’s rich list with at least a Porsche in the garage. The leak reveals 2,500 people who paid to become new citizens of Cyprus with the added perk of be able to live and work anywhere from Milan to Monte Carlo.

So who’s on the list? Among the names in The Cyprus Papers are convicted criminals, men on the run and political figures regarded as a high-risk for dirty money.

Find out more about The Cyprus Papers and the strange trade in nationality in our investigative data-story.

FINMA described the bank’s money laundering processes as “inadequate” and reprimanded it for a breach of its duty of due diligence in relation to anti-money laundering rules.

The Swiss financial market regulator FINMA has reprimanded Bank Syz for breaching money laundering rules involving a business relationship with an Angolan client.

“FINMA found that the bank did not make sufficient efforts to investigate the substantial growth in the client’s assets,” the financial watchdog said in a statement on September 24. “The bank did not adequately resolve issues that should have raised suspicions, even though the client was identified as having links with politically exposed persons (PEP) and the relationship was classified in this category.”

It added that the private bank had “failed to fulfil, or did not adequately fulfil, its obligations to clarify high-risk transactions by the client, which were in some cases in the tens of millions”.

FINMA described the bank’s money laundering processes as “inadequate” and reprimanded it for a breach of its duty of due diligence in relation to anti-money laundering rules.

However, it did not issue any financial penalties. The bank had reported the case to FINMA, which had led to an in-depth investigation in February. It said it would appoint an independent auditor to oversee the bank’s implementation of new compliance measures.

High salaries aren’t what they seem in Switzerland

If you are a male banker, a Swiss diplomat or a foreign CEO in Switzerland, chances are you are living quite comfortably.

“The bank attaches the utmost importance to compliance with its anti-money laundering obligations,” it told Reuters in an emailed statement. “Unfortunately, for a specific business relationship, the procedures put in place proved to be inadequate.”

Geneva probe

The affair dates back to 2018 but only recently became known through a decision by the Geneva Criminal Court, published by the Swiss justice portal Gotham City.

According to the NZZ newspaper, the case concerns Angolan-Portuguese businessman Carlos Manuel de São Vicente, who is being investigated by Geneva’s judicial authorities on suspicion of money laundering.

Based on a report of suspected money laundering submitted by Banque Syz to the Money Laundering Reporting Office Switzerland, the Geneva public prosecutor’s office ordered account freezes totalling CHF1.1 billion ($1.2 billion) at the end of 2018. Following a partial release, around $900 million remains frozen.

On July 9 the court rejected an appeal by Carlos Manuel de São Vicente to unblock the funds. On September 15 it was reported that Angola had asked Switzerland for legal assistance concerning the money frozen in Geneva and reportedly connected to the Angolan-Portuguese businessman…swissinfo.ch

Silavan Wegmann
www.w-t-w.org/en/silvan-wegmann

Secret U.S. government documents reveal that JPMorgan Chase, HSBC and other big banks have defied money laundering crackdowns by moving staggering sums of illicit cash for shadowy characters and criminal networks that have spread chaos and undermined democracy around the world.

The records show that five global banks — JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon — kept profiting from powerful and dangerous players even after U.S. authorities fined these financial institutions for earlier failures to stem flows of dirty money.

U.S. agencies responsible for enforcing money laundering laws rarely prosecute megabanks that break the law, and the actions authorities do take barely ripple the flood of plundered money that washes through the international financial system.

In some cases the banks kept moving illicit funds even after U.S. officials warned them they’d face criminal prosecutions if they didn’t stop doing business with mobsters, fraudsters or corrupt regimes.

JPMorgan, the largest bank based in the United States, moved money for people and companies tied to the massive looting of public funds in Malaysia, Venezuela and Ukraine, the leaked documents reveal.

The bank moved more than $1 billion for the fugitive financier behind Malaysia’s 1MDB scandal, the records show, and more than $2 million for a young energy mogul’s company that has been accused of cheating Venezuela’s government and helping cause electrical blackouts that crippled large parts of the country.

JPMorgan also processed more than $50 million in payments over a decade, the records show, for Paul Manafort, the former campaign manager for President Donald Trump. The bank shuttled at least $6.9 million in Manafort transactions in the 14 months after he resigned from the campaign amid a swirl of money laundering and corruption allegations spawning from his work with a pro-Russian political party in Ukraine.

The FinCEN Files shows how big banks have profited from serving shadowy characters even after authorities fined them for earlier failures.
The International Consortium of Investigative Journalists‘ 2020 investigation, FinCEN Files, shows how big banks have profited from serving shadowy characters even after authorities fined them for earlier failures.

About the High Level Panel on a Sustainable Ocean EconomyThe High Level Panel for a Sustainable Ocean Economy (Ocean Panel) is a unique initiative by 14 world lead-ers who are building momentum for a sustainable ocean economy in which effective protection, sustainable production and equitable prosperity go hand in hand.

By enhancing humanity’s relationship with the ocean, bridging ocean health and wealth, working with diverse stakeholders and harnessing the latest knowledge, the Ocean Panel aims to facilitate a better, more resilient future for people and the planet.Established in September 2018, the Ocean Panel has been working with government, business, financial insti-tutions, the science community and civil society to catalyse and scale bold, pragmatic solutions across policy, governance, technology and finance to ultimately develop an action agenda for transitioning to a sustainable ocean economy. Co-chaired by Norway and Palau, the Ocean Panel is the only ocean policy body made up of serving world leaders with the authority needed to trigger, amplify and accelerate action worldwide for ocean priorities.

The Ocean Panel comprises members from Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau and Portugal and is supported by the UN Secretary-General’s Special Envoy for the Ocean….
Organised Crime in the Fisheries Sector

A cartoon that ran on the Malagasy news site 2424.mg. The caption reads “Blue Economy = 10-year fishing deal with China.”

By Yasmine Motarjemi and Caroline Hunt-Matthes /Verfassungsblog

In April 2019, the European Parliament adopted the Whistleblowing Directive, which aims to protect whistleblowers in European Union (EU) countries. The directive entered into force on 16 December 2019 and EU Member States have until the end of 2021 to transpose the provisions of the directive into their legal systems.

Although the EU Directive represents a quantum leap in whistleblower protection, it nevertheless has some important shortcomings that undermine its potential. The recommendations in this text are based on the authors’ personal experience as whistleblowers: Yasmine Motarjemi was Corporate Food Safety Manager by Nestlé. In the framework of her work she reported mismanagement in food safety. Subsequently, she experienced severe retaliation and was dismissed in 2010. Since then she is in legal battle with the company (for further information, see here). Caroline Hunt-Matthes’ has served as a UN peacekeeper and United Nations staff member for over a decade and is the only vindicated United Nations whistleblower to receive an apology in the longest litigation in UN history (15 year).

1. The need for considering transnational threats.

Contrary to the progress made in the European Union for the protection of whistleblowers, after 12 years of debate, in March 2020, Switzerland buried its draft proposed law. No new initiative is in sight. We need to realize that, given the globalized nature of the modern world, the lack of whistleblower protection in Switzerland, which is home to the highest concentration of Fortune Global 500 multinational corporations is a threat to the interests of other countries. It undermines the benefits that European countries hope to achieve by the EU Whistleblowing Directive. Unfortunately, the European Directive does not address the question of whistleblowers in countries where there is no law for their protection. This is, for instance, of critical importance in the case of employees in multinational companies based in Switzerland or employees of international organisations, where policy and decisions taken in the head office of these companies or organisations have global implications. To address such a problem it is recommended that protection and judicial assistance is also extended to employees of multinational companies who also operate in the EU countries. Please see also here.

2. The need to consider the miscarriage of justice within the scope of the law

This is a core issue in protecting whistleblowers and addressing their objectives, i.e. defending public interest. A law is rendered effective only when it is properly implemented. The corollary is that the violation of the law must be sanctioned. Short of this, the law would be futile. Hence, the protection of whistleblowers requires both a comprehensive law as well as a robust, reliable and independent judiciary to implement the law. These should work hand in hand. Regrettably, the judicial system is all to often the weak link in the protection of whistleblowers. Our experiences as whistleblowers are cases in point. They are given here to show, as examples, the reality of many whistleblowers and potential loopholes in the system.

As required by the EU Whistleblowing Directive, Yasmine Motarjemi’s former employer, Nestlé, had an internal whistleblowing system since 2005. For more than four years (2006-2010), she reported food safety mismanagement and severe retaliation to all levels of management. All to no avail. The Nestlé management refused to examine the food safety management concerns. Only after 3 years, Nestlé conducted a disingenuous inquiry into Ms Motarjemi’s complaints of bullying and harassment. The failure by Nestlé to take action on her internal reports led to serious food safety incidents across the world and brutal retaliation against Ms Motarjemi for essentially doing her job. It took her 10 years to hold Nestle to account in Swiss court for retaliation. In spite of a favorable judgement, there have been no sanctions, no disciplinary measures, nor examination of her food safety complaints, and so far no redress.

During the court proceedings, Nestlé witnesses perjured themselves in court and acted with contempt towards the judicial system. A situation that demonstrated the need for a robust and independent judicial system vis-à-vis a powerful multinational corporation. The fact that the protracted judicial proceedings continued for ten years prevented closure of the case, preventing Ms Motarjemi from moving on with her life and returning to the world of work. All of these factors, together with the burden of the costs of a protracted lawsuit, pose a serious deterrent for employees or citizens who wish to bring forward information of public importance.

The lack of a well-functioning judicial system is not specific to Switzerland. Citizens of many countries report similar problems in their respective countries. In the course of their quest for justice, many citizens are confronted with situations of conflict of interest, nepotism, misinterpretation of the law, corruption, false medical examinations, deceitful lawyers, disingenuous and non-independent investigations, misleading facts or half-truths, defamation of character etc. The situation is such that in some jurisdictions the judiciary, the body that plays a key role in the enforcement of any law including whistleblower protection law, itself suffers from dysfunctions. Therefore, it cannot efficiently and adequately protect whistleblowers, especially those who are confronted with multinationals or powerful entities. A law on whistleblowing is not sufficient for protection of whistleblowers; the question to address is also the procedure for a fair independent investigation and redress.

Lip service is often given to the investigation process by those who control the investigation process as opposed to a rigorous and independent investigation conducted by an independent entity. This was the central issue in the cases of Hunt-Matthes v The United Nations 2013. United Nations judges determined that the United Nations Ethics Office failed to provide protection to Ms Hunt-Matthes who reported through official UN channels corrupt practices within the Inspector General Office of the UN refugee agency (UNHCR). Of all cases regarding whistleblower protection that were judicially reviewed by UN judges errors were found in 100% of cases, i.e. whistleblowers were not properly protected.

Moreover, the United Nations litigated for 15 years against Hunt-Matthes – the longest retaliation case in UN history which concluded in settlement and apology by UNHCR. Again, no accountability was enforced despite the judges’ request.

In view of the above, in the context of whistleblower protection, particular attention should be paid to the functioning of the judicial system. Fundamental procedural flaws, including gag orders and SLAPP (strategic lawsuit for public participation) which prevent a fair and speedy trial, must be examined and corrected. Fast track judicial procedures should be considered. Breach of whistleblowing law should be categorised as a criminal offence, as it has the potential to stifle critical information of public interest. Sanctions should be dissuasive. Highly important, the scope of whistleblowing law should include miscarriages of justice and their underlying factors, that is the issues that derail the proper functioning of the judicial system. To this end, proper protection should also be extended to citizens who report such failures.

Another essential element of the scope of the whistleblowing law should consider breaches of the whistleblowing law itself, that is retaliation in form of bullying and harassment. Such practices set a poor company culture where employees would feel too intimidated, or even threatened, should they report wrongdoing through official channels. A fear-based company culture is detrimental to risk management and undermines the objectives of the whistleblowing law. The underlying organization culture is an aspect which underpins successful “speak up” work cultures.

3. The size of establishments.

The European directive requires companies of above 50 employees to set up an internal whistleblowing system. Such a limitation is arbitrary. In the industrial age, where robotics and artificial intelligence are gradually entering our production system, a company may be able to achieve, with few staff, a high production output. The supply chain is also complex and an ingredient produced by a small company can subsequently contaminate a large number of different products. Start-up companies with small workforces may produce products, materials, science or technologies that may pose public health risks. The same goes for scientific institutions. Fraud or malpractice in the scientific field will lead to false scientific information that is highly deleterious for society. Some companies may also decide to work with subcontractors, volunteers, temporary staff, etc. to keep their formal numbers of staff low and flexible. An internal whistleblowing system should be part of the internal control system of any business or institution. Small businesses or organisations may make use of an external independent provider.

4. The time span for reporting, investigating and corrective measures.

The 7-day time limit for acknowledging receipt of a report and then 3 months for follow-up is too long for certain types of violations, such as those relating to public health or environmental issues. The emergence of the coronavirus epidemic demonstrates the importance of speed of reporting and action in matters of public health. In food or pharmaceutical companies, reported problems are usually acknowledged within hours and concrete measures are taken within 24 hours. Therefore, the time allowed for feedback and corrective measures should be sector-specific. This time frame should be as short as possible, so that corrective measures are implemented before the public is harmed or damage is at least minimised. The burden of proof that action has been taken within a reasonable time to protect whistleblowers and the interests of the public should rest with the company/organization. Guidance is also needed how to investigate retaliatory measures, in particular the role that the management has played.

5. Records and responsibilities

A major omission from the Directive is the requirement to keep records, such as notes of meetings and decisions taken as well as the definition of the roles and responsibilities of senior management. When wrongdoing occurs, it is important to have an accurate record of events and corrective actions taken, and also to be able to identify those responsible for decisions. In Ms Motarjemi’s experience, her former employer’s response in the court was a cacophony of inconsistent statements, with each manager contradicting the other and shifting the responsibility on each other.This is a central characteristic of denial culture. The management of Nestlé acknowledged that managers in their company did not have job descriptions defining their responsibilities. In such a situation, one wonders how the system can identify and sanction the person(s) responsible for the wrongdoings?

6. Independent implementing agency.

The experience of whistleblowers indicates that the system of protection will be more reliable if an independent regulatory agency is responsible for implementing the law, that is, inter alia, receiving and assessing reports from whistleblowers, advising them, investigating their case, providing judicial assistance, liaising with other competent authorities for implementing corrective actions, communicating with media, or taking any other necessary actions. In particular, it would be important to monitor successes and failures and analyse their causes with the aim of improving the system of protection.

7. Learning from the experience of whistleblowers

Studying the experiences of whistleblowers can provide valuable information about the barriers that whistleblowers encounter and eventual loopholes of the system. This can be useful for tightening the gaps and designing an effective whistleblowing system. For instance, the decade long failure of whistleblower protection in the United Nations between 2006 and 2016 merits study. It resulted in the abolition of the old UN policy under the incoming UN Secretary General and the creation of a new policy in 2017. According to UN inspectors the failure of UN Ethics Offices to properly protect bona fide UN whistleblowers from brutal retaliation has created a culture of silence. Consequently, the mandatory requirements to report misconduct is failing.
Whistleblower Protection in Europe- How to Make it Effective?

www.greens-efa.eu/en/article/news/whistle-blowers-directive/

To Pay for the Pandemic, Dry Out the Tax Havens
Corporations and the wealthy have stashed away as much as $36 trillion in untaxed money. It’s time to bring the hammer down.

David L. Carden reports: The costs associated with the COVID-19 pandemic and its massive economic fallout are difficult to estimate, but the sums will be enormous. The first U.S. stimulus package alone exceeded $2 trillion. Then there is the loss of life, reduced economic productivity, and the personal financial ruin many will face. More stimulus packages likely will be required. Worldwide, the total costs will be even higher.

The bitter truth is that the costs and consequences of the pandemic likely could have been avoided or dramatically reduced if leaders had done their jobs. In 2013, the World Bank estimated that an annual expenditure of only $3.4 billion would have let developing countries build up a robust pandemic prevention capability, making a global outbreak much less likely. Yet this relatively modest expenditure wasn’t made.

It’s also well documented that many leaders, including U.S. President Donald Trump, were too slow to respond to the pandemic, increasing its human and financial consequences. These failures exacerbated the damage suffered by other countries around the world. With economies struggling and sharply reduced tax revenues for the foreseeable future, how will the world pay for this calamity?….Foreignpolicy.com

Alternatives To Financing The Corona Crisis!

Rachel Gold
https://www.w-t-w.org/en/rachel-gold/

Epstein & Friends: Managing PEPs and Your Exposure to Risk.
Rachel Woolley reports: What is a PEP, and why should financial institutions be vigilant when assessing the risk of doing business with one? What if someone is not a PEP, but an individual that happens to be associated with one through family, business or other close personal connections? Is Kanye West now a PEP?

The definition of a politically exposed person (“PEP”) varies slightly from jurisdiction to jurisdiction but is generally accepted to include individuals that hold a “prominent public function”, including presidents, prime ministers, and other senior politicians. The definition also extends to members of royal families, senior executives of state-owned entities and heads of international organisations, such as the UN, WHO, IMF and the World Bank. Most jurisdictions consider individuals with the ability to direct and control government funds, or the ability to influence decisions, to be politically exposed, and thus could be susceptible to external influence, bribery, or corruption.

It is important to note that identifying an individual as a PEP is not a suggestion of previous or future criminal behaviour. However, it is necessary for financial institutions to adequately identify those individuals that not only hold prominent public functions, but also those that are considered to be closely connected to senior politicians, like family members and business associates, i.e. “known close associates”. The purpose of determining if an individual is a PEP or not is so additional scrutiny can be applied to the financial activity of such individuals. The source of wealth and source of funds of a PEP must be identified, both of which help to paint a picture as to the expected activity of that PEP throughout the relationship with the financial institution. Ongoing activity must also be assessed in order to identify any transactions that may be related to bribery or corruption.

But what about friends? Shouldn’t financial institutions also be concerned about individuals who have close personal connections to influential politicians? The nature of such relationships is important to consider. It is not a crime to be friends with a PEP of course, but questions should be asked about any linked financial transactions or mutual business interests. Close relationships between world leaders should also be considered, particularly where one stands to benefit from the success of another. Financial institutions should be alert to the potential for financial activity relating to such individuals, especially through any associated individuals or companies.

Political connections aside, wealthy individuals with prominent business interests are categorised as high net worth individuals (“HNWI”) and their financial activity should also be subject to increased scrutiny as a result. This is especially relevant when you consider that such individuals may stand to benefit if political decisions are made in their favour or interest, and whether or not any financial activity has occurred that may have influenced such decisions. It is also likely that such individuals mix in the same social circles as high-ranking officials, some of whom are wealthy individuals with prominent business interests in their own right. So, isn’t it important to identify and scrutinise these connections carefully?

I’m sure you’ll have seen many photographs of senior politicians alongside well-known public figures, including celebrities. You may also have seen photographs that have been widely circulated on social media of Jeffrey Epstein alongside many senior political figures. Questions have been asked as to the nature of such relationships, financial, political, or otherwise. If you haven’t yet seen the documentary, “Jeffrey Epstein: Filthy Rich”, then it’s worth watching. Consider the nature of the relationships that Epstein had with political figures, and whether his financial support or other inducements could have been used to unduly influence decisions to his benefit.

Another must-watch is Ava DuVernay’s 13th, which examines racial inequality in the United States. The documentary also looks at the influence powerful corporations have on legislation intended to bolster corporate profits while negatively impacting other members of society, often with devastating long-term consequences.

And if you have already completed Netflix then consider watching Hamilton, now streaming on Disney+. Keep an eye/ear out for the part relating to one of the first sex scandals in American political history, the Hamilton-Reynolds affair in 1791. James Reynolds extorted Alexander Hamilton, the first Secretary of the Treasury in the US, who was involved in an affair with Reynolds’ wife. Hamilton was ultimately confronted about possible corruption, answering questions as to whether or not the financial payments were in fact misappropriated government funds.

Like all things financial crime related, context is important. As a reminder, being a PEP is not a crime, but it is critical that financial institutions are alert to potential criminal financial activity when doing business with one. Knowing how to identify a PEP or identify individuals that have close associations with one is a crucial element of financial crime prevention. Understanding the nature of relationships and expected financial activity helps to identify activity that may be illicit. Consider individuals in positions of influence or power, particularly those with the ability to direct or control government funds. Also consider individuals with close personal connections. Is it reasonable to invite casual acquaintances to visit your private island, for example? About as reasonable as a celebrity running for the highest office in the land.
@afranco