According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That's a lot of money. But it's an extremely small proportion - only about 3 percent - of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mis-pricing.
This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world's total private wealth. Yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations. The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption has its root in the centres of financial power.
With the City of London at the centre of the global tax haven web, how does the UK end up with a clean Corruption Perceptions Index? The question is all the more baffling given that the City of London, the Square Mile, is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, the City of London has maintained a number of plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.
A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.
This kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires and donors to the main political parties.
But this is just the tip of the iceberg. If we really want to understand how corruption drives poverty in developing countries, we need to start by looking at the institutions that control the global economy, such as the IMF, the World Bank and the World Trade Organisation. During the 1980s and 1990s, the policies that these institutions foisted on the Global South, following the Washington Consensus, caused per capita income growth rates to collapse by almost 50 percent. Economist Robert Pollin has estimated that during this period developing countries lost around $480bn per year in potential GDP. It would be difficult to overstate the human devastation that these numbers represent. Yet Western corporations have benefited tremendously from this process, gaining access to new markets, cheaper labour and raw materials, and fresh avenues for capital flight.
These international institutions masquerade as mechanisms for public governance, but they are deeply anti-democratic; this is why they can get away with imposing policies that so directly violate public interest. Voting power in the IMF and World Bank is apportioned so that developing countries - the vast majority of the world's population - together hold less than 50 percent of the vote, while the US Treasury wields de facto veto power. The leaders of these institutions are not elected, but appointed by the US and Europe, with not a few military bosses and Wall Street executives among them. Joseph Stiglitz, former chief economist of the World Bank, has publicly denounced these institutions as among the least transparent he has ever encountered. They also suffer from a shocking lack of accountability, as they enjoy special "sovereign immunity" status that protects them against public lawsuit when their policies fail, regardless of how much harm they cause.
Local corruption in developing countries does not exist in a geopolitical vacuum. Many of history's most famous dictators - like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak - were supported by a steady flow of Western aid. Today, not a few of the world's most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia. Which is more corrupt, the petty dictatorship or the superpower that installs it? The biggest cause of poverty in developing countries is not localised bribery and theft, but the corruption that is endemic to the global governance system, the tax haven network, and the banking sectors of New York and London. It's time to flip the corruption myth on its head and start demanding transparency where it counts.
The above is taken from an article by Dr Jason Hickel who lectures at the London School of Economics. He has accurately detailed the hypocrisy in the cause of poverty blame game but fails to go further in his condemnation. Capitalism benefits the selfish interests of a few, the privileged elites of the developed world, and damages the interests of everyone else. Capitalism encourages corruption, competition, and consumerism. Steve Forbes, Editor-in-Chief of Forbes Magazine, admits “There will, of course, be criminals and greedy individuals in a free-market economy, just as there are in all walks of life.” What Forbes fails to acknowledge is that the criminals in the capitalist system are those who are at the controls of the system. Corruption based on capitalist interests pervades every sector of capitalist society. Capitalism portrays the accumulation of money as the greatest achievement. This leads to an incessant pursuit of capital, even if it is attained through unethical means. At no point do the capitalist class feel that they have enough. In this obsession to accumulate, many members of the plutocracy willingly use their power and position to gain more wealth via corrupt operations and schemes. After all, its their purpose in life!
This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world's total private wealth. Yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations. The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption has its root in the centres of financial power.
With the City of London at the centre of the global tax haven web, how does the UK end up with a clean Corruption Perceptions Index? The question is all the more baffling given that the City of London, the Square Mile, is immune from many of the nation's democratic laws and free of all parliamentary oversight. As a result of this special status, the City of London has maintained a number of plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations - mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.
A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain's shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.
This kind of corruption is not entirely out of place in a country where a feudalistic royal family owns 120,000 hectares of the nation's land and sucks up around £40m ($65.7m) of public funds each year. Then there's the parliament, where the House of Lords is filled not by election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country's largest religious sect, and dozens of others divvied up for sale to multi-millionaires and donors to the main political parties.
But this is just the tip of the iceberg. If we really want to understand how corruption drives poverty in developing countries, we need to start by looking at the institutions that control the global economy, such as the IMF, the World Bank and the World Trade Organisation. During the 1980s and 1990s, the policies that these institutions foisted on the Global South, following the Washington Consensus, caused per capita income growth rates to collapse by almost 50 percent. Economist Robert Pollin has estimated that during this period developing countries lost around $480bn per year in potential GDP. It would be difficult to overstate the human devastation that these numbers represent. Yet Western corporations have benefited tremendously from this process, gaining access to new markets, cheaper labour and raw materials, and fresh avenues for capital flight.
These international institutions masquerade as mechanisms for public governance, but they are deeply anti-democratic; this is why they can get away with imposing policies that so directly violate public interest. Voting power in the IMF and World Bank is apportioned so that developing countries - the vast majority of the world's population - together hold less than 50 percent of the vote, while the US Treasury wields de facto veto power. The leaders of these institutions are not elected, but appointed by the US and Europe, with not a few military bosses and Wall Street executives among them. Joseph Stiglitz, former chief economist of the World Bank, has publicly denounced these institutions as among the least transparent he has ever encountered. They also suffer from a shocking lack of accountability, as they enjoy special "sovereign immunity" status that protects them against public lawsuit when their policies fail, regardless of how much harm they cause.
Local corruption in developing countries does not exist in a geopolitical vacuum. Many of history's most famous dictators - like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak - were supported by a steady flow of Western aid. Today, not a few of the world's most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia. Which is more corrupt, the petty dictatorship or the superpower that installs it? The biggest cause of poverty in developing countries is not localised bribery and theft, but the corruption that is endemic to the global governance system, the tax haven network, and the banking sectors of New York and London. It's time to flip the corruption myth on its head and start demanding transparency where it counts.
The above is taken from an article by Dr Jason Hickel who lectures at the London School of Economics. He has accurately detailed the hypocrisy in the cause of poverty blame game but fails to go further in his condemnation. Capitalism benefits the selfish interests of a few, the privileged elites of the developed world, and damages the interests of everyone else. Capitalism encourages corruption, competition, and consumerism. Steve Forbes, Editor-in-Chief of Forbes Magazine, admits “There will, of course, be criminals and greedy individuals in a free-market economy, just as there are in all walks of life.” What Forbes fails to acknowledge is that the criminals in the capitalist system are those who are at the controls of the system. Corruption based on capitalist interests pervades every sector of capitalist society. Capitalism portrays the accumulation of money as the greatest achievement. This leads to an incessant pursuit of capital, even if it is attained through unethical means. At no point do the capitalist class feel that they have enough. In this obsession to accumulate, many members of the plutocracy willingly use their power and position to gain more wealth via corrupt operations and schemes. After all, its their purpose in life!
10 comments:
Conspiracy theorist drivel from beginning to end. Tax evasion / avoidance in developing countries is facilitated by officials taking bribes, so to pretend corruption is not a problem is absurd.
The City of London is not a tax haven, residents and businesses are subject to the same laws and pay the same taxes as the rest of England. The idea that the City is outside Parliamentary oversight is an urban myth. Financial regulation is a matter for the UK government, not the City.
It is another urban myth that corporations vote in the City, they do not. the electoral register is drawn up in the exact same way as anyway else in the UK. The London Government Act 1963 gave the City of London Corporation (CoLC) the same powers and responsiblities as the London Boroughs created by the same Act. The 125 members of the Court of Common Council that run CoLC are elected by residents and inviduals appointed by businesses (In this context businesses include pubs, churches, sandwich bars, charities etc.) Voters vote by secret ballot in the normal way. The allocation of voters is skewed towards small and medium sized enterprises. There are more bankers in the neighbouring London Borough of Tower Hamlets than there are in the City.
Part 1
The City of London Corporation has two main claims to being a tax haven: first, as a semi-alien entity, floating partly free from Britain (just as the Cayman Islands are), and second, as the hub of a global network of tax havens sucking up offshore trillions from around the world and sending it, or the business of handling it, to London. Over 500 banks have offices in the City. The role of the Corporation as a municipal authority (and Lord Mayor) is it is a hugely resourced international offshore lobbying group pushing for international financial deregulation, tax-cutting and tax havenry around the world.
The City of London financial center runs a series of satellite tax havens, spread across the world in concentric rings. In the inner ring are Britain's Crown Dependencies: Jersey, Guernsey and the Isle of Man. The next ring out are the 14 Overseas Territories: the last remnants of the British Empire, which include some of the world's most important small island tax havens: the Cayman Islands, the British Virgin Islands, Bermuda, Turks and Caicos, Anguilla and Gibraltar. These two offshore networks, which are essentially the last remnants of the British Empire, are partly British, and partly independent. Each has its own political system with its own independent politics, but each has a Governor (or Lieutenant Governor) appointed by the Queen. Britain is officially responsible for their foreign relations and defense, and for their good governance. The last court of appeal is the Privy Council in London.
Further out in the web are a number of other tax havens with ongoing strong historical or commercial ties to the UK: Hong Kong, Mauritius, the Bahamas, and others. From Britain's point of view, this network operates along the lines of a spider's web, with the City of London at the center. Each haven tends to have something of a geographical focus: the Caribbean havens focus most heavily on North, Central and South America, while the Crown Dependencies will focus most heavily on European business, as well as Africa and the Middle East. They capture huge amounts of money (and the business of handling money) up to the City of London. Just in the second quarter of 2009 the UK received net financing of US$332.billion just from its three Crown Dependencies. Martyn Scriven, secretary of the Jersey Bankers' Association, describes the relationship: "If I have money to spare, I pass it to the father. Great dollops of money go into London from here." Promotional literature for Jersey Finance, says it plainly: 'Jersey represents an extension of the City of London" .
Part 2
Like any other local authority, the City of London is divided into wards. The wards are not reviewed by the Electoral Commission under the Parliamentary Constituencies Act 1986 and (unlike with other local government electoral reviews in the country) the number and the names of the wards do not change. These elect candidates to serve on the Court of Common Council, the City's principal decision-making body. Unlike any other local authority, however, individual people are not the only voters: businesses can vote, too. Political parties are not involved - candidates stand alone as independents. Before 2002, the 17,000 business votes (only business partnerships and sole traders could take part) already swamped the 6,000-odd residents. Blair's reforms expanded the business vote to about 32,000 and gave a say, based on the size of their workforce in the Square Mile, to international banks and other big players. The business vote was abolished in all other UK local authority elections in 1969. Voting reflect the wishes not of the City's 330,000 workers, (these workers did not have control of their own votes but comparable to the voting rights of chattel owners in the pre-war American South: the slavery franchise.) but of corporate managements. So Goldman Sachs and the People's Bank of China get to vote in what is arguably Britain's most important local election.
Part 3
The Corporation's main weapons are more sophisticated, parliamentary lawyers, public affairs staff, 43 media staff, a 50-strong economic development unit sifting through international regulations, researchers and legions of hospitality workers. This public affairs machine costs over £10m, according to the Bureau of Investigative Journalism's calculations. Sitting literally behind the Speaker of the House of Commons chair is a City of London official known as the remembrancer,"charged with maintaining and enhancing the City's status and ensuring that its established rights are safeguarded". The remembrancer scours every piece of parliamentary legislation to ensure the corporation's interests remain unaffected. The remembrancer employs six in-house lawyers. The Square Mile enjoys unfettered and unmonitored access to senior politicians and civil servants through the historic privileges of the City of London Corporation
The influence of the corporation is underlined by speeches by the prime minister, the chancellor, and the mayor of London who outline their plans at sumptuous banquets in the Guildhall or Mansion House. These events' importance is confirmed in a leaked document explaining the aim of thee major national set-piece occasions and small receptions – where politicians and City figures meet in private –is "to increase the emphasis on complementing hospitality with business meetings consistent with the City Corporation's role in supporting the City as a financial centre".
The Corporation's so-called City's Cash fund, one of a number of corporation accounts "a private fund built up over the last eight centuries" its assets are beyond proper democratic scrutiny. The fund's annual report is restricted to City councillors, aldermen and officials.
Within the City, the Corporation owns and runs both Smithfield Market and Leadenhall Market. The Corporation owns and is responsible for a number of locations beyond the boundaries of the City. These include various open spaces (parks, forests and commons) in and around greater London, including most of Epping Forest, Hampstead Heath and many public spaces in Northern Ireland through The Honourable The Irish Society. It also owns Old Spitalfields Market and Billingsgate Fish Market, both of which are within the neighbouring London Borough of Tower Hamlets. The Corporation also owns and helps fund the Old Bailey. The City is the third largest UK funding-patron of the arts. It oversees the Barbican Centre. The Corporation oversees the running of the Bridge House Trust, which maintains five key bridges in central London, London Bridge, Blackfriars Bridge, Southwark Bridge, Tower Bridge and the Millennium Bridge. The City's flag flies over Tower Bridge, although neither footing is in the City.
The Corporation even has its own police force separate from the London Met with an independent police authority, the Court of Common Council of the Corporation. The City Police have three police stations and has 813 police officers, 85 Special Constables and 48 PCSOs. The Port of London's health authority is also the responsibility of the Corporation, which includes the handling of imported cargo at London Heathrow airport.
Nor did the article argue that personal corruption does not exist. The point was that there is required a process to launder illegal assets and corrupt officials are ably assisted by so-called respectable banks and banking laws to do this. We witness the way BAE appear to be exempted from criminal charges of being accomplices in corruption cases. Care to say which BAE CEO has been found unfit person to hold a directorship?
Our companion blog African Socialist Banner documents numerous cases of local and international corruption by politicians and businesses, both national and multi-national.
http://socialistbanner.blogspot.com/search?q=corruption
It is always easy to direct blame at the individual, as has been the case with laying the responsibility of the whole recession on the shoulders of a few bankers (too big to fail, too big to jail) but the SPGB analysis is deeper than holding the personality at fault. We accuse the system - capitalism, having no trust whatsoever in its self-regulation.
@Part 1
The City of London Corporation is not "a semi-alien entity, floating free from Britain", but merely an archane institution which has provided local government to the square mile for many centuries. The London Government Act 1899 gave the Corporation the same powers and responsibilities as the Metropolitan Boroughs created by that Act. Subsequently the London Government Act 1963 gave the corporation the same powers and responsibilities as the London Broughs created by the Act. As such the Corporation is a local education authority, a local planning authority and a licensing authority etc. subject to the same laws and ministerial circulars etc. as a London Borough. If a person is aggrieved by a local government decision made by the Corporation they have the same rights of appeal and / or seek judicial review in the same way that they could in regard of any of the 32 London Boroughs. merely repeating the assertion that the Corporation is the 'hub of a global network of tax havens' without providing a shred of evidence is pointless; that others fall for such nonsense does not give it any creedence.
Many banks have offices in the City. It would not make any sense for banks in the developing world to have branches in every other developing nation, but by opening a branch in the City banks from the smallest and poorest countries can have face to face contact with the world's other banks.
British colonies / dependent / overseas teritories are run by the Foreign Office in Whitehall, not the City.
@Part 2
Subject to an undertaking given to the House of Lords in 2002, that four of the twenty five wards would remain predominently residential, the City decides its own ward boundaries. So what?
As explained above, buisnesses cannot vote in the City, only individuals. Again, why repeat an assertion without a shred of evidence to support it?
The total number of voters on the Ward Voting Lists is 22,213. The City of London (Ward Voting) Act 2002 is a Local Act created by a Private Bill. Private Bills are a matter for Parliament and governments do not get involved. The voters are individual residents and workers, there are no block votes.
@Part 3
Many London Boroughs have large pr departments. The City Remembrancer does not sit behind the Speaker, although he does have access to the same under-gallery as the 14 other Parliamentary Agents at the other end of, but not in, the Commons Chamber. Anybody can scour any and all Bills before Parliament as they have been published for centuries and are nowadays all online, for anybody in the world to see. The most recent parliamentary matters that the City Remembrancer has been involved in are the City of London (Various Powers) Act 2013 c.vii (largely concerned with the regulation of ice-cream vans) which was granted Royal Assent on 18 Dec 2013.
As the Prime Minister confirmed in a written answer to Tom Watson MP (Hansard 31 Oct 2013 : Column 525W) details of any meetings with external individuals and organisations (such as the City Remembrancer) can be accessed on the gov.uk website, so it is incorrect to claim access, if it has occured, is unmonitored.
The ownership of Epping Forest, Hampstead Heath and the various other open spaces comes with restrictions and responsibilities imposed by Parliament. The City built and maintains Tower Bridge.
It is true to say that the original article did not argue that personal corruption does not exist, but I think it is a reasonable observation on my part that it pretended it is not a problem.
The UK Government and its agencies such as the Bank of England and the Financial Conduct Authority are responsible for financial regulation throughout the UK. The government through the Foreign Office is responsible for proper financial regulation in the colonies (whatever fancy names they might be given).
I completely fail to understand why, instead of calling for proper regulation, people spend so much time and effort thinking up excuses as to why government cannot do its job. Do you seriously believe that either George Osborne or Ed Balls are up to the job of regulating financial institutions?
"busnesses cannot vote in the City, only individuals." and who exactly hand-picks appoints those individuals if not the businesses. You will also be well aware of the numerous stumbling blocks placed by this arcane administration in those who can become its officials"
The City of London (Ward Elections) Act 2002 greatly increased the business franchise, allowing many more businesses to be represented. In 2009, the business vote was about 24,000, greatly exceeding residential voters. Eligible voters must be :
A resident
A sole trader or a partner in an unlimited partnership or
An appointee of a qualifying body.
Bodies employing fewer than ten workers may appoint one voter, those employing ten to fifty workers may appoint one voter for every five; those employing more than fifty workers may appoint ten voters and one additional voter for every fifty workers beyond the first fifty.
Only certain individuals may be appointed as voters. Under section 5 of the City of London (Ward Elections) Act 2002, the following are eligible to be appointed as voters:
Those who have worked for the body for the past year at premises in the City
Those who have served on the body's board of directors for the past year at premises in the City
Those who have worked in the City for the body for an aggregate total of five years
Those who have worked mainly in the City for a total of ten years and still do so or have done within the last 5 years.[13]
Voters appointed by businesses do not forfeit the right to vote for the local Council of their home residence (so long as it is outside the City). Therefore - uniquely in the U.K. - these voters are able to vote in two separate local elections. Firstly in 'the City' as appointed voter for their employers, or fellow employees and again for the local Council where their home address is situated.- Wiki
i accept your correction about where the Remberancer is seated - he is indeed in front facing the speaker. "The fact that the City has its own Parliamentary Agent is a reflection of the complicated legal and constitutional framework within which it operates."
Crown Dependencies - Channel Islands and Iof M i believe are not FO responsibility but Dept of Justice and Privy Council (but i stand to be corrected on this)
Perhaps i may agree if indeed the TUC was permitted equal access as the Remembrancer to parliamentary privilege. Indeed the C of L is not treated like any other lobbyist or city council.
Governments perform their job very adequately - representing the national interest of UK capitalism, as does the C of L does.
The City Financial Secrecy Index United Kingdom - Tax Justice Network explains " The City Corporation is officially a lobbyist for the UK financial services sector and for financial deregulation, at home and abroad. It is also, in effect, an old boys’ network, with over 100 livery companies (such as the Worshipful Company of Tax Advisers) contributing to an important but unseen business and political presence in the broader UK economy and political system."
“The City of London uses a web of satellite secrecy jurisdictions based on British crown dependencies and overseas territories to channel huge illicit flows which feeds London’s mad property boom,”
“The crown dependencies and overseas territories have long been considered among the worst offenders of world tax havens", Salman Shaheen, editor for International Tax Review magazine . “What is surprising is that the British government is not doing very much about it. I mean it has introduced certain legislation to clean up its own companies onshore but it really needs to get its work on tax havens offshore in order,” Shaheen said.
Just as you claim the right to your reasonable observation i hold the same reasonable conclusion that the C of L is one of the centres of world financial corruption. Dirty money has to be cleaned.
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