As a recent TV programme (James Bellini’s ‘The Polite Conspiracy’ 4th April 1984 BBC2) made clear, the rich have devised some artful ways of avoiding tax. Of course they also have a government committed to drastically reducing their tax ‘burden’ (e.g. Nigel Lawson’s abolition of investment income surcharge, formerly payable on high unearned incomes).
Naturally, the secrecy surrounding the wealth of the rich and the methods they use to hide it is massive. As far as Britain is concerned there are few directly critical studies of the subject. Instead, the few things which filter through come from apologist or semi-apologist studies, or from practical guides which are written for the rich and their well-to-do colleagues.
An example of the first category is W.D. Rubinstein’s Men of Property (1981). Rubinstein gives some interesting facts about the rich in Britain, but his aim appears to be to prove that the rich are not that rich. In order to do this he has to neglect certain areas, such as the export of fortunes into havens overseas – with Britain’s old colonial connections, the rich have had a million nooks and crannies for many years in which to hide their wealth. Rubinstein does, however, recognise one inadequacy of his account – he hints that the more sophisticated City operators (in particular the well-established merchant-banking families) are able to hide their wealth in trusts.
It is this last aspect which Edouard Chambost’s book, Bank Accounts: A World Guide to Confidentiality (John Wiley and Sons 1983) provides further clues about. This work is an example of the second category mentioned above, a practical guide for those with fortunes but lack of nous. Chambost, so the flyleaf tells us, is a Paris lawyer who specialises in international tax and finance and who has already written ‘Using Tax Havens Successfully’ (Institute for International Research, 70 Warren St. London W1, 1978). His book, therefore, aims to inform the “roving depositor” where and how best to deposit his fortunes.
Bank-havens often coincide with tax-havens, so amongst the leading bank-havens we find Bahamas, Cayman Islands and Vanuatu. Also listed are Liechtenstein, Panama, Singapore, Switzerland (of course), Andorra, Bahrain, Hong Kong, British Virgin Islands, Jersey and Guernsey and Luxemburg (again, some of these are well-known tax-havens.) More surprisingly Hungary and the USSR are also given some prominence as bank-havens.
In dealing with secrecy, it appears that there are two main instruments – direct and indirect. The first centres on the internal confidentiality of banks themselves, including “numbered accounts”. The second concerns the ability or possibility of a depositor remaining unknown to the bank itself. This basically boils down to the use of trusts through which money is deposited in a bank. Chambost’s treatment of this is actually rather sketchy, but it is clear that the law has been brought to bear on trusts, so that great ingenuity (and, obviously, expense) are involved in their establishment. Only the richest of the rich can afford to hide their identities so perfectly, and Chambost’s book is evidence of the lengths the rich will go to preserve their names from inquiring minds.
Chapter 9, “Banking Secrecy and Politics” is disappointing, but then Chambost is not writing for outsiders. He uses the chapter to trace the fate of the Algerian National Liberation Front’s Fighting Fund, which appears to have vanished through the Swiss banking system during the 1960s.
Perhaps one of the more useful parts of this book, from the point of view of outsiders, is its detailed bibliography. General works of a technical and non-technical nature are listed here, as well as books on all the main countries involved. There are also three periodicals dealing with tax-havens etc – all are produced by the aforementioned Institute for International Research Ltd. It would be interesting to know who runs this body and who it is connected with.
Finally, Chambost gives his conclusions on the limits of banking secrecy:
“The true limits are probably moral rules accepted internationally as being the minimum requirements for acceptable behaviour..” (p269)
He then proceeds to modify this rule to the extent that it means …nothing. Instead he opts for the more “realistic” term, “balance”, instead of “morality”, presumably because it is less “value-laden”. But Chambost does believe in some limit to morality or balance. Slave-traders, he believes, would not be given the protection of bank-havens these days, once the bankers knew what their business was. Perhaps it is better for bankers, then, that they do not know the business of all their clients; or, perhaps it would be truer to say that it is better for the bankers that the general public does not know.
E.H.