By Omondi G. Michael
Nairobi, Aug 17-- Between 21 trillion and 32 trillion US dollars (Kshs 1.764 zillion) of the world’s private financial wealth- an equivalent of the economies of the United States and Japan combined- is missing having been invested tax free through the world’s ever expanding black hole of over 80 offshore secret accounts, a report revealed.
The report titled The Price of Offshore Revisited by top tax research organization in the UK, Tax Justice Network (TJN), is thought to be the most detailed and rigorous study
ever made of financial assets held in offshore secrecy jurisdictions. The report released last month comes amid growing concerns about tax evasions and offshore accounts
held mainly by rich individuals.
In Kenya, the birth of every mega scandal has repeatedly pointed to such secrecy jurisdictions with high ranking officials both in private sector and government being
implicated. Goldenberg scandal, Anglo-leasing, CMC and recently NHIF (National Hospital Insurance Fund) and Kenya Power (formerly KPLC) are among those which have
been connected to secret accounts and anonymous shell companies registered in tax havens.
The TJN report comes as concerns continue to grow over the enormous and increasing gulf between the rich and poor globally. Using data drawn from the World Bank, the
IMF, the United Nations, central banks, the Bank for International Settlements, and national treasuries, the report triangulates the results against the data reflecting demand
for reserve currency and gold, and data on offshore private banking studies by consulting firms and others.
Meanwhile, the figures in the report could rise to 32 trillion US Dollars given that only financial wealth was analysed excluding real estate, yachts, and other financial assets
owned via offshore structures. “Stories of African elites and shady politicians stashing their wealth in offshore accounts are not new, what this report does is to put these
figures into context. If we were to stop this hemorrhage of funds offshore there would be no need for any Africa country to continue begging for donor aid,’’ the director of
Tax Justice Network- Africa (TJN-A) Alvin Mosioma says.
The report also highlights the impact of tax havens on the 139 developing countries. It estimates that between the 1970s and 2010, the richest of the 139 countries amassed
between 7.3 trillion US Dollars to 9.3 trillion US Dollars “unrecorded offshore wealth”. China leads the pack with 1,189 billion US dollars while Nigeria and Côte d'Ivoire are the
only African countries mapped out in this report at 306 billion US Dollars and 141 US dollars respectively.
Not long ago, the Swiss National Bank (SNB), the Central Bank of Switzerland, revealed in a report that Kenyans have stashed away Kshs72 billion in Swiss Banks. These
figures are astonishing given that the SNB report only focuses on Switzerland leaving more than 80 secrecy jurisdictions worldwide unaccounted for.
The figures implied in this report is so huge that if taken into account, the offshore assets and the earnings they produce could make many “debtor countries” wealthy.
However, the wealth of such countries is held by offshore jurisdictions, in the hands of their leaders and their private bankers. Thus the developing world as a whole has been
a significant creditor of its developed counterparts for decades bringing to the fore the view that that what ails poor developing countries is not merely a “debt” problem, but
rather a tax justice problem.
According to Mosioma, the sad fact is that despite the significance and danger that the problem of secrecy jurisdictions poses to the world economy and more particularly to
poor developing countries, leading institutions such as the World Bank and the IMF are yet to give the issue the serious attention it deserves. “We can only continue to ignore
offshore banking at our own peril. African governments need to take this matter seriously and demand that assets held illegitimately are returned and the loopholes that
allow this kind of leakages are sealed. Kenya’s recent move demanding the return of these assets is a step in the right direction,’’ he concludes.