Swiss banks linked to $21-trillion tax fiddle

Swiss banks linked to $21-trillion tax fiddle
Photo: Stephen Hyun
Switzerland has been implicated among an array of tax havens harbouring a staggering $21 trillion of offshore assets stashed by the super-rich worldwide, a new report charges.

The research was compiled by James Henry, former chief economist at consulting firm McKinsey, for the Tax Justice Network, a British campaign group.

Henry says Switzerland is among a group of secretive jurisdictions, such as the Cayman Islands, whose private banks have lured the world’s richest people to hide their wealth.

Details of his report, The Price of Offshore Revisited, were released online by British newspaper The Observer on Sunday.

The assets of the extremely high net worth individuals are “protected by a highly paid, industrious bevy of professional enablers in the banking, legal and accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy.”

The world’s top ten private banks, including Switzerland’s UBS and Credit Suisse, managed more than 6.2 trillion dollars in 2010, up from 2.3 trillion dollars just five years ago.

The massive tax evasion has “been going on for a very long time and governments haven’t been taking any action about this,” John Christensen, director of the Tax Justice Network, told World Radio Switzerland on Monday.

The amounts involved in the past few years though have risen dramatically to the point where they are now “threatening economic and social stability,” Christensen said.

Henry’s report compiles data from sources that include the Bank of International Settlements and the International Monetary Fund.

The report indicates that the cumulative value of the money that has flowed out of many developing countries since the 1970s would be more than sufficient to retire their debts to the rest of the world.

Christensen said tax codes globally are “riddled with loopholes” which are exploited by banks such as UBS and Credit Suisse.

These banks have made an industry out of helping wealthy people move their money offshore to avoid paying taxes, he said.

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